Price Increases and Customer Outrage...

[kdw75]

We are a tiny print shop that has gone 90% digital and with costs increasing drastically the past few years we are raising prices. Our largest client has an agreement with us to lock in their prices for 1 years periods, so we updated those last week. We got angry phone calls from their marketing manager saying the price increases were outrageous and they would be taking their business elsewhere unless we could come to a discounted agreement. They claimed they could order their catalogs from Texas and get them shipped here cheaper than buying from us.

Many of their catalogs are of a similar format, so I wanted to run pricing by others and see what you all thought. Specs are:
500 6x9 catalogs Saddle Stitched with square spine creased with no cracking (very picky)
24 pages 100# Gloss Text with 100# Gloss Cover for the Cover
4/4
Full Bleed
Shrink wrapped in 25's

We had been charging 74 cents and our new proposed price is $1.94.

They also have corporate colors they are picky about matching as they are in the health care business.

Note: Our client operates in KC and St. Louis for context.

 

[azehnali]

your issue is you were charging too little and now you have tripled the price
even trump doesn't do that

 

[JeffJ]

Your $1.94 is inline in todays market. You can always find cheaper. But like azehnali said your pricing originally was too cheap.

 

[tngcas]

That's a fairly significant price increase and sounds like you started been below market.
We've been being intentional about doing small price increases every 6 months to avoid exactly this kind of outrage. Usually about a 3-5% increase. Slow and steady over the last few years. I would have a hard time doing a 250% increase on a customer. I would feel similarly outraged if I was buying paper from a company at say $0.05/sheet an they came back and said the new price was $0.14/sheet
Price increases are hardest on the customers who only order once a year (usually events).

I can't give an apples to apples comparison on pricing because we don't stock 13x19 paper in-house which is what you'd really need to do a 6x9 catalog in a cost effective way.
I can give you our pricing on 5.5x8.5 and 8.5x11 full bleed with those specs.
5.5x8.5 = $1.68 each
8.5x11 = $3.10 each

If it's a customer that you want to salvage you can just be honest and say, we've been way under the market and now we're trying to adjust. Offer them a way to step into the new pricing paradigm over a longer term period? Maybe a 50% increase for each of the next 6 month periods until they're inline with the current market rates?

 

[wonderings]

I just priced this through our system and I am at $1.55 USD ($2.12 CDN) a book. Your previous pricing would be around our cost pricing. And just looking now I did not even include shrink wrapping. Your pricing was incredibly cheap and I can see why they are saying something for that increase. Would be curious to know what pricing they are getting cheaper than yours. I am guessing volume is higher that they are pricing from? If you are getting them to commit to a year I am assuming it is more than 500 catalogues.

I looked at our cost, which is what you were basically running at for this book, we are roughly 0.71 cents per book in cost price. This is all digital printing, going on our Bourg for saddle stitch and square spine. I could wiggle our pricing to bring things down of course if I was competing against someone else, but there is only so far one can go. You are also going to have some trouble with colours as well if you were running it all offset before, you are going to need to be colour adjusting for digital printing and spot colours, which depending on the colour can be easy or can be hard.

 

[kdw75]

That's a fairly significant price increase and sounds like you started been below market.
We've been being intentional about doing small price increases every 6 months to avoid exactly this kind of outrage. Usually about a 3-5% increase. Slow and steady over the last few years. I would have a hard time doing a 250% increase on a customer. I would feel similarly outraged if I was buying paper from a company at say $0.05/sheet an they came back and said the new price was $0.14/sheet
Price increases are hardest on the customers who only order once a year (usually events).

I can't give an apples to apples comparison on pricing because we don't stock 13x19 paper in-house which is what you'd really need to do a 6x9 catalog in a cost effective way.
I can give you our pricing on 5.5x8.5 and 8.5x11 full bleed with those specs.
5.5x8.5 = $1.68 each
8.5x11 = $3.10 each

If it's a customer that you want to salvage you can just be honest and say, we've been way under the market and now we're trying to adjust. Offer them a way to step into the new pricing paradigm over a longer term period? Maybe a 50% increase for each of the next 6 month periods until they're inline with the current market rates?

That would be ideal, but they are wanting to lock in prices until June of 2027.

We asked the client for a quote from another cheaper competitor to make sure they were quoting the same specs and they said they never share quotes.

