‘Printers Continue to Dig Their Own Graves’ —Michelson

Tim Rolfsen, president of Vista Graphic Communications.

THAT WAS the subject line of an insightful e-mail I received recently from Tim Rolfsen, president of Indianapolis-based Vista Graphic Communications. Rolfsen felt the need to vent about the ridiculously low prices that printers often charge just to get the sale. “There seems to be a new formula for determining the price of a job: material cost times (x) two. Regardless of the effort that goes into producing jobs—whether it’s several signatures that need to print, fold and stitch, or complex diecutting and hand work—printers seems to think that living with 50 percent or less value-add is acceptable,” he wrote.

“Please remind my colleagues that variable expenses such as labor, electricity, maintenance, commissions and the like fall below the value-add line on the income statement. As the complexity of a job increases, so do those variable expenses, until that trivial value-add is eaten up—sometimes before it even makes it to contribution, let alone gross or net profit.”

Rolfsen went on to point out how printers are in a complex business with a lot of exposure (read: risk) if they don’t do jobs correctly. That in itself warrants a reasonable return on investment and equity, he maintained, noting how many shops are now frantically changing their business models to include services like mailing, kitting, fulfillment, converting, etc. These require big investments in people who are experts at what they do, and the equipment, software and procedures to ensure things are done correctly. Yet, even these services are often given away to secure the print [business]. “Hello—it’s the other services that are going to make you the most money, not ink on paper,” he stressed.

Launched 25 years ago as a small laminating shop that eventually migrated into UV coating, folding carton converting, high-end finishing, and kitting/assembly and fulfillment, Vista had spent a long time observing which services made money for printers, and which didn’t, before launching its own pressroom a few years back. 
In conjunction with purchasing the assets of Centennial Press—a local mail house and digital printing operation—today Vista operates a 44˝, six-color Komori sheetfed press with coater; a half-size, six-color Heidelberg 4/2 perfector with coater; as well as a Canon 7000 imageRUNNER color digital press with in-line finishing and three Konica bizhubs. Its in-house bindery houses folding, stitching, cutting, creasing and mailing equipment.

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  • http://AndrewGriffin Andrew Griffin


    You are right on in your comments and concerns here and for the rest of the pack – it is best to listen up…

    “Cylinders turning on no profit” breeds only one thing for you and I, Tim – Less competition, thus more work, in the future.

    Hang in there and keep doing what you are doing. Yes, it is truly frustrating now, as business owners lose all sense of business finance out of pure desperation, but hold steady the ship and you will be around to perhaps see a better day…

    Thanks for the article and for taking a stand.

  • http://TimRolfsen Tim Rolfsen

    A key point that for space purposes was not included in my comments is that by selling at irrationally low prices the business owner reduces the future value of his/her enterprise. I like many other business owners plan on selling my business some day, but to receive a good price I must show the ability to generate profit and cash, the two key measuring sticks in valuing a business. Top line sales means little to a buyer that uses an EBITDA or cash flow model to value a business. You must show that your accounts are capable of producing enough cash to pay for the acquisition, let alone create additional cash flow.