Why are digital presses so expensive?

[lfelton]

OK, just for fun - why the heck are digital presses such daft money?

An igen4 would cost me about £350K (USD 600Kish?). A new 5-colour B2 from a good manufacturer would cost me a little over £400K (about USD 680Kish).

The press is 20+ tonnes of precision german or japanese engineering. The digital machine is a big photocopier made in China that goes wrong every few days.

We write off presses over 7 years and they have a useful life of 10+ years (in fact, as long a you care to maintain them really). We write off digital machines over 3-5 years and they are useless piles of toxic components at the end of this.

OK, the above is a bit tongue in cheek... but the point is that that we printers are being used as cash cows. Roll on a bit more manufacturer competition

 

[Mark]

Because they are scrap after we are done with them. (just take away the "s" while we are using them)

 

[Craig]

Because we keep paying for them!

 

[JaimeZ]

Yes, we as an industry have allowed Xerox, Canon, Kodak, HP and the rest to dictate how we purchase these toner based machines from the beginning and with click charges on top of the lease price. It's definitely a different mentality and business model.

As ink on paper printer it is hard to grasp that business model. We're used to buying our iron paying it off and keeping them for many more years after wards.

The toner based machines have such a short useful life cycle, so one gets the feeling that one has a permanent business partner in Xerox, Canon, Kodak, HP and the rest.

 

[Whygen]

Apparently (according to a fairly reliable source) a Xerox Igen 3 costs £40k wholesale to bring into the UK - xerox then charge it out at £210 - £340k dependent whether its a Igen 90 or 110 AND on who you are?? Ive also heard of Xerox offering to place an Igen into larger companies on a click only basis - not sure how that works?

Oh, and totally agree - considering their reliability, build quality and depreciation - they are vastly over priced...

 

[random]

Lets look at it this way.

Your supplier is not making any money off your click charges. Your click charges are probably based on 10-15% coverage how many of you do that? Probably none.

I have seen jobs where the supplier (xerox/canon/KM/ricoh im not stipulating who) has lost 30k on a job on toner alone.

Click charges are 1/10 of what they used to be yet the price for the box is probably been pretty static. For example rflores may be able to help me out here. What’s was the price of a DC4040 in comparison to a DC5000, much the same?

Production is an mugs game, infact it is insane. Everyone wants a piece but nobody makes money. Except you guys obviously.

If I wanted to compare a traditional press to a digital press I wouldn't be talking about cost. I would be talking about convenience, variability (is that a word) and print on demand.

Perhaps you could offer to pay a higher click price for a reduced box price?

 

[rathishvm1]

Digital Press volumes are not similar to sheetfed / web offset presses hence the price tends to be high. When volumes being sold pick up the companies will hopefully be happy with lower margins and prices will go down.

 

[lfelton]

@Random

"Your supplier is not making any money off your click charges. Your click charges are probably based on 10-15% coverage how many of you do that? Probably none."

Sorry, I can't let that one go, it's patently wrong!

Unless the manufacturers are deliberately hiring people who can't do math, they will know exactly what the average use is.

A quote from the Reuters article "Xerox Profit Rises on High-Margin Color Systems" (Jan 24 2008):-

"Moreover, it says that more than 70 percent of revenue is now recurring through lucrative long-term supply, financing and service deals to its commercial printing customers."

Another quote from the same article:-

"During the fourth quarter, revenue from color systems and services rose 14 percent and now represents 40 percent of Xerox's total sales. Gross profit for color printed pages is five times greater than from black and white."

link to article:- Xerox Profit Rises on High-Margin Color Systems - Earnings * US * News * Story - CNBC.com



"I have seen jobs where the supplier (xerox/canon/KM/ricoh im not stipulating who) has lost 30k on a job on toner alone."

Well, KM make their own toner, so unless their raw material is gold dust, it can't have been them

Seriously though - if that's true, there's certainly one manufacturer out there who can't do math.



"Click charges are 1/10 of what they used to be yet the price for the box is probably been pretty static. For example rflores may be able to help me out here. What’s was the price of a DC4040 in comparison to a DC5000, much the same?"

No, wrong. I used to have a copy shop and the click charge I was paying on a DC12 7 years ago was 2x the price I am currently paying on "production" machines.

