Commentary & Analysis
Selling Owners Make The Best Sales People
By John Giles March 9 ,
By WhatTheyThink Staff
Published: March 9, 2006
By John Giles March 9 , 2006 -- The division between the haves and have-nots is growing wider, and for those on the losing end, it is usually their own fault. Pricing has always been difficult for printers. Many get into battles for commodity work and attempt to be the low cost producer. A common selling strategy is to find a way to cut costs and then pass those savings on to the customer --whether they need them or not. Printers get wrapped up in costs and forget the value. With new variable data services and faster, higher quality output devices, printers can bring more value to the customer. Instead most want to bring a lower price. What's wrong with this picture? Two recent conversations proved how common this thinking is. The first printer has purchased a high-end color printer to pursue variable data printing. The quality was such that he found he could move some work off his five-color press, especially shorter runs, and produce the work more economically. He called excited about how much money he was going be able to save his customers by moving the jobs from the press to the color printer. I asked if his customers knew he was producing the work on the color printer? No, he said, but I avoid a lot of the make-ready costs so I can sell it cheaper. I asked if the customers appreciated the faster turnaround time. Yes, he said. That was one of the reasons he started moving short run work to the color printer. So why are you cutting your price I asked? The answer: because "I can do it cheaper." Pricing wasn’t an issue in these situations. It was an issue in the printers’ minds. Another printer found he could save a customer $3000 to $5000 a year in discarded inventory by changing his print production process to variable data printing. He also found that the new process cut 30 percent off his production costs. Rather than sell the customer on the fact that by eliminating the overprint waste the customer saved significant money, the printer focused on the face he could cut the production costs. The printer wanted to set up a meeting with the customer so he could tell him that he could save him money and cut his overall bill by 30 percent. Why? Because “I can do it cheaper.” Both of these printers could have added profit to the bottom line, remained competitive and kept the customer happy by keeping the money in their pocket rather than giving it away to their customers. Did the value of the job change just because the printer found a way to produce it more efficiently? No. But the printer was willing to take food out of his children’s mouths to give the customer a discount they never asked for, just to get the job. There are times when competition and market conditions may dictate a lower profit margin, but pricing wasn’t an issue in these situations. It was an issue in the printers’ mind. The printers who are profitable know that when they find a way to cut costs it just means a higher profit margin. They can pay their employees more, buy the latest technology, and send their kids to college. Printers who aren’t profitable find cost-cutting tricks and pass the savings on to the customer. Because they have lower margins they can’t afford the latest technology. They must battle to keep employees. They don’t get to go on vacation with their kids. Understand your value to the customer and sell accordingly. Pricing is an art. Selling is hard. But using the strategy of selling at the lowest possible price, no matter what value you bring to the customer, is a formula for failure. Understand your value to the customer and sell accordingly. A lot of pricing decisions are made based on self-esteem. Just how much are you worth?