A Printer’s Profit: Demystifying the Myth
In a Print Buyers Online Quick Poll Survey last month, we asked major print buyers, “How much net profit do you believe the average printing company makes?” You might be surprised by the results. Of the 82 survey participants:
1% of print buyers said “Over 60% net profit”
29% of print buyers said “About 25% net profit”
49% of print buyers said “7-12% net profit”
21% of print buyers said “1-3% net profit”
As you may know, industry studies have consistently shown the average printer’s net profit is between 1-3%. (If your company is in double digits, congratulations; you are ahead of the game.) According to our survey, almost 80% of print buyers believe printers are making over 7% net profit. But what—or who—drives print buyers to believe this?
Here is a typical scenario: let’s say a print buyer receives two quotes for a project and chooses Company A. Company B calls the buyer and is informed Company A provided a better price. Company B immediately asks if they can match or lower the price. Because this happens so often in our industry, print buyers simply assume the cost difference comes out of the printer’s net profit.
Print buyers don’t realize that a printer will take on a project resulting in minimal net profit just to ensure the plant keeps running. After all, there are equipment costs, salaries and overhead expenses that must get paid. The printer is willing to take a very small return on investment, or not even break even, to ensure the company remains in operation.
Because print buyers assume printers are achieving much higher profit margins, they may attempt to negotiate in an inappropriate manner. This in turn generates more and more competitive prices in the industry and creates the impression that printing has no value. So what can be done to change this misconception and demystify this myth? Let’s hear your thoughts on this.