A Guide for Players in a Mature Industry

As you’ve progressed in your career and grown your company, you’ve learned a great deal. You’ve seen change in the industry, and you’ve grown with it. Here are six concepts you can’t ignore:

1. Digital printing is no fad. By the number of digital exhibits on display at Print 05, it’s clear that the production of forms and other business printing will continue its migration from traditional offset to digital presses. New digital equipment is available that clearly targets the forms printing market, with in-line functions including punching, perforating and die-cutting. In addition, specialty printing is now dominated by digital. In late 2005, the Specialty Graphic Imaging Association (SGIA) surveyed its membership and found that more than half of respondents (53%) reported digital imaging as their primary revenue source. And according to TrendWatch Graphic Arts (“Copiers & Printers: Serious Competitors in the Digital Print Marketplace,” March 2006), 63% of commercial printers already offer digital printing services, and 42% offer those services in-house.

2. One of the best places to network with other manufacturers is the Manufacturer Supplier Print Conference. The Manufacturer Supplier Print Conference is May 17-19 in Philadelphia. DMIA has strategically placed the conference at the end of the On Demand Expo, so attendees may see all the high-end document and processing technologies in action, and then meet with their peers for a day and a half of networking. If you want to find out how other manufacturers are facing today’s challenges, you must attend this event. For most of the conference, your peers are your instructors. The event is sponsored by the Print Education and Research Foundation.

3.Competitors are entering the forms industry from many directions. Many of your new competitors were not producing forms a few years ago. In fact, today a large portion of the total forms market is being produced by players who would tell you they are not even part of the “forms industry.” Entrants from traditional quick printers like Kinko’s and Sir Speedy have set up large sales offices that are separate from the walk-in shop. Office superstores such as Staples and Office Depot are positioning themselves as one-source providers to the small business and home office market. Commercial printers are seeing work dry up in areas such as two-color flyers and newsletters. What else can they make? Forms. Laser cut sheets. Mail shops and document fulfillment operations are producing millions of “transactional documents” per day. A “transactional document” is really a form in disguise. Consider the market landscape, all the services being offered by these new entrants and how you can grow the business you’ve got. Remember, the printing plant of the future will be an information factory.

4. Distributors need more help in selling applications. Trade printers should take a page from the playbook of promotional products manufacturers. In that industry, manufacturers frequently lay out in specific detail what the product is, what types of customers might use it and why, and what other types of customers might use a similar product. In the forms industry, few manufacturers do this well. Some claim that finding this information is the responsibility of the distributor sales rep. Promotional products manufacturers do not wait for distributors to come to them. Their marketing approach is “take this and sell it”—and they do it well.

5. Your company can be listed for free with Google. As Internet searches play a greater role in determining which companies get business, it’s more critical than ever to list your company with the Internet’s most popular search engine—and it’s free! Use this link to go to Google’s “add URL” form http://www.google.com/addurl/?continue=/addurl, and add your company’s URL and keywords to Google’s search index. Your keywords are important. Before you list your site, make sure you have all pertinent phrases and keywords in a Word document. Then when you are ready to list your URL, copy and paste the Word text into the “comments” field on the Google form linked above. Be specific. For example, if you are a distributor in Cleveland, a good “comments” entry would look like this: Cleveland printer distributor business forms printing business document tags labels direct mail process color printing statement processing promotional products supplier.

Add any other keyword specific to your company. Hit the “enter” button, and Google will handle the rest. To test your entry, give it a few days and then do a Google search on some of the phrases and keywords you used.

6. In order to earn 50% gross margin, your mark-up must be 100%.

“Gross margin” is the profit that you make on net sales. To determine what you should be charging for products, first determine your desired gross margin. Then simply divide the cost of goods sold (COGS) by 1 (one) minus the desired gross margin. For example, if the COGS is $300 and the desired gross margin is 40%, the calculation would be as follows:

$300 / (1 - .40) = $500

In order to earn a 40% gross margin, you must charge $500 for the goods. That is a 66% markup.

Here are some other examples: Charging your customers a 60% markup will yield a 37 1⁄2% gross margin; A 50% markup will only yield a 33 1/3% gross margin.

To distributorships, gross margin is key, so determine that percentage first, then allow the other pieces to fall into place. DMIA has an excellent report that shows industry averages for gross margin. For more information click here: