From: TomCrouser@aol.com
Date: Sun, 8 Sep 1996 11:20:14 -0400
Subject: Letters: Price, Selling and Relocating
Content-Length: 21728
X-UIDL: 842282648.007

Crouser Report OnLine Copyright 1996 Thomas P. Crouser, September 7, 1996 -
Material may not be reproduced in whole or in part without prior written
consent of the copyright holder.
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 on
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***** ***** *****
Letters: Price, Selling and Relocating
Transmitted from Charleston, West Virginia

Index: This week our letters are about: PRICES; PRE-PRESS Pricing; SALES;
Conducting a Customer SURVEY; MAILING Lists; comments on the RISO digital
duplicator; and a great reader response to Homeless on RELOCATING the print
shop in 8 Steps; and our first Lost and FOUND section where printers wanta
know  bout stuff.
*****
Subj:	PRICES and Carbonless Paper
From:	QKCONSULT
To: 	TomCrouser

Tom. . .Good newsletter as usual (Aug. 25, 1996 - 2nd Side Prices). One
correction, however. Carbonless printing prices in the l996 Pricing Study
does include padding charges, and question specified as much. 

One other comment.  I also want to point out for your readers that while the
1996 Pricing Study indicates reliably what other printers are charging for
certain products and services it does not necessarily mean that the prices
being quoted are necessarily 

right

 for all quantities and products. An
interesting example of this is if you did a gross profit analysis (excluding
labor) for a series of products you will notice some general consistency from
product to product, but not always. A good example is the pricing our
industry has been using for high quality letterhead type envelopes... in this
case, the gross profit is substantially below most other products and I
believe this relates back many years when printers somehow had a hard time
justifying to themselves as well as customers that envelopes would cost more
than letterheads, although at first glance the envelopes were smaller (they
aren t), etc. Consequently, when I have used my computer pricing and input
adequate difficulty factors allowing for special make-readies, etc. my prices
have always been higher than what our studies have shown. I have not lowered
my price and have been able to get these prices despite the fact that they
have been 15-20% higher than what is typically charged.

My prices, however, for longer runs, have always been substantially lower
than most published prices, because I have assumed much higher efficiency
rates and i.e. lower effective budgeted hourly costs. You raise a good
question as to whether we are leaving millions on the table by doing so, and
I don t have a good response. I favor getting longer runs on my presses
because of much lower waste and error factors and increased efficiency
considerations... just don t know, however, whether or not I would have
received as many orders at substantially higher prices... don t even know if
there is an answer. Anyway, good column as usual. Keep up the good work. John
Stewart, Quick Consultant, Melbourne, Florida.
*****
Thanks, John. Your point that average pricing doesn t necessarily make the
right price is well taken. I always remember the bromide that the average is
the best of the worst, and the worst of the best. I also agree with your fine
example of average pricing on letterhead envelopes. Sometimes one can have a
bimodal situation where, say, half of the printers markup to 

full

 value and
thus have a cluster of pricing points which are high. And, the other half
might not marking up any more than regular for the same item. So, you could
have a cluster of pricing points which are low and another cluster which are
high. The average, then, ends up being mathematically correct, but maybe
smart for someone who chooses to sell the product at full value. So, this is
an example of where the average may not be the best for a price scheme.

Another example of where the average might not be right is round cornering.
The average selling value of round cornering is relatively low in
relationship to cost if you use one of those little hand jobs to round
corner. Now, one could argue that the market doesn t support a high price,
but that doesn t mean it would be smart to price it at average since your
specific costs may be much higher.

Costs also enter into the decision of run length pricing. Longer runs tend to
be priced lower than shorter runs even after eliminating start-up charges.
Why? Well, it s not because the press runs faster, but because the budget
hour rate comes down as you described. I have used this logic in our book and
software for years which allows one to be competitive in both short and long
run pricing without sacrificing income.

Incidentally, there is another often overlooked factor in long run pricing.
The longer run pricing comes down because of competitive pressures from
substitutes. This does not necessarily show up in our survey since we are
only surveying small press printers. However, we all know those who have
invested in webs are producing shorter and shorter (for them) run lengths.
Many times you will go up against a web or a larger format press in the
25,000 range. So, the survey of quick printers may show a ever extending
linear price line, but a survey of the market including substitutes would
show a definitive curve in longer runs.