As far as the prices go, both K-M and Xerox recently had list price increases on production kit. I don't believe that the prices for kit have decreased over the years, IMO only increased competition will do that.


"Production is an mugs game, infact it is insane. Everyone wants a piece but nobody makes money. Except you guys obviously."


Wrong again. Manufacturers want a piece because it's a huge growth area and extremely profitable. I'm probably not allowed to quote directly from the Caslon Western Europe Production Digital Printing Report (Sept 08), but they report 21.1 billion pages printed in colour in 07 and project approximately 100 billion by 2012. Your bosses at K-M are not stupid; that's why they are building dedicated production print sales & support organisations in Europe, they want a big slice of this.


"If I wanted to compare a traditional press to a digital press I wouldn't be talking about cost. I would be talking about convenience, variability (is that a word) and print on demand."

I think commercial printers pretty much understand the USPs of digital. My main point was that the profit margin manufacturers enjoy on some digital presses (capital and servicing) is mad (and I am deeply envious ).

 

[Internal_R&D_Analyst]

Most digital presses are made either in the USA, Israel, or in Japan. With proper maintenance a digital press can last a long time. The speed and dpi will be slower and less in time but if it fills the market/customer need they can still be useful. We have digital presses running that are well beyond the 3-5 year life such as older DocuTechs, DocuColors and indigo's, not HP indigio's original indigo's such as e-prints.

It is true that most digital presses have at most an 18 months of a competitive edge before something else comes out making that technology not the latest and greatest. But I challenge someone to find some cutting edge technology where this isn't the case as well.

As far as click charges the costs from all the major manufacturers are within fractions of cents between the production color devices once you grow volumes. If your volumes are growing consistently and significantly your costs will continue to drop but the manufacturers will always continue to make money, without that it would be 3-4 years between new improvements and releases.

Not all work done on digital presses has to be variable, yes this is a huge benefit which allows you to charge many times over per sheet when compared to offset. Markets with short runs and no variable data can at times be done more cost effectively done digitally through.

The digital press may cost a lot but it is nothing compared to a 840 perfecter which is $3,000,000 plus. Over 10 years that's $25,000 a month in depreciation, then you have a skilled operator and helper. On digital you can train someone and pay them 1/2 of what a large press operator makes and they can run multiple presses. Even for some of the higher priced units say $500,000 depreciated over 3 years it's $10,000 less at under $14,000.

The key is order to cash how many jobs can you complete and ship in a day? Being able to finish inline or nearline allows you to become more profitable. In the time it takes some jobs to dry that are printed offset several jobs can be finished and shipped when produced digitally.

Digital and offset are not competitive technologies, they are complementary.

 

[X33]

in big and bold from Internal_R&D_Analyst :

DIGITAL AND OFFSET ARE NOT COMPETITIVE TECHNOLOGIES, THEY ARE COMPLEMENTARY

there are jobs meant to be done in digital, some others in offset.

Saying that digital presses are expensive is relative. Let's say you spend $10,000 a month in a digital press (lease + clicks). Is it expensive? Compared to what?

what if the revenue from the jobs you do in digital are $50,000? does it still look expensive? can you imagine your profits?

I think this is more about your Business Model. How you make profitable jobs out of it? check this out : Pixi > Home ... click on winners.

 

[macman]

mgi

mgi

have you looked at the mgi dp60, i have seen these going, quality is great, toner based, prints on most stock, including plastics.
cost is arounf 170,000 i believe.
these are ideal for short runs and quick turn around

 

[Internal_R&D_Analyst]

Mgi

Mgi

I've heard more like $210,000 for the one to do paper only, and $260,000 to do paper or plastic. For 60 ppm I personally feel like there are some other options at least on the paper side that make more since.

 

[Island]

Your supplier is not making any money off your click charges. Your click charges are probably based on 10-15% coverage how many of you do that? Probably none.

I have seen jobs where the supplier (xerox/canon/KM/ricoh im not stipulating who) has lost 30k on a job on toner alone.

No matter how great the machine is, it seems the real art is being able to manufacturer toner at an affordable rate. If they're losing 30k they need to figure out how to manufacture the pigmented powder less expensively.