After reading the article in ProPrint on the intersection of volume and profit and seeing that out of the four categories the perfect one is low volume and high profit I felt compelled to put pen to paper.
Western Graphics opened its doors in 1979 and throughout the journey of the 80s and 90s and into the new millennium we ran the company on exactly that strategy of low volume and high profit. We charged back the $200 makeready and $200 per hour on our A2 multicolour press, with a 10 per cent markup on paper, and this combination delivered a 20 per cent overall profit on the bottom line.
We competed in the A2 market against a lot of high profile printers who all charged similar levels, and we won work. However all those printers from those days have now gone, and now we are competing against printers operating on the high volume low margin model, and quite a few of these have gone as well.
[Related: Embracing change in business]
Starting a printing business is no easy ask. For instance if an accountant started a business he would only need a few thousand dollars and little in the way of overhead. He would possibly charge around $120 per hour. A printing company to start up would need hundreds of thousands of dollars, a lot of overhead and would only charge the same hourly rate. We also give credit for 30 or 60 days where a bank charges for credit, if indeed it even gives it. But the way the industry is at the moment the cake is getting smaller so then we are reducing our prices to grab as big a slice of the cake as we can.
But unfortunately those printing companies that go under are often owing money to the small family print companies who are supplying them, which means they struggle to stay in business, and we have all seen the knock on effects of the major collapses in recent times, companies like Focus and Paragon had myriad smaller printers and trade houses to whom they owed not insubstantial amounts of money.
The way I see the industry now it will struggle under the old models as general commercial print is predicted to show little if anything in the way of growth, and as it becomes more competitive, with printers competing on price, and with new digital media like the internet taking the place of print in some cases – who buys a street directory any more. Printers will need to think of new ways to earn a dollar, simply putting ink on a sheet paper and folding it won’t cut it in the modern era.
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