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Commentary & Analysis

The Commoditizing of VDP

By John Giles April 27,

By WhatTheyThink Staff
Published: April 27, 2006

By John Giles April 27, 2006 -- The PODi Application Forum is always an eye opening experience. PODi always offers the unique opportunity to talk with business users embracing the latest on demand and variable data printing technology and to see real world examples. The annual conference brings together vendors, printers and customers to describe how the new technology is being used. Hearing business users describe how the new technology increases revenue and sales can get you excited about being in the printing business. The VDP industry is worried that printers are going to turn VDP services into a commodity But then reality sets in. How much can you get for variable data services? What is the value for the customer? How much will it cost to produce? How much profit can you make? Who do you sell it to? How do you price VDP? At the PODi forum, much of the VDP pricing advice was aimed at printing companies. The general consensus was printers are attempting to be the low-cost provider for variable data printing products and are more concerned with click charges and production costs. Marketers in attendance were talking about the value of VDP and were trying to keep the prices up. The VDP industry is worried that printers are going to turn VDP services into a commodity. If printers are going to take advantage of the profits to be made in VDP, they are going to have to stop thinking like printers and start thinking like marketers. The printer should not be selling the customer on the cost of the printing job. The focus should be on the possible return on investment from the project. If a printer can help a customer increase revenue with a printing job, the printing job will have more value to the customer and deserve a higher price. The PODi members with VDP sales experience offered printers some advice on how to make more money on VDP orders. The most important suggestion was to stop giving away parts of the VDP services just to get the printing job. If printers are going to take advantage of the profits to be made in VDP, they are going to have to stop thinking like printers and start thinking like marketers Printers tend to concentrate on the printing job and devalue the other services that typically go along with a VDP job. Marketers pointed to the value of the VDP “idea” and suggested that printers place a greater value in bringing their “intelligence” to the customer. Printers should be taking VDP ideas to potential clients rather than waiting for the customer to bring a VDP idea to them. If the printer’s idea can increase the customer’s revenue then it could have a greater value that the printing itself. Printers are use to going to customers and presenting an idea that will generate printing for their company. They use the idea as a “loss-leader” to try to capture the printing. Too often they find the prospective customer loves the idea, but then takes it and bids out the printing of the idea to find the lowest printing price. The customer benefits from the printer’s idea and the printer watches the printing go to the lowest bidder. Marketers offered a suggestion to stop that from happening. They suggested printers put a value on the idea but requiring customers to sign an agreement to not discuss the idea with anyone else or have the idea printed by another source before the printer presents the idea. This puts the focus on the idea and printing becomes secondary. The agreement helps the customer protect the intelligence that is brought to the customer. It also gives the printer a “take-away.” If the customer doesn’t want to use the idea, the printer will take it away and present it to someone else. By protecting the idea, the printer puts value on the idea. Potential customers prove their integrity by signing the form. VDP is becoming the next “big thing” for small commercial and quick printers. Most printers already have the equipment. Some already have the software. The recent move by Printable Technologies to lower the price of its Fusion Pro Desktop VDP solution to under $400 makes VDP affordable to anyone. What will happen to the value of VDP if everyone tries to sell it? VDP is more than just printing. If printers are going to take advantage of the profits to be made in VDP, they are going to have to stop thinking like printers and start thinking like marketers VDP is more than just printing. It requires marketing knowledge and sales experience. It can offer printers a variety of new services to offer customers that can be sold at premium prices. What small commercial and quick printers must avoid is repeating what they when they introduced design and typesetting to their line of services. They gave away design and typesetting to get the printing work. They devalued those services in the minds of their customers and now find it difficult to charge enough to make money with prepress services. They could easily do this to VDP. Printers should get into VDP services, but they shouldn’t rush into this new market without first learning the value of VDP. PODi will soon be releasing a pricing report on VDP services. Other industry groups are looking into pricing and should be supplying pricing information. Right now the profit margins for VDP are high. Hopefully the VDP margins will continue to be high as printers learn to sell the value.

 

 

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