Facing Today’s Manufacturing Woes
Postage. Paper. Freight. Ink. How can you deal with all the price upturns?
August 2008 By Alex Brown
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You are not alone. Publishers are being buffeted by cost increases on all fronts, and while there are no magic wands to wave, we can gather round to share our sorrows and consider a few basic cost-control tactics.
The latest blow is a 10-percent to 12-percent increase in ink prices announced by ink suppliers. Printers will differ in their implementation of this, but if yours is delivering bad news in the form of higher prices, you can accept it as a true reflection of the market. The costs of raw materials and freight have indeed affected the selling price of ink.
Your printer may spare you this increase, or you may hear of another publisher that has gone unscathed. There are good reasons for printers to differ in applying ink escalations.
First, some printers have an ownership interest in an ink supplier. They can let overall business strategy rule their decision on a price hike, and they can do it customer by customer.
Second, printers that are not tangentially in the ink business vary in the markup they initially impose on the ink they sell to you. Once again, a critical customer relationship may be important enough for a printer to absorb some or all of the escalation blow, particularly if he has a comfortable markup to cushion it.
Third, printers sometimes delay imposing an escalation. Your vendor may not be sending out the bad news quite yet, but it doesn’t mean you’re off scot-free.
Finally, ink costs generally represent 5 percent to 8 percent of a manufacturing invoice, not including paper. With today’s tight margins, that’s a significant amount, but printers may still have some negotiating room.
With all this in mind, the smart print buyer will look at a change in ink prices as an opportunity for negotiation. But tread carefully: The printer’s costs really are going up. What you’re negotiating is how much it will affect you. Keep your guns in their holsters and start out with sympathy for the printer’s situation. Then look for a fair way to absorb the rising price together.
The greater the printer’s ink markup, the more leeway it has for giving the publisher a break. You can look for a compromise on a lower percentage increase or a delay in its effective date.
The Bigger Problem: Paper
The latest blow is a 10-percent to 12-percent increase in ink prices announced by ink suppliers. Printers will differ in their implementation of this, but if yours is delivering bad news in the form of higher prices, you can accept it as a true reflection of the market. The costs of raw materials and freight have indeed affected the selling price of ink.
Your printer may spare you this increase, or you may hear of another publisher that has gone unscathed. There are good reasons for printers to differ in applying ink escalations.
First, some printers have an ownership interest in an ink supplier. They can let overall business strategy rule their decision on a price hike, and they can do it customer by customer.
Second, printers that are not tangentially in the ink business vary in the markup they initially impose on the ink they sell to you. Once again, a critical customer relationship may be important enough for a printer to absorb some or all of the escalation blow, particularly if he has a comfortable markup to cushion it.
Third, printers sometimes delay imposing an escalation. Your vendor may not be sending out the bad news quite yet, but it doesn’t mean you’re off scot-free.
Finally, ink costs generally represent 5 percent to 8 percent of a manufacturing invoice, not including paper. With today’s tight margins, that’s a significant amount, but printers may still have some negotiating room.
With all this in mind, the smart print buyer will look at a change in ink prices as an opportunity for negotiation. But tread carefully: The printer’s costs really are going up. What you’re negotiating is how much it will affect you. Keep your guns in their holsters and start out with sympathy for the printer’s situation. Then look for a fair way to absorb the rising price together.
The greater the printer’s ink markup, the more leeway it has for giving the publisher a break. You can look for a compromise on a lower percentage increase or a delay in its effective date.
The Bigger Problem: Paper
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