Commentary & Analysis
How to Make Money in Prepress
By John Giles Quick and small commercial printers want to know when they will see a return on dollars spent on prepress technology.
By WhatTheyThink Staff
Published: July 18, 2005
By John Giles Quick and small commercial printers want to know when they will see a return on dollars spent on prepress technology. July 18, 2005 -- Quick and small commercial printers continue to report that they are losing money in their prepress departments. It seems like every day I'm dealing with a printer who is trying to figure out how to make more money in their prepress department or at least stop the cash drain. Now, with new operating systems being introduced that require software upgrades, printers are again opening their checkbooks for their prepress department. Understandably, they want to know when they will start seeing a return on their dollars spent. The basic problem is not the technology or the skill of prepress employees. It's that most printers don't charge for the work they do. That makes it kind of hard to make money, doesn't it? I find some concentrating on an hourly rate, but they fail to readjust their hourly rate when they buy new equipment and software to do jobs faster. Others spend a great amount of time keeping records in prepress, only to ignore the collected times when invoicing the order. Others give away author alterations and changes because it would change the estimate that was given when the order was taken. And those are just the problems dealing with design and typesetting jobs. Pricing customer-created files is another area that keeps prepress the black hole of the printing industry. Just about every job must be "touched" by prepress, yet most printers don't charge for the work they do. Makes it kind of hard to make money. One problem that printers do have in tracking work going through the prepress department is that prepress is doing so many tasks. Just about every order must be "touched" by prepress and all other processes seem to be connected to it, yet many price allocations are based on assumptions. There are three areas where printers can focus that will help increase dollars for the prepress department. Pricing structure New equipment and procedures can help cut the time it takes to produce the job, but it does not cut the value to the customer. The first is to change the selling pricing structure for typesetting and design from an hourly rate to a value system. Certain types of work will have a certain value in the market. New equipment and procedures can help cut the time it takes to produce the job, but it does not cut the value to the customer. Printers need to make sure the efficiencies gained stay with the printer and are not automatically passed on as a discount to the customer. Value pricing can handling the pricing needs for many standard jobs (brochures, forms, letterheads, business cards, newsletters, menus, etc.) and the hourly rate can still be used on jobs that don't fit into a standard category. If the job is sold for a set amount, additional profits can be made if the prepress person can finish the job faster than expected. The printer gets the profits and the customer pays the value price. Some printers use a catalog for pricing standard work. Having a published price helps justify it and gives the customer a feeling of fairness since the price is offered to everyone. Standards-based file preparation The second way to stop the bleeding in prepress is to have a pricing procedure for customer-created files based on published standards from the printer for proper file preparation. If a printer has rules as to how the customer must prepare the file, it is much easier to justify the prices when the customer moves outside the standards. Using this approach, the customer-created file is compared to the published standards. Is it an application supported by the printer? Does it include all the elements required to print? Do the graphics and color models meet the printer's standard? If not, an additional charge will be added to take care of the additional time needed by prepress to get the file into the printer's standards. Since a printer will have the digital standards available, the customer can always make the changes himself if he wants to save the money. If a printer has rules as to how the customer must prepare the file, it is much easier to justify the prices when the customer moves outside the standards. In addition, I recommend assessing a 30-minute prepress charge for all digital files. The prepress staff has 30 minutes to get the file to print. This may even include correcting minor errors. If the file cannot be printed after 30 minutes, the prepress staff would prepare a report about what is wrong with the file and estimate the cost to fix it. The customer would then be given a choice whether to fix the file or pay the price to have the prepress staff correct it. A 30-minute charge for file handling and print preparation isn't usually a deal killer when compared to the entire price of the job. Charge for Changes The third way for printers to make money in their prepress department is to charge for author alterations and changes. If a customer wants to change something in the file that you have already prepared for him, then he should be charged an additional fee. More than a few customers attempt to do their final design based on the "draft" that was prepared by the prepress staff. Too often, these changes are looked at as corrections and never billed properly. The additional time spent on an order should be logged and added to the invoice. Someone in the organization should be charged with making sure the author alterations and changes make the final invoice. Charge for author alterations and changes. Pricing is an art. Finding the right price that lets customers feel they are getting a good value while the printer is getting the best margin is hard. When pricing, printers too often err on the side of the customer and end up cutting their margins. In many shops, work is turned around so quickly that it is difficult to stay on top of the pricing. A printer needs to establish pricing procedures that everyone in the organization understands and applies to customer orders. Assumptions are made and prices are given. Hopefully, the assumptions will be correct most of the time and allow the printer to make some money on the job. Prepress, typesetting and design are an important service a printer can offer customers. Don't let them be a loss leader.