However, my point on second side pricing, (Aug. 25, 1996), is as it relates
to the first. To recap, regardless of how and what we came up with as a first
side price (which includes paper), the second side should relate. Example:
$40 for side one with $7 of paper value should return something like a $33
second pass price not a $25, for instance. If the pricing scheme does return
an abnormally lower second pass in relation to the first, then either the
first side is too high or the second side is too low. So, I don t refer to
the price level (high, middle or low) or the price curve (decreasing price
which relates to decreasing costs), but the relationship of pass one
(including paper) to pass two (not including paper). That s where I see a lot
of money being left on the table. And speaking of price, here is a real
interesting price question for all of us.
*****
Subj:	PRE-PRESS Pricing
From:	New in Jersey
To: 	TomCrouser

We had a discussion this morning on pricing typesetting for jobs which have
been typeset by us but whose files are no longer useable due to software
upgrades. We charge for typesetting initially, but once it is on file we only
charge for changes to the file. When a form, for instance, is run for several
years without changes, the software it is typeset in becomes outdated. If the
client then needs to change something on the form, it may now need to be
reset in new software. Who pays those charges? 

We have gone around and around on this. Our solution: 1) business files will
be considered current for 2 years. If more than 2 years has passed since
initially set or last changes made, and changes are now needed, a 

Business
Upgrade

 fee may be charged to reset the file with the changes. This fee
involves a lower (50%) hourly rate than standard typesetting. 2) personal
files (i.e. resumes and invitations) will be kept for 6 months. After that,
we no longer have the file and standard typesetting fees will apply.

What do you think? Are we short-changing ourselves? I want to encourage
businesses to stay with us, and having their forms in our system helps with
this effort. This represents a compromise, allowing us to schedule work and
get paid for it, while giving us a selling point to promote our company to
other businesses. New in Jersey
*****
Hey, New. A real interesting question. Off the top of my head, I would charge
for the work that is done. That means when we upgrade software and have to do
work, I would charge for it. When we don t I probably would not charge,
however, some folks could rightfully argue that you should be charging at
least a storage fee. Anyway, assuming you upgrade software, etc. and the file
is no longer good, I would not 

feel sorry

 about having to charge to remake
the file. Anyway, I will put it out for everyone s response. (Let s hear from
you.) Tom
*****
Subj:	OUTSIDE Sales
From:	Burned in Sales
To:	      TomCrouser

Tom, your discussion with the printer about using an outside salesperson to
increase sales struck painfully close to home. Your reply was very good,
however one factor you didn t mention is the exposure this places your
business in, when placing this activity in the hands of an outside sales
person.

I hired an outside (experienced in printing sales) person to work in outside
sales.  In spite of my efforts to be involved, she took advantage of an offer
from a competitor to go to work for him.  We are still working through the
aftermath of this.  Hopefully we will be able to control the damage. But It
will be a long time, again, before I get outside for sales assistance.  It ll
be me beating the pavement for awhile now. Burned.
*****
Hey, Burned. . .Your beating the pavement is exactly as it should be. When
the owner sells enough to need a person to assist them in handling the work.
. .that s when a outside sales person should be hired. DO NOT hire an outside
person to do what you won t do. Especially don t hire an experienced printing
salesperson to do for you what you won t do.

Why? I discussed this with printers down in Dallas last month. When the owner
(who will not sell), hires the experienced printing salesperson who will, one
of two things TEND to happen. One, the salesperson holds the owner hostage by
threatening to take the big customers to another printer (or they do take the
big customers to another printer). Or, two, the experienced printing
salesperson ends up forcing the owner out of their 

own

 business. It s a
pity too because it doesn t have to be this way.

This situation occurs because the owner plays 

estimator

 or 

bookkeeper

 and
avoids the real work of the organization which is (as I have described them
for years), the three 

gettin s.

