1) The client wants to remove headcount from their business, offload non-core activities and achieve the promised savings of print management. Understandable at the C suite. But that doesn’t make it a good decision. Here’s why….

2) Print management firms have HORRIBLE profit margins. 3% or less. Dangerous in terms of sustainability for the end client. Look it up. HH, WL, INWK. Why? Because it’s a low margin supply chain and you need MASSIVE scale to generate decent profit. But guess what….print demand tends to shrink every year on a same account basis…That puts constant pressure on the print management firm. And that is where their fees come in…..

3) Print management firms extract a fee from the supplier in order to fund their operations which damages the supplier and is unsustainable over the long term. That fee increases nearly every year. One of them requests SEVENTEEN PERCENT of every dollar sourced (and that includes paper which is usually a pass through). The real result here is that printers INCREASE the sale price to the print manager. So when they 3 bid, all the bidders give a higher price because they know about the big fee paid to the Print manager. Here’s the rub….clients pay MORE than if they go direct….BUT….

4) Savings can’t be tracked or proven because print budgets and specs change every year and print budgets typically SHRINK every year. So the goal posts move and the print manager cannot be held accountable to provable savings.

5) Print management firms say to suppliers…we don’t need a sales rep so we save you that money. The truth is that they are disorganized, not well skilled in print and under resourced so they typically do need what is typically defined as a sales exec at a printer (or an account manager).

6) Further ALL PM’s expect/take ‘wining and dining and gifts’ in order to source to suppliers…someone in a sales capacity needs to handle that. And last but not least…

7) Print is such a desperate industry that most print company leaders don’t view PM’s as an opportunity but a RISK. Printers are desperate for volume so they take the beating and take the work. They are afraid to reject supporting PM’s and they are even more afraid to speak the truth about them (contracts, fear of business loss, NDA’s, etc.).

8) For print company leaders….don’t be foolish…don’t build a business on print management unless you truly want to be a trade shop. If you are so desperate for the volume, then be prepared to take a hit in margins…prepare to wine and dine your print management firm employees (all the way to the CEO who might request super bowl tickets). Prepare to eliminate your sales force. AND MOST IMPORTANT. Don’t expect to sell/exit your company (the dream of most business owners) at an attractive multiple. You are nothing more than a trade shop with customer concentration risk.

Thanks for listening and taking the time to leave a comment… much appreciated 🙂

Great point!

Try explaining a poorly printed piece to a marketing manager that we print production managers no longer have a say as to where their piece is printed.

These two quotes from Astronaut John Glenn say it best”

“As I hurtled through space, one thought kept crossing my mind – every part of this rocket was supplied by the lowest bidder.”

“I guess the question I’m asked the most often is: “When you were sitting in that capsule listening to the count-down, how did you feel?” Well, the answer to that one is easy. I felt exactly how you would feel if you were getting ready to launch and knew you were sitting on top of two million parts — all built by the lowest bidder on a government contract.”