Is Your Printing Contract Working Against You?
So printers’ costs fell, and then they lowered prices even before they could reap the profit benefits of the new technology they had bought. Imagine, however, the embarrassment that ensues when it’s time to renew a contract. The incumbent printer’s offer usually includes a price cut that leaves the publisher smiling for only about a half a minute before their brows furrow again: “You mean I’ve been overpaying by this much?”
Finding a Solution
There is a way to navigate this era of falling prices successfully with a printing contract. Negotiating for immediate price cuts, usually with a counterbalancing contract extension, could keep publishers from missing the price-cut party.
Printers are happier than you initially might think to offer these mid-contract reductions. It means lower bills, but it also means an ongoing commitment. A printer who doesn’t keep pace with the market has an especially tough time renewing a deal––wait too long, and the price cut must be too big.
The culprit is obvious. The escalation provision in print contracts lately has included two incorrect assumptions: that inflation was worth guarding against, and that an index like the consumer price index (CPI) was a decent reflection of a printer’s change in costs.
Inflation has been a fairly quaint concept for almost 20 years now. It’s easy to forget that print contracts once were a neat technique for staving off inflation’s ravages. Escalation provisions in the 1980s often were big-time gambles, and contract negotiations had a Texas Hold ’Em quality. Instead of pegging increases to the CPI or the printer’s actual costs, publishers negotiated for fixed percentages. And something as high as 5 percent could actually backfire against the printer, not the publisher.
This little history lesson is included to remind you that, should inflation rear up as it’s now showing some signs of doing, you may want to dust off your Reagan-era playbook. But more importantly, bear in mind that contractual commitments have value when the escalation structure has a real enemy to fight, like inflation. Without this menace, a price-control system can work against a publisher seeking guarantees. That’s exactly what has been happening since the 1990s, and it’s made contracts look like poor publishing strategy.