 One has to be gettin  jobs out, gettin 
jobs in or gettin  paid. The owner can choose as their prime duty (say 50% of
the time), either gettin  jobs out or gettin  jobs in. Getting paid is a
clerical function which you pay competent and dedicated bookkeeper (One of
the worst persons to keep books are printer-owners who have degrees in
accounting. They know what to do, they just never do it.) Then, at least 25%
of the head honcho s time should be DEVOTED TO SELLING the capacity of the
organization. The final 25% of the time should be in supervising and working
with the other functional areas.

So, as I see it, all leaders of print shops are intimately involved in sales
(who is the genius who got us into this deal anyway?). When you re not, and
especially when you won t, you get burned. When you do, you find out that
it s not that bad, there is no heavy lifting and you can bring outside sales
people along behind you to help you with real work. You maintain, though
appropriate sales management techniques, the customer control and supervision
of the salespeople.

Burned, you re on the right track by doing selling tasks yourself. And I m
sorry you had a bad experience. However, don t cut your nose off to spite
your salesperson. Compete, don t retreat.

Thanks again for the excellent observation. Makes me remember things I want
to say which I forgot about saying. Happy Trails, Tom
*****
Subj:	Conducting a Customer SURVEY
From:	MarkJacque
To: 	TomCrouser

Dear Tom. . .I have been an subscriber to your newsletter for just a short
period of time now, and I must say that the information that you freely
distribute has already proved very helpful.  I am grateful for your opinions
and feedback.

My question is in regards to conducting a survey of my customer base.  It is
something that I have been thinking about for quite a while.  I was wondering
if you no of a source for getting some examples of this type of survey to
help guide me in creating one for myself? Thanks for any help you may
provide. Mark Jacques, Sir Speedy Printing, Bloomfield, CT
*****
Hey, Mark. Thanks for the kind words. Customer Satisfaction Surveys have
become a lot more scientific in the past few years, however there is still a
great deal of art involved. I saw a form somewhere in the NAQP section of
America OnLine which can be downloaded. It is a fax survey you may send to
your customers which will suffice quite nicely for your purposes, I am sure.
There are, however, more advanced efforts. The Quality Institute (not it s
proper name - I forget right now) has put together a Customer Satisfaction
Index with help from, I believe, the University of Michigan. Our staff is
tracking this and other types of Customer Satisfaction indices for use with
clients in small press shops. Anyway, these types of studies are important
tools for us when used properly. Good luck and happy customers.
*****
MAILING Lists
Last week (Sept. 2, 1996 - Outside Salesperson), I mentioned data which could
be obtained on customers. I got a couple of responses wanting more
information such as the following.

Subj:	MAILING Lists
From:	CraigTen
To: 	TomCrouser

Tom, I was very interested in the opportunity to get the demographic data on
potential customers but you didn t give any info on how to go about getting
it. Could you elucidate?  Thanks, Craig Tenbroeck, Bala Printing, Inc.
*****
Sorry, Craig, that I wasn t clear. I had several people write. We (Crouser &
Associates) can and do provide this information (to clients) as agents of
American Business Lists. We have certain demographics, etc. we use as well as
providing the list in the form which can best be used. . . .I found when we
recommended the list to clients, they would buy it but then wouldn t buy
something we really needed. So, six months or a year later we would have to
effectively buy the list again. That s when we became agents of American
Business List and set up a whole range of standard specifications. We now ask
our clients to buy through us so we can assure they get the information they
need.

Anyway, it appears a number of you are interested in obtaining this
information for your market. If so, email me your primary zip code areas (or
counties) and I will provide you with a total count and count by size of
company as well as cost to you. Thanks. Tom
*****
Subj:	RISO digital duplicator
From:	LaserTed
To:	       TomCrouser

A few weeks ago a printer asked about using the RISO digital duplicator as an
entree to digital printing.  I have the model 3750 from RISO.  It is a great
machine, but in short, I am not ready to put it up against a Docutech or
direct to plate press system.

We have fun offering color to our customers (we were previously a 

High-Speed
and Color Copy Only

 shop).  We are able to run envelopes and bags for
ourselves and our customers.  Our unit is not interfaced to our computers,
yet.  However I was very impressed with the interfaced unit on display at
NAQP, in Chicago. The 3750 has included improvements, which have met many of
the reservations about accepting the previous model - it did have some major
problems. If you have additional questions I will be glad to reply.
*****
RELOCATING in 8 Steps
TempusFugit responds to a July message inwhich Homeless was looking for a new
pad. Tempus said, 

I wrote the following back in July but postponed sending
it due to its length. Reckon I ll send it along to you anyhow, as the
relocation subject seems to be one worth discussing. Many small business
owners (not just printers) seem to be clueless when they have to deal with an
expiring lease.

