Prices to high? Too low?

One of the most challenging things in the world of printing, whether offset, digital or letterpress, is figuring out how much to charge. Too much, and you don’t get the work. To little, and you don’t make enough money to keep the doors open. Printers in Reno/Sparks with roughly the same capabilities should have roughly the same costs… and therefore very similar prices. In such a situation, a client will make a decision base upon relationship, not a 1% price difference (one hopes!).

We at Reno Type have a pretty good handle on our costs. We know that our raw cost of goods, monthly, is about 23% of sales. It’s been as high as 26%, and as low as 20%. This is pretty good. Knowing this, the prices we offer our customers are consistent. Month to month, year to year: what we charge is based upon our costs. If paper cost goes up a bit, our prices go up a bit. For work that we’re really good at, or that represents ongoing monthly work (like variable data mailers for small and medium sized casinos, say), we are able and willing to cut our margins and be really aggressive. But that does not mean a 40% discount.

When someone beets our prices by 5%, we see if we can sharpen our pencil a bit. When someone beats our prices by 30, 50, or 75%… something is up. And you should beware. Is it smart to do business with a firm whose prices are dangerously close (or maybe BELOW) their costs? I guess it depends on your goals. I’d leave the reader with these thoughts:

If the price is substantially lower than ours one of two things must be true: (1) They will go out of business, or (2) they will raise the price own the line.

If you need one job, right now, and trust that a company who doesn’t understand their costs will do a “good enough” job, you can get a real bargain. You should let them do it.

If you need a good job, done consistently, the bargain will wind up costing you more in the long run.

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