In publishing, we primarily work in a contractual world. This is opposed to the transactional world that most sheetfed printing falls under, as do our collateral projects (BRCs, posters, etc.) Contract negotiations can be tricky and are an aspect of your business that has to be done correctly the first time. There’s no going back and saying "Hey Bill, I just noticed something I’d like to change here". When it’s done, it’s done.

Over the years, I negotiated a few contracts and this month I thought I would share some of my observations concerning various aspects of the contract that are truly negotiable and some that are fairly engraved in stone from both your and the printer’s standpoints. I will also include pointers that can help organize your thoughts when working on the contract. For all you printers out there, have no fear–I’ll not give away pricing or specifics. There are also tips for transactional print buyers to consider when entering into a formal relationship with your printer.

What to do first?

When your Request for a Proposal (RFP) is sent out, list conditions that must be met. You’ll need these prior to going into negotiations. In my last RFP I listed 15 conditions that any plant working on the project had to meet in order for us to come to an agreement. Here’s the listing:

1. The proposed plant must be SWOP 2001 compliant in all ways. This includes the ability to RIP PDF/X1a files accurately and consistently.
2. The project must be produced using CTP. We are a "filmless" operation.
3. The plant must have experience working with newsstand pools and distribution.
4. The plant must have UV coating capabilities.
5. The plant must have in-house USPS reps and capabilities.
6. The plant must be willing to accept terms of net 60.
7. The plant must be willing to accept my stock as purchased and store it for up to 90 days without storage fees being applied. Said fees must not exceed $.45 per CWT.
8. There must be NO handling fee for publisher-supplied paper.
9. The plant must have diverse onserting and inserting capabilities in-house, including the ability to tip, magnastrip, onsert items as small as 2.5 x 3.5 and onsert up to 4 pieces.
10. The plant must have in-house polybagging capability.
11. The plant must be willing to work directly with my Paper Rep and provide bi-monthly reports on stock received, used and current levels after printing.
12. The plant must be willing to enter into a contract of no longer than two (2) years.
13. The plant must be willing to work within our production schedule of 3 weeks from the time files are sent to the plant until the subscriber copies drop.
14. The plant must be willing to place our PO number on all receiving reports.
15. The plant must be located in the Midwest United States.

When I first choose a printer for magazine work I have already determined that they can meet these conditions and I have compared their pricing and capabilities against others that had an RFP sent to them. They have submitted a proposal that addressed the key elements of my RFP and I have confirmed that they indeed do have said capabilities though checking references or getting a pledge that they will upgrade in order to meet my needs. This would be the case for my specified file format as they might be, at that time, unable to work with it, but their system might be upgraded in order to accept it into their workflow.

The printer’s proposal should be very detailed and contain an itemized Proforma invoice, breaking out all the key elements of the project as mentioned above. This is the foundation that a contract is built upon. In most companies your Legal department will need to be involved to review various elements of verb age in the contract. So after choosing your vendor, contact Legal and let them know what’s happening and that you will be submitting a contract, minus enclosures, to them for review. Let them know that you will need a "red lined" version to re-submit to the printer for their review and, hopefully, approval. Ask your chosen printer to prepare and submit a draft contract to you. Now sit back and wait …this process from start to finish might take a while.

What to look for when the draft contract arrives?

When the draft arrives begin your review and remember, this IS a draft so don’t be afraid to mark it up. I ask for an electronic version so that I can red line it in Word. Some printers are fine with this and some are not. I like to think that my printers trust me enough not to disseminate their contracts so mine do come in digitally. Your Legal folks will also thank you for this! The base contract will not be very large, probably 2 to 3 pages at most.

These are traditionally called the "Terms". They provide the legal structure that the enclosures are built upon (paper storage may cost $.XXX per CWT, but when do you incur charges?). The bulk of the contract will be enclosures. These should cover:

a) Specifications
b) Schedules for manufacturing
c) Paper Requirements
d) Prepress Pricing (both digital and conventional)
e) Presswork Pricing
f) Bindery Pricing
g) Distribution Pricing
h) Shipping Pricing

There may also be other attachments such as Non Disclosure Agreements if required.