 

[kslight]

I don’t chase prices with customers, we do smaller increments of increases than this, often around material cost changes, and it is what it is. We have never tried being the cheapest, it’s a way to attract the worst customers and make no money doing it. I worked for someone who would just charge enough to keep the lights on. They went out of business 6 years ago when those companies keeping our lights on went fully digital over Covid.

If you feel that it is a fair cost for everything involved, I would hold to it. I think offering them a discount does two things…1. Perception of dishonesty. 2. Moving the goalpost. Eventually you’ll have to increase the price again anyway, and you’re back again.

Is it a new marketing person? Sometimes we have stinks like this come up when there is a personnel change. You get someone in there that either knows another vendor or has otherwise not lived the pain of trying to find a different vendor to match the same quality of the current. I suspect if you’re providing them the quality product that meets their standard they’ll be back when they find out the cheaper guys suck. Or they will lower their expectations. We are a small printer (in KC, fwiw) and send out large jobs, and those often come back to us poorly QC’d, at least in a sense that, they would never leave our door like this.

If there is any business that can afford a price increase it’s health care, imho. We all know costs have increased. I think it’s unreasonable of them to want to lock in until June 2027 also, with the way prices have been increasing. Of course you are going to have to shoot high with a quote in order to CYOA.

Perhaps go back to them, asking if there is another issue that is causing them to look elsewhere.

 

[wonderings]

That would be ideal, but they are wanting to lock in prices until June of 2027.

We asked the client for a quote from another cheaper competitor to make sure they were quoting the same specs and they said they never share quotes.

If I was in your shoes I would go in leaner with your pricing, reduce the markups to make something but ease the impact of your serious price increase. There is no way someone else is going to be that much cheaper then what you have in pricing unless they are not comparing the same thing.

You have a leg up as they know your quality and I am assuming have been happy with your service up to this point. I would leverage that attempting to work with them and get yourself to a place that works for both of you. They will certainly not be getting your pricing from anyone else.

 

[kdw75]

If I was in your shoes I would go in leaner with your pricing, reduce the markups to make something but ease the impact of your serious price increase. There is no way someone else is going to be that much cheaper then what you have in pricing unless they are not comparing the same thing.

You have a leg up as they know your quality and I am assuming have been happy with your service up to this point. I would leverage that attempting to work with them and get yourself to a place that works for both of you. They will certainly not be getting your pricing from anyone else.

We have dealt with them for well over a decade, but they have recently been doing massive expansion and downsizing staff while increasing automation. They fired their outside marketing company and brought that in-house and are trying to cut costs and increase productivity any way they can. They spent $60 million on a new automated packaging facility.

I think I will tell them we are willing to give them a discount in as they have been a good customer and meet them somewhere in the middle.

I really appreciate the input from you all. This is the same client that I found out was buying their banners directly from Signs365. Oddly enough they did share those quotes with me along with a screenshot, which is why I knew who they were getting them from. Several years ago this client told us money was no object, just service and quality. Boy how things have changed. lol

 

[wonderings]

We have dealt with them for well over a decade, but they have recently been doing massive expansion and downsizing staff while increasing automation. They fired their outside marketing company and brought that in-house and are trying to cut costs and increase productivity any way they can. They spent $60 million on a new automated packaging facility.

I think I will tell them we are willing to give them a discount in as they have been a good customer and meet them somewhere in the middle.

I really appreciate the input from you all. This is the same client that I found out was buying their banners directly from Signs365. Oddly enough they did share those quotes with me along with a screenshot, which is why I knew who they were getting them from. Several years ago this client told us money was no object, just service and quality. Boy how things have changed. lol

Always a hard thing when you have to fight again for the client you fought for to get in the first place. The bigger they are the colder they seem to be to existing relationships. I personally only work with a small group of companies that I have long lasting relationships now and have our sales teams look after the rest. Mine are basically non profits that I have a history with.

They are probably not giving you a quote for this supposed much better pricing out of state because it is either not true or pretty much inline with what you are doing already. You have 2 people who have compared pricing with you on this forum and both in line and one is US and I am Canadian, so pretty safe to say your prices are not out to lunch. Again if I was in your shoes I would have a sit down with them face to face and go over the pricing. Letting them know the pricing you have had for so long is no longer tenable at that price point. I would let them know I value the long relationship you have had with them and are willing to work on the pricing a little to ease the shock of the significant increase. Then do what you can where you are making money and they are getting a bit cheaper price, which I am guessing will have you beating this cheaper option they have as they are probably just pricing it really lean as well to try and get the work. Good luck!

