Agencies have always charged for their strategic thinking. In contrast, many printers give it away as part of the price of getting print business. For print providers to thrive in today’s economy, this practice needs to change.
This was the case made on a panel presentation I led at the On Demand Conference and Exposition in Philadelphia about value pricing. It addressed one of the hottest topics our customers confront: How can they ensure being properly compensated for all the digital services they’re providing? And it featured two leading thinkers on the topic: Waleed Ashoo, president of graphic communications services provider, Lithexcel, and Joe Rickard, founder of sales and sales management training and consulting company, Intellective Solutions.
Waleed shared his shop’s value-based pricing approach and described how he abandoned the traditional cost-plus pricing approach about four years ago. Now he calculates fees based on hourly rates assigned to every aspect of a job, with additional markups for rapid turnaround, difficult client relationship management and other factors. He presents comprehensive programs to his clients and rarely breaks out costs of individual services.
Joe Rickard spoke from his experience helping dozens of print providers develop their pricing and business strategies. He emphasized that transitioning to value-based pricing involves a company-wide transformation that’s not just about price, but about mindsets, particularly within sales and management. He stressed the importance of understanding the business value your work delivers in helping your clients meet their objectives — and then charging for a fair portion of the value provided.
Are you establishing value-based pricing, or do you encounter impediments that keep you from pursuing this more profitable approach? The first 10 people who post a response will receive a free copy of the Xerox ProfitAccelerator Value-Based Pricing Guide, which can help steer your transition to value pricing.
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30 Comments
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We calculate in packages.
1. means creation, idea, concept.
2. implementation, data handling, matching
3. image and text personalization: cost per recipient, and in combination with generating a PURL when in a web/print crossmedia project
4. crossmedia project: all costs related to this, like web programming, SMS, QR-codes etc.
5. print
All this happens to be transparent and to show the user the value.
It will take years to eliminate the bad thinking that all costs will reduced on one piece (print) like for a static postcard.
static it might cost 0,35 – with the added value it is no problem to sell for 0,80 plus above costs 1-4
that’s our thinking and experience. But still we develop, improve our pricing strategy 😉
Chris
Chris – thanks for your great comment. Sounds like you are well on your way to ensuring you capture the added value you provide to your clients. I agree it is a change for the industry and will take some time. But the more organizations who take on this approach will help the cause! thanks again for your comment and continued success in ValBased Pricing! Hope you enjoy the Guide.
Like you and Chris in his comment we are in a transition to change our pricing methods. We are already asking money for our ideas and solutions. Not only printing for less than your compatitor but adding added value for your customer, who will be happu to pay more for more response, result, ROI. Like Chris not always but folliwing a roadmap for more profit. For the customer and ourselves.
This article and the comments are very insightful. Will look to encourage this way of thinking within my environment.
Good graphic designers have been moving to value-based pricing for the past several years, and switching their pricing away from objective measurements like time spent on projects toward package and unit-based models. Customers are less price-sensitive when their costs are based more on value than on commodity structures. It takes courage and confidence to switch, and technologies like VDP and purls, that aren’t easily compared, are the easiest to transition.
Like those above, we too are having to rethink our methodology from just pricing our products to including our time and effort we put into creating and producing a quality product. We have found that if we include this all in the final cost we are less likely to get push back from the customer on the price for a quality product.
It’s like dating: if you’re desperate, it shows. And if you put up with whatever the client is willing to give, that’s what you get. And it isn’t respect.
Instead, by demanding to be fairly paid for your strategic thinking, conceptual execution, and effective counsel based on years of experience, the client will respect you, want to do more business with you, and hey, maybe even make a long-term commitment.
I can see this working with businesses. Was there any thought about how to bring the wider consumer market for printing along too?
For print service providers who are now marketeers/consultants, should be compensated for their time spend on a client.
We are trying very hard to implement value based pricing, its a mind changer for us and for the clients.
I agree with Jennifer, if client sees your pricing as “cheap” their take on the business as a whole is the same way. I feel our time is worth more than we charge for it. I am starting to charge for all my services!
I’m really psyched to see that this blog is generating so many interesting comments and perspectives. Thanks to all for sharing your efforts and perspectives about ValueBased pricing. I’m encouraged to see that so many adopting this approach in working with your clients! AND being compensated for your “brain power” – way to go!
I am brand new to this industry and really appreciate all the information you are all willing to share. Thank you so much for all your feedback!
Chris has made a great point in his “We calculate in packages” (comment #1). We have found that the better the sales ability to “bundle” offerings into fewer categories, the greater the profit margin. If the customer asks you to “unbundle” your solution in smaller chunks, unbundle only the level the customer insists. Try hard not to give the customer a price list for each individual element that are used to construct the solution.
We too are changing. I started in the business not charging for design, as I am not a designer. I lost a big customer because I would not include the graphic design for free–it would show up as a separate entry on the receipt. The printing company I lost it to probably was charging, but packaged it in the total cost and did not show the separate entry. Now I charge for the smallest setup, but still show the entry. If I do not want to charge them, I give them a 100% discount, but show the entry on the receipt. This works well.
We have found that the more we do charge, not necessarily in dollars, but for each project, we are accepted more as a printing company that can service professional design work. It is funny how charging for something can change the perspective of our clients.
Like Pam, I am new to this. We’re 9 wks into this. I’m wondering how to price the package when the PostNet print estimator shows all aspects of the job.