 Thanks, Tempus. This is just what we need.
*****
Subj:    Get The Lead Out
From:   TempusFugit
To:        TomCrouser@aol.com

Can t be much fun being on a month to month with a not-so-nice landlord
actively seeking a new tenant for your little corner of the world. If
Homeless opts to move to a location requiring a major buildout, perhaps the
following 

eight step

 will be helpful.

Step 1:  Buy some time. Major buildouts don t happen in a week. Try to
negotiate a short term lease with your present landlord. Something in the 180
day range should be adequate to take the heat off. If he s not amenable, try
sweetening the pot by offering a couple hundred extra dollars a month.
Believe me, a few dollars of extra rent is cheap insurance when you re
between a rock and a hard place. Much less expensive than a botched up move
made under pressure.

And if sweetening the pot doesn t work, uh... best you can hope for is that
your present location is really not that swell after all. Maybe it won t be
leased until you ve had time to plan and execute your move successfully. 

Step 2:  Get a more precise estimate of buildout costs (and add at least 33%
for contingencies). That nice Realtor is probably not the best fellow to rely
on for these numbers. His $5.45 per square figure smells more like a
storefront remodeling project than a 

MAJOR COMPLETE buildout

 of warehouse
space.

Step 3.  Prepare a sketch of your proposed floor plan along with notes about
all the things you want to include in the buildout. The more detailed the
better, but get it done NOW.

Step 4:  Engage the services of an architect or contractor (preferably both)
with substantial commercial building renovation expertise. They ll be able to
give you a better estimate of what the true buildout costs are likely to be.
And they ll tell you about all the things you left off your list... little
things like that ADA-compliant restroom facility and rerouting the sprinkler
system due to the new drop ceiling in the lobby.  Oh yes, and what it will
take if control of the HVAC in your new space is of any importance.

Step 5:  Run the numbers. Factor in the other elements of the decision-making
process (location, efficiency, etc.). Call Tom for his read on your analysis.

If all systems remain go at this point, proceed to Step 6. If not, it s back
to ground zero. Get the lead out!

Step 6:  Negotiate with your potential landlord. Will he cover all this
through an allowance and/or increased rent? A portion of them? What will the
revised lease rate be? If you have to pay for the buildout, what restrictions
will the landlord impose? Will he let you use a contractor of your choosing?

Step 7:  If you need a loan to cover buildout expenses, go to the bank. Show
the loan committee that strong balance sheet with the 2:1 current ratio
somebody in our midst preaches about. Obtaining financing should be a breeze!


Step 8:  Run the numbers one more time. Call Tom again to get his blessing.
Make the decision.

With good planning, relocation can be an enjoyable experience paying nice
dividends. But (pardon the pun) effective execution is difficult when you re
under the gun. Everybody out there who s on a month to month or has less than
a year remaining on their current lease ought to seriously look at relocation
options starting right now. TempusFugit
*****
Thanks, Tempus for your advice. Tempus  day job includes dealing with
relocation issues, as you might have expected.
*****
Lost and FOUND
And now for our first Lost and FOUND section. I frequently get messages
regarding this or that. So, here are some which we invite your comments. That
way, I won t have to do so much work in tracking this stuff down. Neat, huh?
Well, here are the questions in rapid fire order:

+ BIDNET -  How do I find BidNet and compete for work?

+ Who is OCE? I have seen their large volume copier in their local show room
and it produces great copies, however no one around us has ever purchased
one. OCE says they are as big as Xerox in Europe and are just now getting
into the states. What do you know about them?
 
+ IKON Office Solutions: I would like to see some information on this company
I see popping up everywhere are they Xerox2?
*****
That s it for now. The blonde lady and I head out to the Garden State of New
Jersey this week. The next three weeks we will be involved in our Performance
Group meetings. One in Pittsburgh and two in Orlando. Until next time. . .

Happy Trails, Tom and Pamela
***** *****


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