The print industry is more competitive than it has ever been, and growing a profitable shop is becoming increasingly difficult.
Now more than ever, shop owners must put an emphasis on maximizing the profitability of every job they produce. Otherwise, it’s unlikely they’ll be able to experience significant growth in the coming years.
Over several years of working with hundreds of businesses to improve their business management, we have identified 3 common mistakes among print shops that eat away at their profitability… usually without the shop owner even realizing it’s happening.
Today, I’m going to share these mistakes with you so that you can be sure to steer clear from them and keep your shop on the right path.
Mistake #1: Pricing Without Knowing Your Costs
Your pricing strategy is one of the greatest factors that impact your profitability. Choosing the right pricing strategy is one of the most difficult things you have to do, but it’s also incredibly important and deserves your attention.
The biggest issue with how print shops approach their pricing strategy is not taking costs into account.
It doesn’t matter what pricing structure you follow. Whether you are taking a cost-plus markup approach, versioning, or more realistically a number of different strategies depending on the situation, you absolutely need to know the costs involved to price your jobs effectively.
We’ve found that many shop owners are pricing based on what their competition is charging or what they think the market will pay.
Both of these are risky strategies as they are on par with taking an educated guess.
Let’s say you are pricing based on your competitors’ prices…
Without knowing their exact processes, the technology they use, and how much it costs them to produce the job, there is no way to be sure that their price point would be profitable for you.
In fact, there’s a chance that a price that’s profitable for your competitor would actually lose your money.
I can’t think of a single successful business person who would take this risk, so neither should you!
Instead, you should calculate ALL of the costs involved with every single job you produce to ensure that you are only fulfilling profitable orders.
You can take this a step further and actually rank your jobs based on their profitability, and try to fill your schedule with as many of the more profitable jobs as you can.
At the end of the day, there is a limited amount you can produce in a given day without hiring new employees or investing in new equipment, so your focus should be on maximizing the profits on each job that comes in.
Mistake #2: Not Measuring Your Performance
Growing your shop’s success is all about consistent improvement, but how can you do that without knowing what areas of your business you need to focus on?
You can’t… at least not effectively!
Still, we see so many shop owners who aren’t collecting data and tracking their performance over time. This will probably lead to hitting a wall in your growth and not knowing what you can do about it because of a lack of understanding of your weak points.
If you have high hopes for achieving success in your business, you should be tracking your marketing campaign performance, productivity, profit margins, etc.
Some examples of measurements to keep track of are:
- Total Sales
- # of Orders Produced
- # of Orders With Defects
- Total Cost of Orders With Defects
- Website Visits
- Website Conversion Rate
- Profit Margins For Every Type of Job
Tracking this data over time will make it clear what aspects of your business need the most improvement, so that you can focus on those to make the largest impact to your profitability.
Mistake #3: Managing Processes On Multiple Platforms
Being in a price-driven and highly commoditized industry, print shops must focus on maximizing their output from the resources that they have.
Customers expect high quality products at low prices, and they know that there are plenty of print shops to choose from. As a result, raising prices is likely to hurt your sales and is not a good strategy to become more profitable.
This leaves us with the only other option, which is to lower your costs.
One of the most effective ways to do this is to produce more jobs with the same number of employees, same amount of materials, and the same equipment.
How can you do that?
By putting a focus on the efficiency of your processes.
Being as efficient as possible is important to businesses in all industry, but it’s especially critical to your success due to the nature of the print industry today.
In order to run a highly efficient shop, your processes should all be connected on a single platform. Communication between your employees, order intake, production management, collecting payment, and other key processes should all be seamlessly integrated with one another.
How does this help your efficiency?
It makes it so that you only have to enter data one time rather than having to enter the same information at every step of your workflow. Not only will this reduce the chance that you make expensive mistakes, but it will save you and your employees time.
Don’t underestimate the impact that this has on your productivity. The time saved by minimizing the manual touchpoints at which you have to input information adds up very quickly over time.
Connecting your processes on a single platform will simplify your shop management, and leave you and your employees more time to focus on revenue-producing activities
Printmatics is an end-to-end business management software solution designed to help shop owners improve their business management. Our software seamlessly manages your processes from order intake through delivery and everything in between. If you are serious about building a better print shop that’s more profitable and efficient, click here to schedule some time for a FREE workflow assessment where we can discuss your current situation, your goals, and how we can help you get to where you want to be.