After a few weeks of running the promotion for 10 Cent Color, we’ve decided to kill it. It’s too much of a distraction to what we are doing, trying to sell a premium product price on one side of the fence, and a loss-leader on the other side. The bottom feeders that have come to that site end up needing more hand-holding than the customers who visit Printelope. They are also more likely to complain about something, in an effort to get an even better price than what they just paid. And if you can believe it, there is someone out there selling 9 cent color prints, a penny cheaper than us.
Of the work we did do, it was profitable, but at a much lower profit margin than our other products. The 10 cent color product was designed as a loss leader to bring in customers for our other products, but they did not migrate to those products – they focused on the one cheap product we had, and nothing else. Our primary customers were print brokers and realtors. Who needed more hand-holding? It was the print brokers. Who, incidentally, did not adjust their prices to their customer to reflect a lower cost. They continued to charge their full price but ate away at our remaining margin through file fixing and output issues.
So, after a very short discussion at our marketing meeting, we pulled the plug. And smiled about it. Anyone want to buy the domain name?
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{ 3 comments }
Who woulda’ thunk that print brokers would be so needy and greedy? The same goes for managed print procurement – those bastards are trying to commoditize all forms of print while doing the same “excellent” job of pre-flighting the files and providing clear specifications. When I HAVE to work with them, my pre-press rates double so I never hear from them again! I think that savvy customers know that they just add cost and confusion to the job…
Why am I overjoyed that 10 cent color is over? With bottom line, beat any price, commodotize the heck out of it mentality, I already find myself trying to justify a margin on digital gear against the big X who will through in clicks, drop the price and even worse – no credit? No problem!
You wouldn’t think that a press salesman would care much about some printer offering 10 cent clicks, but when you are having the “adopting digital” conversation with 80% of your prospects, those who remained on the fence in regard to buying digital did so, in some cases, because they can buy out a click cheaper than doing it themselves.
Do the math. Let’s say the average monthly payment on a new piece of gear (Canon, Konica Minolta, Xerox, your choice) was a nice round $1,500. After aggressively negotiating, a high volume printer might commit to 100,000 clicks (that’s high volume these days) and proudly sleep at night because that commitment got them a $0.05 click even if they print 2-up. Now figure out the true fixed click cost in that scenario ($1,500 spread over 100K clicks is another 1.5 cents, plus 5 and another 2 for overhead/labor you get a grand total of 8.5 cents).
As soon as that customer drops in volume, has a bad month, has to re-run a job (it does happen and guess who eats that cost)or goes down for a major issue and has to outsource work – you get the idea. Why take all the risk in a perfect world if you are paying 8.5 cents and for 1.5 more could get rid of the entire headache?
Notice I am not talking about selling cost. Profitable variable data work might sell for 40 cents a sheet so no one is suggesting you walk away from the work, but a smart printer with good prepress skills can do all the VDP work up front and still provide a 200 or 2,000 page pdf (VDP in there) to the same printer and get the 10 cent price. He doesn’t care what you give him as long as he just hits print and in some cases the smartly prepared VDP job runs better than the 2,000 separate “copies” of 2,000 different files.
Bottom line – The minute you put a “one size fits all” price on everything from garbage quality up through carefully prepared high-end profiled, VDP rich work, you murder the value proposition that better and more intelligent “content” can achieve a higher profit margin. At 10 cents the LED imaging units don’t care where the dot goes or how much work went into designing it.
Jason,
as i agree with you on most of your points, i think the initial thought process was solid. these guys set out to look for more productivity for their press, but unfortunately found nothing but problems from scavengers. i personally think the program should run that you send your file via email and have the work sent out to you everything is cherry. although where problems arise is that many wanted a personal touch which i don’t think the site was meant for. now getting to your price analysis if you spend .18 (click .08, overhead .05, .02 labor, .03 paper) and sell for .40 i think this makes perfect sense. maybe i did not understand your stance on this, but let me know if you think i am in the wrong. cheers, kristian.
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