By Ed Avis
Inflation is affecting countless products that reprographics firms require, from media to parts to toner. But many APDSP members are fighting back by raising their own prices.
“We hadn’t raised our prices since 2018, but we had to take a jump here,” says Chad Powell, general manager of Bonneville Blueprint in Idaho Falls, Idaho. “We added 4 cents a square foot at the first of February, but we’re still cheaper than the FedEx store – they’re 50 to 60 cents a square foot – so we’re still heroes.”
Rapid Increases
Inflation has been hammering the entire economy since Covid started releasing its grip last year.
“Everything has gone up,” says Gilbert Guzman, president of Pope Reproduction & Supply in Amarillo, Texas. “Of course paper, but also toner and every copier part. And I just heard we’re going to have another 15 percent increase in paper at the end of this month.”
Guzman has lots of company: “Everything across the board is going up,” Powell says. “Probably the biggest factor is the inflation in freight. When we order paper and whatnot, they give us free freight if we meet a threshold, so we try to hit those marks. But we also a sell construction and engineering supplies, and that freight is getting insane. For example, say we order a GPS system that goes on a road grader, they used to ship it one box that weighed 50 lbs, so that shipping cost was maybe $50. Now because of supply and demand they’re splitting the pieces up, so when a cable comes in or controller, they’re shipping it out when they get it, so I’m getting 10 boxes at $20 a box for same thing. That’s killing us.”
Powell says another interesting cost factor is that some vendors are adding a 5 percent “surcharge” to their invoices to deal with inflation. The surcharge even has its own SKU number.
“They’re saying, ‘Once we raise the price on something, it’s hard to reduce the price,’ so instead of raising the price they’re adding this surcharge,” Powell says. “And they say that someday this surcharge might go away. I guess that makes sense, but when our customers see that we give them a 10 percent discount on something and then add this 5 percent surcharge back in, that doesn’t make sense to them.”
Response? Increased Prices
Reprographers have responded to the inflation by raising their own prices. In early 2021 this wasn’t always the case, based on interviews with APDSP members, but everyone contacted for this article has raised prices to combat the inflation they are seeing. But sometimes they simply don’t know how high to go.
“I’m trying to raise prices to keep up, but I have no idea to go up honestly,” Guzman says. “I just heard we’re going to have another 15 percent increase in paper at the end of this month. According to my accountant I’m still profitable every month, but something is going to have to give.”
Elmer Rhodes, owner of Cross Rhodes Print & Technologies, used to give high-volume clients a fixed price so they could easily plan out projects, but now prices are climbing so quickly that he tells clients they need to call for quote for each project. He also sent a letter to all his clients in September alerting them to upcoming price increases, and he included a quote from his paper vendor so his clients would know that he wasn’t just pocketing a few extra bucks.
“They don’t mind, they totally understand,” Rhodes says.
Powell says his customers also have been fairly understanding to the increased prices.
“They’ve called around and got prices from other places, so they feel our prices are still fair,” he says. “We’re not the lowest or the highest. As long as we’re somewhere in the middle, we’ll be OK.”
Consequences
The inflation has caused some customers to change their habits. For example, Guzman says the higher prices has accelerated the move to digital for some of his clients. One client, for example, was buying $25,000 worth of prints each month and has dropped to just $7,500. Another has asked him to buy a year’s worth of media upfront so that he can lock in the price.
“It’s just one of those things I’m going to have to deal with,” he says.
But there may be a silver lining to the inflation crisis. Perhaps the incessant drive to cut prices will end, since there’s simply no margin if you cut too low, and customers who read the headlines realize that inflation is affecting everything.
“This may be the best thing that ever happened,” Rhodes says. “Now all the crazy price wars are over.”
Rhodes also has adopted a new policy: Customers with big jobs must pay a deposit in advance so that he can buy the materials. That takes some of the pressure off his receivables and keeps the production department working.
Overall, inflation is hurting the reprographics industry just like every other. But smart customer relations is easing the pain, and if the crisis permanently increases artificially deflated prices, all the better.
“I haven’t had anybody balk at our higher prices,” Powell says. “They still feel it’s fair.”