Why Printing Companies Struggle to Make the Same Margins as Print Brokers

Would you like a 50 percent profit margin?
I met a print broker the other day who claimed that he wouldn’t bother dealing with a job unless he made a minimum of 50 percent markup. He would actually turn away work the only made 49 percent markup.

This may be an unusually high profit margin, but the fact remains that brokers are making healthy margins from print jobs. I see few print brokers that are charging any less than a 15 percent markup.

Why can’t printing companies make similar margins?
Printing companies can reach out to similar customers. They are selling the same products. In many cases, they are also selling the same services.

So why do printing companies seem to be pushed so hard on price when brokers are making good profits?

Maybe it’s all in the sales message
I once worked with a company to create a personalized voucher book. They gave me a huge amount of valuable advice. This advice improved the results of the project and made the printed item far more valuable. In effect, the printing company was acting as a consultant.

There was one thing that struck me at the end of the project.

The printing company never sold their value to me
They had made their pitch all about economic production. What they were doing was selling price. They assumed that price was all I was interested in.

If they had shown what they could bring to the project in their sales pitch, they could easily have added quite a few percent on the price. However, all they did was to focus me on price.

There’s another tactic they could have used.

The printing company should have focused on the client’s world
These days, most buyers aren’t that interested in print. They are interested in the results that print can bring to their companies. There is a big difference between the two.

Categories:
Many printing companies are frustrated how hard it is to engage buyers in today’s world. That’s where Matthew Parker can help. He is a gamekeeper turned poacher. Parker has bought print for more than 20 years and received over 1,400 print sales pitches. He now uses his buyer’s point of view to give practical advice to printers. He helps them engage with prospects and customers to create profitable relationships.

Download his free e-book, “Ten Common Print Selling Errors And What To Do About Them
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Comments
  • Web Printer

    I rarely see brokers offering any true value to the client other than "cheapest price", misrepresentation and restrictions on information flow, though there are some reputably brokerages out there offering additional services with lower mark-ups. You can tell pretty quickly which is which. If they’ll let you talk to their clients directly, you know their relationship is valid, honest and valuable to both parties.
    The real message should be sent to buyers to make sure they’re actually dealing direct which will always yield the best price and work flow. The first clue is usually in the domain of the email address!

  • Dave Schrup

    Matthew, there is a big difference between markup & margin. Our shop averages margins in the mid 50% bracket. If I were to markup jobs at 50% my margins would only be 33%, which means after factoring in cost of doing business I would be lucky to have a net profit at the end of the year. Most print brokers I encounter operate at a lower margin due to lack of overhead. I can sell a job for $5000 and net $2500 while a lot of brokers would offer the same job for $3500 and be happy with a net of $1000.How can I sell at the higher price? Because I provide more than just that print order. Value is in the eye of the consumer. Perceived value based on price, backed up by an established and credible track record always leads to a more profitable and long term relationship. Why do people pay more at Nordstroms for the same pair of jeans they can get a lower price elsewhere? The perceived value and mystic of Nordstroms makes the buying decision easier.

  • BobfromCA

    I am a print broker and graphic designer. I used to mark up jobs 100% years ago. If I had to reprint a job it didn’t cost anything but my lost profit. Now my average markup is 40% – 65% on smaller jobs (under $300) and 30% or so on larger jobs. If my client is unhappy with the print job, I reprint the job. If it was something the printer did wrong, the printer eats the job. Otherwise I eat the job. I just had to eat a job – remittance envelopes that had a photo that printed over the seam of the envelope causing a slight line through the photo. It was not the printers fault – he printed what I gave him. I didn’t think it looked that bad but redid the job at my expense to keep the customer happy. I need a decent mark-up to help offset my liability. Also as a broker, I interact with my client, prepare the artwork or at least preflight their files, which frees the printer from client interaction so they can spend their time printing. Many printers do not want to hold the client’s hand or spend time explaining all the options to the client. That is what I am getting paid to do. So I work with trade printers that understand this and that know that if they can offer competitive prices and do not have to spend time dealing with clients, then it becomes a win-win situation.

  • TXD International

    nice piece, thank you for the article.