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By: Nick Howard | Date: June 2010 | Contact the Author
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Seventy-nine years ago, Canada’s flagship
printing magazine, The Printing Review,
included a feature article outlining why a
printer – in 1931 – would be making “the
mistake of their life” by reducing prices to
appease the buyer’s market. The article, entitled
Printers Cannot Afford to Cut Prices,
explains, that not so long ago, a printing
company could reduce pricing to secure a
job with the intention of making up the difference
on the next job – “but these other
ones are few and far between to-day, and
the wise printer knows it.”
The June 1931 article continues: “The
price for printing is something that cannot
be successfully tampered with. If a buyer
suggests that a printer must lower his price
to secure an order, the following questions
should be considered first:
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Has the price of paper been lowered?
Has the price of ink been lowered?
Has the price of photo-engravings and
electrotypes been lowered?
Has the price of trade composition been
lowered?
Have wage scales been lowered?
Has the rent been lowered?
Has the rate of depreciation been
lowered?
Has the overhead been lowered?
Has the cost of power, telephone, etc.,
been lowered?
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The Printing Review writer answers his
own list of questions with a vigorous
“NO!” – all-caps and exclamation mark
included – then emphasizes his point suggesting
that the only true reduction that a
printer can make is to their profit: “The
man who knows his costs and knows the
margin of profit he is operating on, soon
realizes that he cannot afford to cut his
price.”
The writer then backs up the argument
by referencing an article by Robert Maxton,
from The Business Printer, who outlines the
pricing pressures on your typical 1930s
printer, emerging from a major worldwide
economic meltdown. Maxton writes that
about 40 percent of what the printer takes
in for his product goes to pay for the purchase
of paper, ink and trade work
(bindery, composition, engraving, etc.),
while another 30 percent goes to pay overhead
costs like salaries, rent and taxes.
“If he is extremely lucky, there will remain
about six cents out of the dollar as a
net profit, which he can call his own,” writes
Maxton, about the 1930s printer. “In fact,
nearly one-fifth of the printers have lost
money in their plants and are slipping behind
just a little bit each year. Not a pretty
picture of things as they are, but they are
vastly better than they were 20 years ago,
when very few printing plants were making
any money out of printing.”
The search for margin, which, according
to these articles, seems to have been printing’s
Holy Grail for nearly a century now,
will always be a major challenge
for the industry. As such, printers
in Canada need to adopt a new
mantra solely focused on the ability
to lower the cost of manufacturing
print.
You might, in fact, be surprised to
learn how some (certainly not all) of
your rock-bottom-price competitors
are actually making money, and not
just turning their press cylinders, for
turning’s sake. Some companies have
already changed their tune, from worrying
only about price, and did so predominantly
by investing in modern
instruments of automation.
Out of the old
Nearly a decade before television was
even known to the public, and some 50
years before the arrival of the World
Wide Web, the printing industry at large
felt hard done by the pricing pressures
placed upon it by the marketplace.
Reading through this old printing
article, I found it fascinating how congruent
today’s printing mindset is with
the mindset of yesteryear. Certainly,
today’s printing companies and their analogue
product face even greater challenges,
as new forms of on-screen
communications seem to emerge from
every possible form of device.
When I listen to members of our industry
today, many still recite the same 1930s
mantra of downward pressures on pricing,
seemingly unfair competition with wild
and crazy prices that do not seem to make
any sense. And while they are most certainly
correct in citing such challenges, there is
also some solace to be gained from understanding
that the printing industry has always
persevered under such pressures.
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