How Prices in the Crouser Digital Price Guide Were Developed

  • Short Answer: Prices were initially established based on market surveys of key price points and cost factors among 250 printing companies throughout the United States and other public information available to us. This information is also updated throughout the year (to join our National Panel on Prices, Wages and Costs without cost or obligation, go to www.crouser.com). Once armed with this information, we formed a rational price structure with variations for the cost of paper and second side pricing. For the long and really boring explanation, keep reading.
Long Answer: The Crouser Digital Price Guide is the result of an intensive seven-month research and development project by Crouser & Associates, Inc. in 2024. Immediately we faced three major issues in creating a logical price plan printers could implement:

1. We found no established digital pricing formulas or formats among commercial digital printing providers which were commonly accepted.

2. There is a wider spread of prices for digital printing than offset printing. For instance, in offset printing prices often find ranges from $50 to $200 on an item. In digital printing, it is not uncommon to find prices ranging from $15 to $850.

3. Cost of digital production is not the driver of the prices of digital printing; rather market value is.

Cost or Market

All the Crouser Guides use a two-pronged approach to suggested pricing: cost plus AND market value. We calculate the cost of manufacturing utilizing cost models we have developed* and apply base markups which yield an adequate return on investment and effort. This forms a floor under which the retail price should not fall. Then we compare the market value of the same item and allow the suggested price to rise to market assuming market exceeds cost plus.

*Crouser & Associates consultants normally work with at least one hundred printing companies throughout the United States each year in establishing budgets. In so doing, we have developed certain ratios of costs that are used in modeling costs used in our Guides. No other firm maintains such an intimate relationship with costs in the printing industry.

In the specific case of Digital Printing, we found printers using the cost plus method of pricing to be severely under pricing their work when compared to what others were obtaining.

The typical direct costs for digital printing on digital copiers, digital duplicators and some digital presses tend to center around a production unit that is leased from a vendor for approximately $1,500 per month and a per meter click charge of up to $0.055 per image (regardless if imaging 8.5x11 or the maximum size which is approximately 12x18). These units are typified by the Konica-Minolta 6500/6501; Canon 600; Xerox 700 and like machines. These prices cannot assume to be reflective of digital presses such as the Indigo (HP), iGen (Xerox), Nexpress (Xerox).

Price Does Not Determine Profitability

A company can be profitable with either a low price or a high price. In fact, it’s not the price of the product itself that determines profitability. It is the relationship between total sales (price x units sold) and the other wage and overhead costs of a business that determine profitability.

High price x low units sold minus (direct materials + wages + overhead) = LOSS

Low price x high units sold minus (direct materials + wages + overhead) = PROFIT

What Does

Three factors determine a company’s total volume and profitability: Price (yes it is a factor but there is no direct relationship between price and volume; rather it is indirect), Product (differentiated for the customer’s use and thus higher or lower value to the customer); and sales activities. A complete discussion of this may be found in the resource section at www.crouser.com under the title of The Role Price Plays in Volume.

How We Determined Market Value?

We utilized all available resources to the industry to study digital pricing. As the latest public studies were several years old, we embarked on establishing a study of our own. We began by inviting a small group of printers (50) to help us establish parameters of digital pricing.

From that we were able to establish a consensus on various production factors. Among them were the typical run lengths on the equipment studied (usually less than 1,000 and rarely over 5,000); those things that effect prices such as RIP times (5,000 images of one original process faster than 50 images of 100 originals); and those things that effect running speed such as size of the substrate being imaged (8.5x11 vs. 11x17, for instance) and thickness (card/cover versus text/offset).

We then opened up the study group to others and expanded to a total of 250 individual firms. With these we then studied various elements of price such as the typical price of 1,000 11x17 text/offset. But we did not just study the price point. We also gathered information on the cost of the paper stock being priced and developed a correlation between paper costs and price. It is from these that we were able to develop a variance on a price point based on the cost of paper (substrate) being processed.

We also studied the outer limits of price so we could reliably predict price points between the outliers. Specifically we gathered prices at various points from 10 through 5,000.

On these various price points, we used the percentile between the quartiles method which is a fancy name for a simple process. Example: take 100 pricing points and stack them up from the smallest to the largest. Count up from the bottom to the 25th price and that is the first quartile (25%). Continue up to find the 50th number (median or number in the middle). And then continue to the 75th number or the 75th percentile.

The relevant range of this data range is from the 25th to the 75th percentile with the 50th being the more typical. It is possible from this to determine that a relevant range of a specific price could be something like $15 (25th percentile) to $50 (75th percentile) with the typical price being $35 (50th percentile or median).

What about the average? If one has enough data to form a normal distribution; then there is a whole range of statistical methods available, one of which is the average along with standard deviations. However, without enough data to form the normal distribution, the average can be misleading (skewed high or low).

Example: five price points are as follows:

         $ 100
         $ 50
         $ 45
         $ 40
         $ 30
         $ 265 Total

The average of these five numbers is $53 ($265 / 5 = $53). With the percentile approach, the 25th percentile number is $40, the 75th percentile number is $50 and the median or 50th percentile number is $45 which is more descriptive of the data set than the $53 average. In this case, the average would be considered to be slanted to the high side (high skew).

Within the Crouser Guide, the X or low book would approximate the 25th percentile number, the Y or middle book would approximate the 50th percentile or median number and the Z or high book approximates the 75th percentile result.

Do Over Survey

A major feature of our study is the fact participants had an opportunity to review the data they submitted along with the relevant range of results and had an opportunity to “do over” or correct any entries that were in error. We recycled this new information into the database to have a more accurate representation of the relevant range.

Permanent Study Panel on Prices, Wages and Costs

We continue to upgrade the information used in our guides by maintaining a permanent panel of owners who participate in information gathering of prices, costs and wages. We invite you to participate as well. You may sign up at www.crouser.com as well as learn the benefits and tasks required. There is no cost or obligation for participation.

Difference in Price Surveys and a Guide

It was from these studies that we were able to determine market values. But just because a typical range of $15 to $50 with a most typical of $35; doesn’t necessarily mean you should put your price point at $35. You may be in a higher cost area or a lower cost one. More often, surveyed price points aren’t necessarily logical, for instance a higher quantity could sell for less than a lower quantity in some cases. A guide takes these abnormalities into consideration and presents a logical price plan a printer may implement.

Various Levels for Varying Costs

In all Crouser Guides, there are three levels: X is low; Y is middle; and Z is high. As a note, there is a wider spread in the variance between the low and high guide in digital printing as opposed to offset. The main reason for this is the natural evolution of the price level.

Almost all new products or processes start off at a higher price because the market will support a higher price for a new or innovative approach. When new, variable windshield wipers were only found on higher priced automobiles. As the production process produced cost savings and as demand increased; one or more of the producers begins selling for a lower price. Today, variable windshield wipers are found on even the least expensive of automobiles.

This tendency has a bearing on printing. Offset printing is an older process and is available from many sources. As a result the main price driver in offset is the cost of production plus a markup. Digital printing, on the other hand, allows for lower total costs (for instance, you can buy 100 full color images today when not that long ago a practical minimum would be at least 5,000). However, the unit price of digital is much higher than offset. The customer looks at the total amount of cash they have to hand over for an item. So, offset will still continue to be a lower per unit cost.

If you would like to discuss more boring information like this, please message me at tom@crouser.com. I enjoy chatting about it which obviously means I don’t have a real life.