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CEO of Finishing Resources, Inc

The Finish Line

By Don Piontek

About Don

Don has worked in technical support, sales, engineering, and management during a career in both the commercial offset and digital finishing sectors. He is the North American representative for IBIS Bindery Systems, Ltd. of The United Kingdom.
 

Pricing Your Finishing Systems Correctly

 

A press, whether offset or digital, is the beating heart of a printing firm. Without a press, you're not a printer. Finishing systems, on the other hand, vary widely as to their necessity for the operation.

Finishing machinery varies widely in build quality and the ability to handle different work loads. The folks who build all of this stuff are constantly coming up with new and innovative gear. After the engineering is done, and the machinery is ready to ship to the customer, their final dilemma is setting the price that fits the market.

Back in the day (in the 90's), runs were still very long, and finishing systems, such as perfect binders and saddle-stitchers were built for speed, and to hold up to continuous 24/7 operation. The productive life of these machines could easily exceed 10 years or more. Now, the long runs have (mostly) disappeared, and the order of the day is shorter runs and format flexibility.

No one really expects their machinery to last 10 years because of changing industry demands and the steady stream of new technologies. These are now introduced every few months, instead of years. Make no mistake, there is a "correct" price for every machine out there, and it pays to do your research when determining the market price. Here are some of my thoughts:

  1. ROI: The days of five year return-on-investment paybacks are history. No one even knows what the print industry is going to look like in five years. One to two years is the maximum, and under a year is the best. The shorter the ROI, the more pricing leverage you have.
  2. Technology: Does your machinery bring some unique technology with it? If so, you're in a good pricing position against your competitors. That is, until they catch up with you (which they will).
  3. Labor: This is the big one, and it really helps you make the sale while maintaining your price. If your machine can increase throughput while reducing labor input at the same time, you're in a very good position.
  4. Build Quality: Although lots of folks assume that manufacturing build quality is equal across machine segments, that's not true. There are significant differences in quality between manufacturers addressing different finishing environments.

    The top-end manufacturers are rightly proud of their reputation for assembling heavy-iron precision machines. This does not mean they can ask twice the price of their lesser competitors. As I mentioned, not everyone is expecting the equipment to plug along for 10 years or more.

    But you can (and should) ask a price premium if your system is expected to perform flawlessly in a 24/7 production environment. Experienced finishing people can spot construction quality in a heartbeat, and many sales have been lost because proposed finishing machinery simply didn't "measure up" in the eyes of the purchaser's bindery staff.
  5. Where Is Your Competition?
    Lots of people think it's great to underprice their competitors. Maybe. If you feel strongly that your system is superior in construction, features, and productivity, then don't be afraid to ask for a premium. Just don't go overboard with it!
  6. Where's The Market?
    There is usually a market price range for systems of similar systems. You're not obligated to follow it to the letter, but it's there for a reason.

And finally...

Is Your System A leading Actor, or a Bit Player?

Is the work your machine will do a major part of the finishing operation, or a sub-specialty? If the process is only 5 percent or less of the printer's business, it becomes very difficult to justify a half-million dollar system purchase for most firms with annual print sales of $30 million or less, no matter how well it performs.

That's why presses command the prices they do, since all downstream processes flow from them. Setting the "right" price for your finishing system is not about guesswork. You need to analyze many data points to arrive at it. Good luck!

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