I have a favorite ad campaign. It’s for a bank and features a slick fellow offering different cool things to children, but there’s always a catch. As it dawns on the kids that they’re being treated unfairly their benefactor turned tormenter seems terribly pleased with himself, even laughing in a small girl’s face in one commercial. The tag line at the end of the commercial has a couple of variations such as “Kids know it’s wrong to hide behind fine print. Why don’t banks?” Maybe this campaign speaks to me because I’m in an industry where a similar ad could easily be run with a closer like, “Even kids know it’s wrong to pad the bill. Why don’t printers?”
The current trend in the reprographics industry is to aggressively compete for business on price alone. And prices aren’t just low, in some cases they’re nonsensical. In our industry we are seeing prices per square foot that barely cover the cost of the paper that the drawings are printed on. How can that be? Well, either the printers doing this are so desperate for cash flow that they’re willing to mortgage their future to make it through today, or you, the clients, are not really paying that unbelievably low price.
Years ago some repro shops started charging delivery charges to offset costs without having to quote higher rates. While we never did this at Hackworth, the practice caught on quickly with the vast majority of our competitors. Once you have a delivery charge a pick up charge just seems natural. The pick up charge served a couple of purposes initially. First, it increased revenue without ostensibly raising prices. Second it pushed clients to send jobs online. Using an FTP site is a huge increase in efficiency for both parties and was probably the best reason to charge for pick-up. We don’t charge this one either, preferring to educate clients about the benefits to their operation instead of coercing them with fees pAbout a year ago we saw something that turned out to be the beginning of a flood of these “soft” charges. Gas prices went to $4 a gallon locally and more in many markets. For an industry that absolutely depends on its ability to deliver to clients as needed rather than on predictable routes and schedules, this was a tremendous blow. The dilemma most of our competitors faced was predictable, though evidently not predicted. They had already begun charging pick up and delivery charges when the costs of those activities were relatively low in order to keep up the appearance of charging a lower price. When those costs skyrocketed they either had to raise the price or the fees or they had to come up with another revenue stream. On top of the pick up and delivery fees that were already being charged, the “Fuel Surcharge” was added. Of course fuel prices have been cut almost in half over the last year, but we’re still seeing fuel charges on competitor’s invoices.
Beginning late last year the amount of printing work in the marketplace fell off. Up to that point we had seen a few very
questionable price quotes from other companies. Once the recession really took hold we began to see below cost pricing throughout the segment. It didn’t take us long to realize that this was made possible by the ever more creative fees coming out of competing shops.
Several clients and prospects were good enough to share competitor invoices withus and we saw an astounding proliferation of fees. There are “upload fees” of as much as $20 per job. So if you avoid a pick up fee and fuel surcharge and save the printer those costs by going electronic, you’re rewarded with a $20 per order hit for using a service that costs the printer next to nothing. There’s the bindery fee for stapled sets. This starts at $.25 and goes up from there to $1 or more; for two staples
without which the job is loose and incomplete and a piece of paper with printer’s marketing information on it. For jobs that are picked up to be printed we’re seeing scanning charges of up to $2 per page. You give them the job at whatever price you were quoted and in order to do the work they have to scan the pages which incurs an extra charge. Saving the best for last though, there’s also the “Quality Control Fee”. One would think that if anything were included in the price it would be the best effort to do the job properly. Sadly that is not the case. When I first heard of this fee of as much as $15 per order it struck me as so
odd that I had to suppress a laugh. When the client added that the first time he was charged this fee the job was in fact wrong, I did laugh a little.
Even worse these fees aren’t just being charged to clients getting favorable pricing. I’ve seen clients of other firms who were
paying as much as three times the loss leading price of that firm and also paying the fees. It also isn’t true that firms that don’t charge the fees charge a higher rate. We did an assessment for one client who was paying about 20% more than we were prepared to charge as well as the fees. Even if this client had been paying 20% less than our price, they would have to print at least 1100 square feet on every order just to break even form the additional cost of fees.
There are many reasons to pick one printer over another and currently price is a big one. Just make sure the price you’re paying is the one you were quoted. If you pull out a couple of invoices and a calculator you can learn pretty quickly what you’re really paying. If it’s not what you were quoted then you have every right to demand that your quote be honored. And don’t
let a sales person tell you that these fees are an industry standard. Yes the fees are becoming more common but you can find printers who will give you honest and up front pricing. In fact, if you’re reading this either you’ve found us or we’ve found you.