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    « Fonts and A Road Less Traveled | Main | Invitation to Start a Relationship »

    March 07, 2007

    Value Based Pricing versus Cost Plus Pricing

    Most reprographers not only print construction documents but they also ship them.  They either take their customers preferred courier account number or use their own overnight courier account to do the shipping and then bill it back to the customer.  I have found that in most cases around the globe the reprographer determines the cost of shipping and bills that back to the customer with a markup (or they negotiate discount from the courier).  In many cases the reprographer puts the method of delivery, including the name of the courier company (FedEx, DHL or UPS), on the invoice.

    I believe this practice marginalizes the value provided by reprographers.  It furthers the believe that the value reprographers provides is simply "dots on paper".  Reprographers get the right content to the right people when they need it.  This is very often lots of content to many people in a very short period of time.   This is a specialized business.  I don't see it as "printing".  I see it as construction content logistics.  Putting "dots on paper" is a small part of the value provided.

    If you are providing this valuable service to the customer why should it matter how it gets there.  They are outsourcing this service to you because of your specialty.  Reprographers make sure it gets done right.  If you find innovative methods of getting it there more cost effective (i.e. digitally sharing work with other locations, or sharing with partners) that is your prerogative.  You can choose to keep the profits or pass them on to your customers as savings (or both).  The only thing that should matter to the customer is:

    1. The fact that you meet the expectations set (i.e. the right information gets to the right people on time)
    2. The price you charge for the service is as good or better than the next best alternative (i.e. What your competition would charge or how much it would cost to do it themselves)

    How you get it done is your business.  You should not take customers courier account numbers.  This adds additional cost while taking away from profits.  You should not show on your invoices what service you use.  It shouldn't matter as long as you deliver on time and the price for delivery is competitive.  If you digitally distribute content to an office closer to the point of need and print it locally you should still charge an overnight (or even same day) fee for getting there.  It is your right as a for-profit business to utilize technology to find more cost effective and innovative methods of meeting your customer's needs.

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