Posts Tagged ‘Supply & Demand’

Why God Made Economists

Tuesday, May 5th, 2009

 Question: If I order a reprint will the price be the same?

This came up recently when a customer realized that the address on her business stationery was out of date. You’d think a question like this would require a simple yes or no. You might think that, but you could be wrong. There are several variables that would affect the reprint bid, here’s some things to consider:

  • The price might actually be less!

If the job was completed recently enough that the factors going into the bid hadn’t changed, your price could be less. Printing bids consist of two parts, fixed costs and variable costs. The fixed costs include prep work, press make-ready, overhead, and such. Every printing  job needs some amount of pre-press preparation to get the files ready to plate. If your job is an exact reprint, with emphasis on the word “exact,” a reprint could cut out some, if not all of the pre-press work, thus saving the printer and you money.

  • What if I want some minor type change?

A minor change probably won’t cost as much as a major change, but unless your printer is willing to throw it in for free there should be a charge.

  • How long ago was the job printed?

If it was last printed two or three years ago, they may no longer have the files and will have to start over. I work with a graphic designer who had purged her files on a five year old project. Without warning, her customer came back after five years and expected a reprint. I was called, and happily, I keep my records for seven years. To be perfectly clear we are talking about my job files, not customer art files. But because I was able to provide the specifications from the previous printing we were able to accommodate their request by recreating the original art. We did have to choose a new vendor because the previous one was no longer making that particular product. A lot changes in five years, you know.

  • What about paper cost increases?

Paper and other supplies are not static. When paper, ink, plates, or other materials increase those increases must be passed along at some point. What makes commodities go up? Supply and demand is the easiest answer but not the most complete. There are a whole host of reasons that affect pricing and that’s why god made economists. Let’s just say that if paper takes a 6% bump (which is not unusual), you will see it in your bid.

  • What else could increase cost?

Every business faces increases in operating expense. Good employees need to be rewarded with pay raises. Equipment breaks down and must be repaired or replaced. Insurance, taxes, and licence fees go up.

  • The printer bid it wrong last time.

Printing is custom manufacturing. Every job the printer does is a custom job. When estimating a project the printer has to take into consideration the costs of materials, time, labor, overhead, and profit. With all these variables in play it is easy to make a mistake. When there is an error in the bid, the printer is often made to hold to the original bid price. Most printers, if the difference isn’t too onerous, are willing for the sake of goodwill.  If you don’t know this by now you should know that printers as a group are very helpful and understanding. I’ve seen them go much further than they should to please a customer. If you feel you are being treated unfairly by a printer, step back and ask yourself if that is really true. Maybe the fault is somewhere in the middle. And perhaps, perish the thought, the blame is more yours than theirs. The bottom line is that if the job was mis-bid last time, for whatever reason, you can’t really expect the same price on a reprint–can you?

  • Did the printer have an advantage?

Maybe the printer bought some paper on a closeout discount, or ordered enough “house” stock to get a price advantage. Maybe an ink company made an offer that couldn’t be refused. There could be a thousand different reasons for the printer to have a better price one time and one not as good at another. Printing is a VERY competitive business. If you don’t take every opportunity to best the competition with wise buying you’ll lose. So if you see a reprint bid that is 30% higher than the previous one, it could be that they don’t have that advantage any more.

I’m sure I’ve missed some reasons in this list, and if anyone would like to add to it just let us all know by adding your comment.

Steer into the Slide

Wednesday, February 18th, 2009

What is the first rule of economics? Supply and demand. The economic slowdown (I hate to say crash, I’ll leave that to the historians to decide) has affected printers, big time. Printers all over the country are shinning their spotlights, searching for hope, any hope, that this will soon be over. There are rumors of printers giving up, quitting, closing their doors, and walking away. There is gossip spreading about presses being repossessed.

Prices are being reduced to entice people to print, and often those bids are so low  there isn’t any profit. It is reasoned that it is better to keep, or get, the press running than to make payments on a piece of iron that is generating Nada, zilch, bupkis. We have an overabundance of supply and a sharply reduced demand. It’s good for the buyer, but is a killer for the printer.

hoarding assets

It makes sense. When companies are in the midst of trying to figure out how to weather the storm, they  hoard their assets. What’s more important after all, printing a new brochure, or keeping your core employees, so that when the situation improves you still have a company left? Tough decisions.

steer into the slide

Everyone in advertising and marketing is shouting as loudly as they can that it pays to advertise during a recession. Companies, they say, who keep their names in front of the public come out of recessions even stronger. That does make sense, logically that is. It is exactly what you are taught  in driver’s education, if you find that the car (the economy) is sliding, steer your car into the slide. Our natural  instinct tells us otherwise, but steering into the slide is the only way to stop it, other than wrecking it.

The problem with recessions is that they are fear based. Emotions trump logic in this case. You’ve all heard the stories of people using worthless stock certificates to paper their walls and discovered decades later that the worthless stock was now a goldmine.  How many potential millionaires tossed away their stock fortunes because of emotions?

feeding emotion

The downward slide we are in, is fed by emotion. Who would buy a new car when they don’t know if they will keep their jobs? Or if they keep their job will they have to agree to pay cuts? Who will buy a new home, go out to a nice restaurant, or invest in a struggling company?

high hopes and low expectations

I have high hopes and low expectations of the new American president. May his infectious smile reassure us that we can pull out of this nose dive. May we learn to sneer at the doomsayers, and laugh in the face of negative press. I’m doing what I can. I’m spreading the word to a larger audience about Bill Ruesch Print Broker, and hoping to infuse my company with new customers. In the meantime, we’ve cut our expenses to the bone, hedged our retirment money, and are doing our best to remember to steer into the slide.

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