Pricing standards for digital color printing.

[Milo Wilson]

Good afternoon.
I'm a technician that decided to get into doing my own print shop. I'm running 2 iGen3s, 1 with an inline BCMx, BDFx and SQM. I'm trying to get pricing guidelines for doing digital print.
Are there basic variables that you use to justify to a customer how much you have to price your print?
I'm a newbie in the printshop area but I've been doing service for 23 yrs on Xerox equipment.
If you would like to PM me with some pricing advice, I would really appreciate it.
We are generally printing for business. Trying to keep away from walkup customers.

Thanks for any input.

 

[arossetti]

You need to do a cost + model to be competitive in the market you are working in. Which means you need to find you all-inclusive cost (not just direct). I would suggest starting here: www.costrateadvisors.com

 

[Milo Wilson]

Thank you.

 

[dabob]

Milo . . . its really hard for us out here in webbyland to give you any idea for hard pricing, for the following reasons, 1. Building costs vary vastly, here in the San Francisco Bay area rents are a bit higher than in bozeman montana . . . wages are different, an established printer may have enough room in their existing operation to just put a digital press in one corner of it and not increase his rent. . . . and on and on and on. It would help if you could give us an idea of where you are.

 

[gordo]

[snip]
Are there basic variables that you use to justify to a customer how much you have to price your print?

That's a scary sentence.

 

[Shawnd]

Milo, have you given thought as to what you will specialize in? Are you going to do books or wide format? What are you going to do to make yourself stand out from the existing competition? Once you figure out what you want to do then you can work on pricing.

Coming from the tech side of the business and going into sales I know what you are up against, it is a whole different world on this side of the fence. If it was me I would hire a consultant to help you get an MIS system setup and help with pricing so you can keep your doors open.

 

[Milo Wilson]

Milo . . . its really hard for us out here in webbyland to give you any idea for hard pricing, for the following reasons, 1. Building costs vary vastly, here in the San Francisco Bay area rents are a bit higher than in bozeman montana . . . wages are different, an established printer may have enough room in their existing operation to just put a digital press in one corner of it and not increase his rent. . . . and on and on and on. It would help if you could give us an idea of where you are.

Sorry about that. I was looking more for a general idea. With say a rent of 2000.00 per month It's just myself right now. We are still just getting off the ground. I'm located in the Arkansas/Missouri area. What are the basic considerations when pricing the print, i.e.. paper cost, rent, operator wages, electricity, etc.

 

[Milo Wilson]

Milo, have you given thought as to what you will specialize in? Are you going to do books or wide format? What are you going to do to make yourself stand out from the existing competition? Once you figure out what you want to do then you can work on pricing.

Coming from the tech side of the business and going into sales I know what you are up against, it is a whole different world on this side of the fence. If it was me I would hire a consultant to help you get an MIS system setup and help with pricing so you can keep your doors open.

I'm going to specialize in High volume and saddlestitch inline booklets. I want to provide the area with the same kind of production that the online printers do but without the wait time from sending it out of state.

 

[Craig]

Just starting out with 2 iGens.... The operating costs have to be painful. You should have done all this pricing BEFORE you started a business. You need a model in place to see if it will be successful.

 

[MailGuru]

Just starting out with 2 iGens.... The operating costs have to be painful. You should have done all this pricing BEFORE you started a business. You need a model in place to see if it will be successful.

I agree with Craig. running 2 iGens is a helluva nut to crack to get to your break even point. Not to mention, those are behemoth machines with special customized ventilation requirements. Also, not sure how your going to find a facility big enough to house those two machines, plus your bindery and admin office for only $2,000 per month rent.

 

[arossetti]

Just starting out with 2 iGens.... The operating costs have to be painful. You should have done all this pricing BEFORE you started a business. You need a model in place to see if it will be successful.

Agree with everything here but would like to counter that he probably got the machines for close to free since they are iGen3's. Don't get me wrong, I understand all the operating costs that go into actually running them however.

 

[MailGuru]

Milo Wilson: Since you were a Xerox tech, and, assuming you got the machines for next to nothing, I'm assuming you will be servicing the iGens yourself. I don't know how difficult it is to buy the toner and the other consumables outright, not sure how that works. What I'm driving at is: Will you be paying a per sheet color click charge? (it makes a big difference in your pricing structure)

 

[davarino]

Find out what your competition is charging. If you don't know that, all the budgeted hourly costing in the world will do you no good at all. (Because you won't know whether you are beating your competition on price or not. It's often not important to beat your competition on price, but if you are high market you had better be able to make it worthwhile for your customers to be choosing you instead of someone else.)

It's good to know your costs, but you have to know that your costs are GUESSES.

And then remember that the only sensible numerical relationship between costs and selling prices is that the selling prices should almost always be higher. (Which they won't be under many models: Does a copy shop make money off a single 10¢ copy? I don't believe it does. But it can drive good business in through the door.)

There are "irrational" factors, such as "what do my competitors charge?" These are REAL determinants of pricing: if your customer is scared away by your seemingly high price for a low quantity, whom will they go to for the 100,000 order? Not you. That's a fact.

It reduces to understanding the marketplace. And that's not a simple thing to do. Especially because you have to make money by losing money sometimes. Or by outsourcing instead of keeping your machinery busy.

But you CAN do it. Be intelligent, sell what makes you the most profit as much as you can. And don't bother yourself with formulas for pricing.

I can tell you from experience: once your competition "cracks your pricing code" and knows you're bidding, they just have to come in lower.

See, it's not just pricing. It's selling.

 

[craiglpress]

Good example of how to come up with pricing for digital using a cost plus markup model: http://costratesadvisor.com/images/example-HP-Indigo-cost-rates.jpg