First of all, there’s no right or wrong way to mark up your print. Every business has their own requirements. After all, when outsourcing is a vital part of your business model your prices will have a direct impact on the business. Yet there are a few things you should consider when pricing your products to get the most out of outsourcing and achieve the best margins you can.
1) The Value of The Job
Working to a flat markup is commonplace practice, but it could be losing your business work. Print work becomes increasingly price sensitive the larger the jobs become, so applying this flat rate markup could literally price you out of the market. For example, you may be able to apply a 30% mark up to 250 A5 Flyers, but if your client wants 5,000 suddenly that 30% markup is going to price you out of the race. Consider how larger commercial printers price their print on a larger scale, the larger the run the cheaper is it.
For example, with a smaller run, a 30% markup of outsourced print keeps your pricing sharp in the market.
250 A5 Flyers 150gsm Silk
• Route 1 Print Cost = £18.50
• 30% markup = £5.55
• Selling price = £24.05
• Online price by leading online printer = £24.43
However, when you compare this to a larger run of the same product, the same 30% markup makes you far more expensive than the online retailer.
5000 A5 Flyers 150gsm Silk
o Route 1 Print Cost = £45.94
o 30% Mark Up = 13.78
o Selling Price = £59.72
o Price by leading online retailer = £50.99
Although offline retailers should be able to greater prices than online as they are providing a personalised service, this is something to take into consideration in terms of pricing quantities of the same product.
2) The Time Involved in Outsourcing the Job
Pure print brokers place most of their outgoing costs in the time it takes to procure the print. In the example we used above, it could be argued that the time it takes to outsource the job would be identical. This brings around the question of whether it is right to bill more for a longer run when it took the same time to source.
Of course, there are arguments to counteract this (it costs us more to buy or we can’t make money if we charge less for more products etc.) however this does shed light on how you consider margins. Rather than looking at margin as a flat markup, consider how much money you need to add onto a larger job vs the time involved in procuring the print.
A higher markup could be added onto a campaign where you would have to contact different suppliers, bring in a designer and help them build an arsenal of products from scratch. Your time is valuable and most businesses recognise that time and effort is something which is considered with price, especially if they are receiving a comprehensive service covering multiple bases.
3) The Risk Involved to You
A major consideration for print brokers is the risk involved in outsourcing a job. Imagine if you outsource work that costs £100 for you to buy and then that job goes wrong. If your printer won’t rectify the issue then you are going to have to incur that cost. Suddenly a £30 margin has turned into a £70 loss.
Many print resellers will factor this into their prices and ensure that they have enough insurance built in to their sales to cover for these unfortunate circumstances. But no matter how appealing your print supplier’s prices are, if they keep messing your jobs up this is going to harm your business. Excellent sales and customer service are now your greatest assets, so being let down by your supplier will mean you cannot deliver on these promises.
It also goes without saying that the more reliable your supplier is, the less you need to factor risk into your jobs. If you are finding yourself consistently let down by your supplier, it could be time for a change. Risk is minimalised and your margins are stabilised!
4) The Risk Involved For Your Customer
Just as risk is an important consideration for you, so is it for your customer. Why do people pay more for a higher-ticket item such as a Washing Machine from say, John Lewis, whilst they will happily buy their washing powder from a discount store? They know a washing machine is a higher-risk item and therefore are willing to pay more to lower the risk of bad quality or longevity.
Smaller, standard jobs with low costs such as flyers carry far less risk for your customers than larger jobs like Booklets or Exhibition Stands. In cases like this, your client may be less inclined to simply go for the cheapest option or purchase online since the cost is higher and in their eyes, more is likely to go wrong. We’ve even had print buyers confess to us that they have opted for significantly more expensive suppliers in the past because they deemed the risks too big!
This ultimately means higher risk jobs can command a slightly higher margins. As long as you can ensure you can deliver, factor this into your markups.
5) Consider the Lifetime Value of a Customer
Is this order likely to be a one-off or a regular occurrence? If it’s a one off, you’ll probably want to maximise your profit from this job. If it has the potential to be a long-term relationship, you may want to accept a lower margin now and consider the potential long-term value of the client.
At Route 1 Print, we look a lot at the lifetime value of our customers when we consider prices. This is why we can charge a lot less to our trade customers despite having to spend more on marketing to acquire them. Trade customers rely on us as partners who they use time and time again, therefore we offer lower prices to help them make more margin and maintain a loyal relationship.
For example, selling 6 jobs to a customer with a 20% markup is better than selling 1 job at a 30% markup then the customer goes elsewhere as they feel they can get a better price. Gage the buying potential of the customer by asking about their campaign and business and see if they regularly buy print.
Although it is important not to devalue your service to the point where your business model is unsustainable, thinking about short term gains may hinder your business in the long term.
Keeping competitively priced in a saturated market is a growing concern for print resellers. Bearing in mind these considerations will help your prices remain attractive and still be profitable. Ultimately, flexibility over margins and placing value on your time will help keep your prices sharp while ensuring your business isn’t undervalued.