No to ‘Value-Added’ Plans –Farquharson/Tedesco
“A bound-in reply form would allow subscribers to take action either when they first open the package OR at anytime in the future. Onserts usually get thrown away unless they’re used right when the package is opened the first time. Are you sure you want to do this?”
JOE: “Instead of expensive plastic spiral and laminating, how about double-loop wire and UV coating instead?”
JANE: “Substituting double-loop wire is a fine option. An advantage of double loop is that there is no ’step-up’ as pages are turned. However, double-loop wire, if crushed, becomes useless whereas you can stomp on plastic spiral binding elements and they spring right back to form. It’s your choice; we have automated manufacturing resources for either plastic spiral or double-loop wire. Regarding UV, yes it is a lower cost option than laminating. I can talk you through the benefits of each and help you make the right decision that’s best for your needs.”
Get the point? Because Jane's not tied to a restrictive, value-added sales comp plan, she is properly incentivized (i.e., free) to work the job to her customer's best needs. Joe, a slave to his value-added comp plan, will work to shoehorn the job into his employer's plant, regardless of whether or not it's in his prospect's best interests.
A Peek into the Numbers
Let’s consider the $100k miniature folding job referenced above. In this case, $10,000 of printing should generate about $1,000 of net profit. For the outsourced $90,000 portion, a 20 percent markup will generate $18,000 of incremental income, of which we can easily assume at least 50 percent will be left over in contribution margin after appropriate management and admin costs are deducted. This leaves at least $9,000 additional profit, which is significantly greater than the $1,000 generated from internal operations. Better yet, this printing company still has a lot of capacity to produce core business.
Bill Farquharson is a sales trainer for the graphic arts. Email him at Bill@AspireFor.com or call (781) 934-7036. Bill’s two books, The 25 Best Print Sales Tips Ever and Who’s Making Money at Digital/Inkjet Printing…and How? as well as information on his new subscription-based website, The Sales Vault are available at BillFarquharson.com.