Do In-Plants Use Innovative Pricing Strategies? Yes and No!

As I write this blog I am in the process of preparing a presentation for In-Plant Graphics Magazine Innovators Conference. Formally the Digital Printing in Government and Higher Ed Conference, this year’s conference begs the question that innovation is a critical success factor (CSF) for all in-plants.
Innovation is a common denominator of leading companies, both commercial and in-plant printers. One example of innovative thinking is pricing strategies which was discussed in a blog on this site last year entitled “Value Based Pricing: Fact or Fiction”. The issue is that the traditional cost-based pricing strategy does not take into account market-based or value based pricing.

These more innovative pricing philosophies allow companies to charge less for commodity products and more for products perceived to have higher value. Charging less for commodity products often reduces customer complaints about pricing, which makes it more difficult for companies trying to take over the in-plant (outsourcing companies or facilities management companies, known as FMs) to make effective sales presentations based on price.
The value proposition that is most effective for these companies focuses on price: why are you printing, printing is not a core competency, your manufacturing costs are too high, your prices to customers is too high, and customers are dissatisfied paying these higher costs.
Considering the potential role of pricing you would think that all in-plants would be very motivated to consider innovative pricing strategies. That is why we looked at pricing strategies in our last research project. In the recent PRIMIR study entitled Digital Printing Technology’s Influence on the U.S. In-Plant Printing Market that IMG worked on with IDC, we discovered a trend in pricing based on the size of the in-plant. Looking from left to right or from smaller to larger in-plants, you can see the yellow bar growing larger suggesting that larger in-plants monitor and adjust pricing more than smaller in-plants.

The obvious question is why? One possibility, is that the larger in-plants remain threatened by outsourcers and FMs while smaller in-plants are not. With declining volumes of traditional work and increasing pricing pressure, it is possible that it’s no longer worthwhile for outsourcers and FMs to pursue smaller in-plants. This is consistent with another trend which is that outsourcers are focusing more on taking over both the fleet of copiers and printers within the enterprise as well as the in-plant production.
What do you think? Is the threat to smaller in-plant service providers declining?

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