Digging into the terms:

First, take a close look at the terms. Both you and your printer will have areas that are non-negotatable. Remember that this is a partnership so be prepared to walk a fine line between asking for something that is reasonably within the context of industry standards and the moon. The basic terms of the contract should contain, at a minimum:

a) The term of the agreement – how long will this contract be valid? I recommend 2 years,
b) Publisher’s right to terminate – either party should have the right to terminate the agreement given 30 day written notice,
c) Specifications – this relates to one of your attachments,
d) Production Schedule – again, this relates to one of your attachments,
e) Price Adjustments – These come yearly and this section explains when, how much and what the adjustment will be based on,
f) Provisions for Credit – this relates to disputed invoices and the like,
g) Terms of Payment- 30 day net, 45 day net, etc.,
h) Materials Furnished by the Publisher – this section sets forth your responsibilities to provide the printer with usable materials like files, film or inserts,
i) Quantity Variations – this defines the acceptable overs and unders as negotiated,
j) Disclaimer of Warranties – In this section, the printer will outline their warranty for final goods delivered,
k) Insurance – this covers the insurance taken out at your expense to cover destruction of your goods and describes the reimbursement process,
l) Passing of title – this details when responsibility for the printed magazines passes to the publisher usually when loaded on trucks or at final invoicing for the issue, whichever comes first,
m) Storage – a BIG aspect of what you will be doing. We’ll talk about this below,
n) Work Stoppages – this lets the printer off the hook for liability due to fire, natural disaster, strikes, etc.,
o) Claims – this details the claims process to be used by the publisher,
p) Limitation of Remedies for Claims – what the printer agrees to pay and how if a claim remedy is agreed upon. It also usually sets forth that the printer will not be responsible for punitive or non-direct damages,
q) Confidentiality – this concerns the exchange of information and the proprietary nature of your information,
r) Warranties – this section is important as it specifies that all persons working on your project are qualified to do so.

There may be more to a contract but these items should be included for both parties’ protection.

What is and what is not negotiable?

There are aspects of a contract that one can negotiate, while others are pretty standard. Here’s a quick listing of some aspects of your contract that I feel are important with some comments on each:

Storage: Storage, especially of paper, is a very important aspect of your contract. Every dime you save by purchasing your own paper can be sucked up if you get hit with extreme storage fees. This is negotiable and I would suggest a clause similar to the one listed above regarding 90 days on the floor with no charges being incurred. Have a "first in, first out" policy so that paper will continually be used up within the 90 day period.

Paper handling fees: Man, I hate these. Unfortunately (for the publisher) these are part of doing business. You’ll find it very hard to negotiate them out of your contract all together, but you can negotiate the amount.

Manufacturing costs: These may or may not be negotiable as they will reflect the proposal initially provided. I personally feel that once you’ve awarded the project, it’s in poor form to try and negotiate lower costs for manufacturing. Not good for partnering.

Schedules: I have found that the best method of working through scheduling negotiations is to provide the printer with a target newsstand pool date and build on that. I’ve also found that if the printer can accommodate you they will.

Prepress: Here’s a basic production philosophy of mine..."The less work done at the printer, the less you should pay." That seems like common sense, but I’ve heard of instances where a publisher has provided a file format to the printer that caused less actions to be initiated at the plant and the result has been an actual increase in cost. CTP is a good example of this for some. Prepress costs are negotiable and mapping out the workflow of what actions are taken once your files hit the printer can really help you visualize this. If the costs seem out of line or an operation is being performed that you don’t understand, ask questions. Also ask the printer for their preferred file format. Using it will probably save you money and if it doesn’t let the printer know that it should!

Last, but certantly not least, do not go into a contract with a printer that you feel cannot consistently provide you the quality and service needed for your magazines. It’s easy to go with a low bid, but if things don’t go well once at the printer, especially distribution, the result can be disastrous and actually cost you money, and boy, it’s a pain to pull a magazine and scramble to find a new printer in order to get your next issue out.

I hope this will assist you in the future to partner with your printer for the benefit of both companies!

Until next time, all the best!