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Commentary & Analysis

Who Will Rule in VDP?

By John Giles June 27,

By WhatTheyThink Staff
Published: June 27, 2006

By John Giles June 27, 2006 -- Big printers be forewarned. Small print shops are coming after your variable data digital printing business. Heidi Tolliver-Nigro of TrendWatch sounded the warning in a recent article for Ondemandjournal.com and I agree. Small printing companies are looking at digital printing opportunities and beginning to understand how to sell digital services to their customer base. According to Tolliver-Nigro, shops with 1-9 employees still make up 67.3 percent of the industry. As the quality and speed of RIP-driven copiers improve, the smaller printers are finding they can offer the same type of services offered by the toner-based press shops. Small printers have an expertise in handling customer-created files from less than sophisticated buyers. They aren't afraid to take complicated files and get them to work. Why is variable data a perfect opportunity for small printers? They already have the equipment. Many small shops have invested in both black-and-white and color RIP-driven printer/copiers. The equipment is perfect for the short print runs required by small business print buyers. Many of the small commercial printers and quick printers have specialized in short-run, quick turnaround printing for years. The print buying market is moving down toward the quick and small commercial printer. The Advantage of Being Small The small printer has an expertise in handling customer-created files from less than sophisticated buyers. Many quick and small commercial printers have years of experience dealing with bad files and data from small business customers. The small printer knows how to communicate to the customer the problems to avoid and how to create files and data properly. Their staff is has experience in fixing everything thing from simple mailing lists to complicated page layout designs. Small printers aren't afraid to take complicated files and get them to work. For many printers, the VDP job is just walking in the door. All the printer has to do is figure out how to produce and price it. Small print companies are closer to the general business print buyer than the larger shops. Most small printing companies take a more retail approach to selling printing and target small business. As the larger digital companies focus on Fortune 1000 businesses and professional marketing and advertising companies, the small printer sells to the local business down the street that wants to sell something to someone. The buyer is usually the company owner who wants to get the most out of his advertising budget. He has heard he can get a bigger bang for his bucks from personalization and variable data printing so he goes to the same printer who has been doing his business cards, invoices and brochures to see what is available. For many printers, the VDP job is just walking in the door. All the printer has to do is figure out how to produce and price it. The Problem of Pricing Why haven't more small printers embraced VDP? The reason is pricing. Too many small printers use a cost plus pricing approach and forget about the value that can be found in a job. VDP experts hope small printers don't do to variable data printing pricing what they did to desktop publishing. Small printers use desktop publishing as a loss leader. They believe that if they charge too much for DTP and design, the customer will take the job somewhere else. The desktop publishing department has been the "black hole of profits" for most small printing companies and they are afraid the same thing might happen if they take in VDP work. While small printers say they have an hourly rate for work, few ever price their work to cover their actual time. The fear is that small printers will believe that they can be the low cost provider for VDP because they are not considering all the elements in a VDP job. The small printer will just look at the printing costs involved in the job and give away the rest. The larger printers and VDP print providers are afraid that because small printers don't understand VDP value, the customers will become confused when trying to compare prices. The biggest fear for the large printers selling VDP services shouldn't be that more small printers are getting into the market. The fear should be that the small printers will muddy the market pricing by not selling the value. What will happen to profit margins if small printers give away the marketing idea to get the job? What will happen to the market if small printers give away the cost of fixing the customer's data so the job will print? If VDP is turned into a commodity then no one will benefit. Small printers have to be educated. They have to understand the value of VDP to the customer. They have to know what elements of the job are chargeable to the customer. They need to know that the costs of VDP are more than just a click charge. Small printers have to be educated. They need to know that the costs of VDP are more than just a click charge. Organizations such as PODi and PIA are already trying to educate large printers to the opportunity they have with VDP. All printing organizations, along with vendors, need to push that education down to the smaller shops. Just because a shop has less than nine employees doesn't mean it has to have the cheapest price. For VDP to be successful for the printing industry, it will up to the printers themselves to keep the value high in the eyes of the customer. Of course prices will level off and VDP will become a commodity at some point as competition increases and printers institute the best practices in production. But until that time, the printing industry needs to avoid artificially lower margins because it just doesn't understand that the customer is willing to pay for printing materials that will increase the buyer's revenues.

 

 

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