Commentary & Analysis
Wide Format Graphics Printing: The Numbers Speak Loud and Clear for those with the First Mover Advantage
Wide format graphics ink jet printing is entering its second decade of commercialization and is belatedly being discovered by commercial print-service-providers. The ubiquitous availability of wide format output at the consumer level is opening the door to promote wide format graphics print as an alternative to traditional advertising for small businesses.
By Marco Boer
Published: February 6, 2013
Wide format graphics ink jet printing is entering its second decade of commercialization and is belatedly being discovered by commercial print-service-providers. Wide format ink jet printers historically didn’t fit the business model of commercial printer: they were not very productive, order volumes were small, and frankly it was not a product they believed should be part of their portfolio. Fast-forward a decade; competition continues its relentless march towards devaluing prices and commercial printer profits have shrunk to the low single-digits.
Meanwhile, the Internet has opened the door to mass-customization of printed articles, opening up new consumer markets. Schools, non-profits, and even consumers think nothing of ordering large format prints to promote their special events. Easy access to wide format graphics output is provided through over 1,500 supplies superstores franchises with in-house printshops.
The ubiquitous availability of wide format output at the consumer level is opening the door to promote wide format graphics print as an alternative to traditional advertising for small businesses. Instead of spending $2,500 on a yellow page advertisement, $1,000 would enable a storefront business to put up a new promotional or advertising message in its front window once per month and leave money for social media advertising. In an age where it is more difficult to gauge the effectiveness of advertising expenditures than ever, the impulse buy driven by point-of-purchase signage is stronger than ever.
This brings us to the numbers; the profit to be made by commercial print providers if they were to tap into what we believe is latent demand for wide format graphics output. Retail pricing for wide format graphics output remains quite high for small volumes of output. A price check reveals average retail selling prices per square foot to be in the $6.00 per square foot range. Add lamination and dry mounting and the total cost per square foot nears as much as $13.00. The cost to the commercial printer (assuming he is using a $10,000-$20,000 wide format graphics printer) averages about $1/square foot for print, $1/square foot for lamination, and $0.50 per square foot for drying mounting – generating a 5X gross profit excluding equipment amortization and labor. For simplicity reasons, if one where to keep retail pricing and cost constant on a per square foot basis, printing anywhere from 5 to 20 six-square foot posters per day (at 240 working days/year) results between $75,000 to $360,000 in gross profit annually.
Figure 1 The wide format printing profit opportunity
For a typical $2 million annual revenue commercial printer, even selling as little as five wide format prints per day, wide format printing adds nearly 4% to his annual profit. For many of that size commercial printers this may well double or triple their annual profit.
To make matters even more interesting, for daily output volumes of five to twenty prints illustrated in our example there is a good selection of wide format graphics printers available that for under $20,000 can print both indoor and outdoor graphics. This opens up a “knock-on” opportunity not accessible to the 1,500+ superstores offering wide format graphics printing: printing on vinyl for banners, canvas for durable fine-art prints, even polyester fabrics to create soft signage advertising or custom furnishing decorations.
The crop of latex and eco-solvent printers now available for under $20,000 open the door to commercial print provider for a new journey, a journey onto ever expanding and incremental revenue applications. Restaurants, typically good menu printing customers, are starting to be offered wide format graphics prints as decorative designs for their backdrop murals, even ceiling panels.
To be successful in generating incremental profits with wide format printers it requires a major adjustment in attitude for commercial printers. They can no longer wait for orders and compete on the basis of service and local reach: they must proactively go out and sell their existing small business customers on helping them become better advertisers. If they don’t, the opportunity cost is losing “share-of-wallet” to the superstore printshops, or worse, losing the wide format graphics opportunity and ultimately their collateral business.
The dramatic hardware cost reductions in wide format printers able to print on a wide range of indoor/outdoor substrates have made the purchase of these devices by commercial printers effectively risk free. The counter argument that it is difficult to sell even five posters per day is really no longer valid. The education and non-profit fundraising market alone in most towns could absorb one poster per day; adding small retailers can easily help to exceed the minimum five posters a day in our illustration.
However, this also assumes that there isn’t already a commercial printer or other print provider able to reach small business in that town offering wide format graphics printing services. Statistically well under 10% of commercial printers offer wide format graphics printing services today. The implication is that given the near risk-free hardware acquisition cost, the real cost is the opportunity cost resulting from delaying an acquisition of a $10,000 to $20,000 indoor/outdoor printing capable ink jet printer. The first mover advantage is powerful. Waiting for hardware prices to decline even further is futile, as any “cost savings” will have been mitigated by having to “buy” market share from the print service provider that adapted wide format ink jet technology ahead of you.
To the estimated 15,000 commercial printers left in the United States the numbers should be loud and clear: expanding services to include wide format graphics printing is among the lowest-risk and highest incremental profit opportunities accessible. That is, for those who don’t hesitate and grasp the first mover advantage.