 

[TJPrinter]

I had one of those customers years ago and I was a bit nervous when I said I won't go down in price, it was already a low price. Best thing I ever did, the work I lost let me do more profitable work and less of a pain at the same time.

I raise my prices several time a year now, in small increments.

 

[gordo]

Is there a way that you can suggest to the customer to lower the price by adjusting the specs - e.g. paper choice, bleed, etc.? I.e. work with the customer to find a solution to the cost problem.

 

[MailGuru]

Pricing aside ($1.94 is pretty much in line for the product you describe), I'm curious as to why the drastic price jump with virtually no warning creating "severe sticker shock".

Are you mad at them or something? is there more to the story that you are not revealing?

 

[PricelineNegotiator]

How often do they order this product?

Talk to them about not being locked in on the pricing until June 2027. They are being unreasonable. Throw them a bone and give them locked in pricing for 3 months at a reduced price from your $1.94. You can't guarantee pricing that far out. That's ridiculous.

 

[pippip]

I can't offer a price as other side of the pond but as per others who have it seems you're in the right ball park with your revised quote.

Unfortunately it looks like you're negotiating at just the wrong time as they have marketing costs under the microscope and it's a sizeable increase.

I'd highlight items like -
Areas of the job that in the past they've wanted extra attention with and how this is specifically factored into your quotation (based off only you knowing due to your long term relationship) which no other blind quote would account for.
The saving they've made over the last few years based off your inaccurate pricing, which you apologise for.
Your willingness to lock the pricing for a year in an extremely turbulant market.
That your quote is providing them with a proven product with no surprises.

Personally I'd try and hold firm to your new quote with a minimal discount in respect of long term customer.

Push them further to see their cheaper quotes, perhaps put it that you're offering to assist them in confirming the details are correct before they proceed and that they're not overlooking anything. Makes no sense for them to not share the quotes other than they simply don't exist.

I've found customers can be all talk until that point they need to pull the trigger and suddenly nobody has the balls to execute the change and take responsibilty for an incorrect order from elsewhere.

 

[Robohopar]

24 page saddle stitch booklet for $1.94??

I charge minimum .12-.15 cents per page for that job depending on my clients turn around needs.

 

[tngcas]

24 page saddle stitch booklet for $1.94??

I charge minimum .12-.15 cents per page for that job depending on my clients turn around needs.

It's fairly close to half page size so that's probably close to your pricing.

 

[bcr]

That would be ideal, but they are wanting to lock in prices until June of 2027.

We asked the client for a quote from another cheaper competitor to make sure they were quoting the same specs and they said they never share quotes.

given the current global economic turmoil, agreeing to lock in prices beyond a couple of months seems like an unwise proposition from a seller's point of view. anything could happen to the price of substrates, electricity, labour, parts shortages etc.

 

[kdw75]

Pricing aside ($1.94 is pretty much in line for the product you describe), I'm curious as to why the drastic price jump with virtually no warning creating "severe sticker shock".

Are you mad at them or something? is there more to the story that you are not revealing?

We had agreed to that pricing in the Fall of 2024 and had agreed to revisit pricing 1 year later. At the time, there had been some big shakeups at the company, and we were pretty aggressive with our pricing. They also had been taking advantage of the situation by saying they wanted the price for say 2,500 books and then ordering 500 of 5 different books.
After everything had settled down, we agreed to discount the books 10% for them and they have placed several orders and seem content with the new pricing as are we.

 

[tngcas]

We had agreed to that pricing in the Fall of 2024 and had agreed to revisit pricing 1 year later. At the time, there had been some big shakeups at the company, and we were pretty aggressive with our pricing. They also had been taking advantage of the situation by saying they wanted the price for say 2,500 books and then ordering 500 of 5 different books.
After everything had settled down, we agreed to discount the books 10% for them and they have placed several orders and seem content with the new pricing as are we.

Oh. I've been there. Where someone says it's 2500 and they mean 5 of 500. Very annoying.
Yeah, they can't keep the 2024 pricing thru 2027. That's crazy because you can't predict the market that far out.
I bet they weren't finding better pricing on 500 books either.
Glad it worked out and you were able to keep the customer.