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Pathways to profit – Print 21 feature

Thursday, 11 August 2005
By Print 21 Online Article

PacPrint was interesting. It was interesting because people were there to spend money. Lots of people bought lots of stuff. To me this means that the print industry as a whole is feeling good. People have had another two years of good profits since the last PrintEx in Sydney. The overdraft is down or paid out, profits are looking good for at least the near future, so let’s look at what is available, and let’s place an order or two.

I gave a talk at PacPrint on digital profitability. One bloke came up afterwards to thank me and said that it was a nice summary of all the relevant points. The points were

1. Be clear what market you are in, or are aiming to move into. There are different ways to look at the market, but basically there is the low volume high price market, and the high volume low price market. You probably fall into one of those categories for most of your work. Your equipment and staff need to be arranged accordingly. There is also a moderately high volume, high price market, and this is requires that you have a value – added niche.

2. It is almost always better if the owner closely manages the shop. The exception is when the boss has taken his eye off the ball, in which case a good manager will do much better, but generally the owner should be there every day, do some of the quoting, massage the important customers, and know what is happening. If not, it is time to sell the shop.

3. The manager needs to be able to see the production boxes. No good having an office on the next floor.

4. The people who handle the incoming digital files need to be able to see the production boxes. No good if they are on the next floor up. Things will start to go wrong.

5. Use the minimum number of operators for the maximum number of production boxes. Bernadette at Rapid Digital in Sydney ran five DocuTechs on her own for nine years. She did everything except drive the forklift and in a busy month, those five Docs were doing 9 million clicks.

6. Don’t buy a second box, run a second shift. The only reason not to do this is if you are a long way from service people and you absolutely have to have built in redundancy. It never ceases to amaze me that some people buy a second box when they haven’t filled capacity on the first box.

7. Have a good grip on your costs. Every major digital shop today is run by someone who has a really good grip on costs. If they didn’t they wouldn’t be in business. If you are digital but small and thinking of going bigger or you are thinking of dipping a toe into the digital water, you must be able to make a good calculation of what an A4 and an A3, single and double sided, is going to cost you. That tells you what you have to charge to make a profit. You have to know this.

8. Charge all the extras. The most important extras are the file handling charges. It costs you at least $70 an hour to provide people and equipment to receive and un-stuff customer’s files. If you are not charging for this you are headed for bankruptcy. It is no good saying that customers won’t pay for it, they will. And if they won’t, let them send someone else broke. You need to charge all the other extras. Find out what all your people are doing with their time, and make sure you charge for it.

9. Charge the highest price you can. Some people charge low and say they can’t charge higher, others charge high and say they won’t charge lower. Fact. Be a high charger.

10. Next time you buy a digital colour box, tell your supplier that you won’t pay more than 10 cents per A3 for service and toner. Why? Because you are going to be competing with people who are paying around that figure.

The boom areas in printing at the moment are short run digital colour, and poster printing. But, as always, more people are getting in to these areas, and competition is increasing. There is good money in digital printing but it needs careful and skillful management. Good luck with it.

Bio
Ian Maclean produces the CostMaster MIS for print shops and also consults to the trade. You are always welcome to contact Ian on 0411 426 215 or ian@costmaster.com.au>.

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