Skating on thin ice

[Sophie Matthews-Paul]

It’s tempting to try to win business on price alone and never has this been more apparent than in the current economic climate where everyone is after a bargain and, in many sectors, there’s not as much work around as there was this time twelve months ago. Not everyone’s doing it, but stories continue to filter through about amazingly low costs for jobs which, formerly, would have commanded a premium rate.

Producing wide-format digital print isn’t just about churning out miles and miles of ink onto a selection of materials using a variety of machines. There are many other elements which need to be factored in, some of them obvious and others involving variables which are more difficult to quantify. Like every commercial venture, the display producer is in business to make a profit and to earn a living for all employees, often being answerable to a board of directors and, in many cases, a bank or other financial institution.

Some canny buyers and agencies, however, are discovering that it’s easy these days to phone round several print providers and this can end up like a Dutch auction with the order going to the lowest bidder. Whilst these folk might take pride in beating our industry down to a price which virtually removes all profit margin what, perhaps, they don’t realise is that continuing to treat tenders in such a way will result in a false value ultimately being placed on the work which display producers provide. If all goes smoothly with no hitches along the line, it might be possible to output an order without any loss to the company involved. But it only takes one hiccup for this job to turn into a loss.

It’s not just a case of factoring in ink, material, machine time and power. Of great value are the resources used, such as manpower, skills at the design and RIP end, finishing, packing and delivery — not to mention the administration and paperwork associated with every order. Then there are premises to maintain to make sure they fall within the confines drawn up by the health and safety brigade, there is the requirement for power, heat and light and there’s the value of the equipment and the cost of the premises in which all these operations take place.

The problem arises when end customers become accustomed to paying a lower price than in former, more buoyant times. They are often under the illusion that, if a print provider can output a job once at a ridiculously low rate, he can work to these levels all the time — and we all know this isn’t true. Everyone likes a bargain but cheap usually equates with compromise; unless a product is grossly over-priced in the first instance, low prices cannot be maintained when they sit well beneath the true value of the goods involved.

Speaking to print companies spread across the industry in different parts of the country, there isn’t one which hasn’t told me of the fear of margin cuts. Few will admit to taking part in price wars and those who do just to keep their machines running live in dread of having to reprint a job or in spending too long at the origination or finishing stages.

If only every print service provider refused to drop below a certain price then everyone would be able to work to sensible margins. The end buyers would soon realise that a quality product is worth paying for and that, in turn, would mean that display producers would be able to invest in newer equipment to add greater improvements and overall better value for money. But, whilst these cost cutting exercises continue, there’s the danger that some businesses just won’t be able to make enough revenue to keep going — it’s a sobering thought.

[Rainer Schloesser]

Sophie, very good summary of the situation from a end-user, printer point of view. And it goes on... What does a printer ower do when they have to go down in price? They are looking where to cut cost. So they might look for cheaper material. Cheaper material might mean (a) lower grade material, (b) less durable material or (c) new/unknow source / brand. In whatever way, they will most probably increase the risk of screwing up the job and getting into the non-profit zone. The contrary should be done - but we all understand how high the pressure is.