Making money from A4 colour digital printing at 20 cents a sheet!

The amazing thing I learnt in 2004 is that it is possible to sell A4 colour copies at 20 cents and make a good profit. This is humble pie for me as I have long maintained that any price under 40 cents was crazy. So what is the secret?

First you pay a click charge for service and toner of about 10 cents per A3, and you run all the work A3, so click cost per A4 is 5 cents. Then you pay maybe 2 cents or so for half a piece of quality A3 paper, so we are up to 7 cents per A4.

Let's say that you want to make 5 cents per A4 that you are selling for 20 cents. This would be a mark-up of 33% on a cost price of 15 cents. The click and paper come to 7 cents, so at these prices you have 8 cents to cover the box, operator, overheads, directors drawings and so on.

If you have a high speed colour box that will do 60 A4 copies a minute, you can theoretically get 3600 A4 copies an hour. If you multiply 3600 by 8 cents you get $288 for every hour that the machine is up and running. Reduce that to 85% to account for jams and so on and it still comes to $245 per hour. So what, you say, it all depends how much volume you put through the machine. Yes and yes again. That is the big secret. I have come across two shops that are exceeding 300,000 colour copies a month, and sometimes up to 500,000 a month - on a single machine.

Money in them thar boxes.

Can you believe that? I saw the figures. Even 300,000 x 8 cents will bring in $24,000 a month. That's a hell of a lot of costs and overheads. And of course much of their work is sold at better prices than 20 cents, the lowest rate for highest volume.

How does this affect you? In the short term probably not very much. But you can see the writing on the wall. Colour copy prices in capital city markets are around 40 cents for volume work, and can be expected to slide down closer to 20 cents over the next year or so. This means that the click charge you pay for service and toner is going to be critical to profitability. When colour copies sold for a dollar it didn't matter too much whether you paid 18 cents or 24 cents. But it does now. Next time you buy a colour box, or renegotiate your current box, you will be looking for a click charge of 11 cents or less.

Next thing I learnt in 2004 is that Canon is a serious player in the black-and-white production market. I have known about their IR105 box for at least two years, and one of my customers has two of them, but somehow it never really registered. Having seen David Weaver and his fleet of five IR105s, at the Pirion site in Sydney, each box doing 600,000 a month, every month, I now realise that Canon is indeed a force to be reckoned with in the B&W market. I'm also very impressed by their integrated booklet maker with foredge trim for I think about $15,000 per box.

CostMaster grows through partnership.

For me personally, the big thing in 2004 is that I took on Doug Malcolm as a full partner in the CostMaster business. This was not an easy decision. I had a disastrous partnership arrangement about 10 years ago and swore 'never again.' Doug had being doing marketing and sales for us for the last 18 months and saw better synergies and outcomes from full partnership. I hadn't known Doug all that long, and consulted a mutual friend who has known him for many years. Amongst other things, he said, “Well of course Doug is absolutely honest.” That's a nice recommendation isn't it? It made my decision easier.

Doug has a background in marketing and finance, is old enough to have the experience but young enough to have the drive and enthusiasm. Unbelievably to me, he actually enjoys sales and marketing. So far we make a very happy combination, and sales have rocketed, mainly in the offset market which I have never really targeted before.

So 2005 looks good for us, and I hope it is for you.

Bio

Ian Maclean produces the CostMaster MIS for print shops and also consults to the trade. You are always welcome to contact Ian on 0411 426 215. or ian@costmaster.com.au.