By Paul Fridrich, IRgA President
We have billed for our prints on a square-foot basis for generations, but I believe the time has come for us to do away with that tradition. Why? Because that old method no longer fits our industry, and continuing to bill that way is only hurting us.
I propose that the IRgA consider a new model of pricing that more accurately represents the labor and talent that goes into our products.
What’s Wrong With the Old Way?
Here are three reasons square-foot pricing no longer works for the reprographics industry:
1) Our services are not commodities, but pricing by the square foot makes them seem that they are. Just like price-per-barrel in the oil industry and per-bushel in the agricultural commodities trade, price-per-square-foot for document services makes it seem like our products are entirely interchangeable with any other provider. That’s not true, and we shouldn’t let our customers think that it is.
2) Many of our customers these days are asking for half-size prints, and we are charging them per-square-foot for those, even though the work to create those prints is exactly the same as full size prints. If we adopt the model described below, we will be able to more accurately charge for prints based on the labor involved, not just the paper consumed.
3) We all print a lot less hard copy than we did in the past – jobs that once required 100 sets now require 5 sets, for example -- but we are often providing the same high-volume discounts we did in the past. A different pricing model could address that.
Let’s change the old way of pricing before it morphs into color CAD printing and other important new business segments.
The New Proposed Model
The new model more accurately charges customers for the value we provide. It consists of several elements:
1) We stop charging by the square foot and instead charge by standard sheet sizes. If a document falls between sheet sizes, we charge for the next larger size. Why is this better? It removes the focus from the paper consumed and more accurately places it on the final product. Furthermore, odd size jobs will result in slightly more revenue, since they will bump up to the next largest size. Finally, charging by the sheet makes billing easier – imagine how much more quickly and accurately you can determine the price of 50 copies of odd size sheets if you can just bump each sheet to the next standard size rather than calculate square footage.
2) We charge for all of the services and extras that accompany a print job. Those services add value to the project, thus we deserve to be compensated for them. Several years ago IRgA developed a digital services chart that includes 77 services (yes, 77!) that can be charged for (click here to see the chart), but it was not widely adopted. If we adopt that now as an industry, our bottom lines will benefit. (Click here to read the full 2007 IRgA report on digital services.)
3) Consider summary invoicing, with all prints and related services rolled into one fee. As with standard sheet pricing, summary invoicing takes the focus off the commodity aspect of printing. The client sees one price and thinks, “OK, this is how much my document services cost this month.” Simple.
So what should the standard sheet sizes be? That’s something we should all discuss. We could adopt the current North American sheet sizes (Letter, Legal, Ledger, C, D, E) or the metric format used in other parts of the world (A4, A3, A2, A1, A0). It doesn’t really matter what the sizes are called or whether the measurements are inches or centimeters, because with standard sheet sizes all prints will simply fall into one category or another. However, adopting one standard would make it easier to communicate about jobs worldwide (click here for a chart that compares North American and metric sheet sizes).
Need to be Realistic
I know you are thinking, “But some of my jobs require bids in square-foot pricing.” That’s fine – this model won’t work for every job. But my experience, and the experience of others on the IRgA board, is that 80-90 percent of jobs do not require competitive bids in square-foot pricing. Those are the jobs the new model would work best with.
What happens now? Now we need to do two things:
1) Gather more information. Please click here to complete a quick survey about your current pricing practices (don’t worry, we’re not asking for your actual prices and your name will not be connected to the data). If we have a better handle on the current situation we’ll be better able to move forward.
2) Tell us what you think about the ideas presented in this article, and if applicable, your personal experiences with different pricing models, by using the Comments below.