Steps to Take Before Purchasing a Digital Press

By | May 7, 2010

I am working on a new presentation for the MFSA show in Charleston, SC, in June. The title is “Business Strategy: Steps to Take Before Purchasing a Digital Press.” In my opinion, the first consideration is the ROI. Unlike offset presses, which used to have an ROI of 10-15 years, we recommend an ROI of 2-3 years for a digital press. To calculate your ROI you need to consider your selling price, value add and volume.

Here is a high level review. Your selling price falls within a range between your TCO (total cost operation) and the highest competitive price in your market place. Typically to win higher volume work or contracts requires more of a discount. If you’re considering bidding on higher volume work, you may be able to negotiate a lower click charge with the manufacturer. If true, then you may need to recalculate your cost/page.

Your volume calculation should be based on your existing volume and/or your outsourced volume. In fact, we agree with our members who say that the best way to add new services is to initially outsource until the volume justifies the purchase. In the NAPL 2007 State of the Industry Report, 65% of respondents said this was their preferred strategy. And, last but not least, we do not recommend including additional “promised” volume from customers or “optimistic” sales projections.

Those are my ideas. What do you think?

Howard Fenton is a Senior Technology Consultant at NAPL. Howie advises commercial printers, in-plants, and manufacturers on workflow management, operations, digital services, and customer research.

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4 thoughts on “Steps to Take Before Purchasing a Digital Press

  1. Henry Freedman

    Howie and readers, the economics of the digital press is a function
    of the reliability and image quality. Many in our industry spend
    hundreds of thousands of dollars without reading the fine print
    or preparing documentaion to hold the vendors feet to the fire
    if service or image quality drifts. A press, after all, must print
    an accepatble image reliably at an affordable cost. Since the
    press vendors in esseence turn you into a franchise (taking money
    on each page you print), you should mesure the image quality
    of the press before accepting it and attach samples to the contract.
    You should also track service requests and response times. This
    log will be invaluable when problems occur. One client of mine had
    over 1,000 hrs of downtime since the vendor repeatedly could
    not service digital presses they have. So when you speak of TCO
    nothing is more important and is often overlooked.

  2. Dennis Beck

    I don’t agree that your price must fall between TCO and the highest competitive price in your market area. I believe that part of the structure of pricing is the value that can be placed upon the product that the customers holds. That is how much does he value YOUR SERVICE. Your product is only one aspect of that. Some customers want the lowest price and they could care less about your service-that is they want it now and they don’t care how you do that. These are the worst customers and the ones to avoid. However, your best customers are those customers that value your service,where price is not the main reason they deal with you, these customers will pay more than the “highest competitive price” because they want YOUR SERVICE AND ATTENTION. I believe that examining your main customers bases is as, if not more important, than negitiating the click charge.

  3. Paul Edwards

    Howie, Here is a top 10 list I posted recently on Print Planet.
    Here’s my top 10 list in making an equipment decision.
    1> look at costs for lease, maintenance, and supplies for each machine. Make sure that both companies reduce the costs to a common format that you can clearly understand. This will include costs for overages, supplies, B&W vs. color, and different sheet sizes.
    2> ALL new lease MUST include some kind of a fair cancellation clause that you can exercise unilaterally for whatever reason. This can be done very easily. Also, make sure you clearly understand who you lease is with. Chances are it will not be with the same exact company or division offering the machine.
    3> Select 10 jobs that clearly demonstrate a cross section of the applications and materials which you will want to print on the machine. Ask for a live demo with you present and actually pushing the buttons and loading the files and materials into the machine. Hands on is a must for your evaluation.
    4> Ask the equipment sales person to show you samples imaged on their machine model of other applications which will allow you to expand your sales offering. Also find out how long he/she has been in this position and how many sales rep peers he has locally. These people change positions almost every year.
    5> Xerox also has a Xerox Supplies organization. Ask to meet with the Xerox Supplies rep for your area and to review all of the specialty substrates that are qualified by Xerox for your exact machine. Substrates like ID cards, magnets, synthetic papers, labels just to name a few. Not sure if others have a supplies group to support their equipment. The Xerox Supplies rep may be able to show you enough new ideas to pay for the machine in increased sales revenue.
    6> Ask to visit three account that are using the machine that you are considering
    7> Ask to meet with your service rep and his manager to personally discuss your service level requirements. Find out how deep the service organization is and whether they are expanding or reducing staffing. Also find out level of training for your rep.
    8>What is the profile of your intended customer base. Find out if the machine company is also selling similar equipment to your customer base. This can get a bit sticky if they are also selling your clients while you’re are trying to build your revenues to support your new machine.
    9> Ask what types of business development operator or sales training programs the equipment company is offering for FREE with your new machine
    10>Lastly, ask the machine company to document in writing the guaranteed duty maintenance counts for the machine. If the PM cycle is 50,000 impressions then they should document it and explain what they are willing to do if your actual count is 35,000.

    Some of these are ‘business’ comments, but it is not all about machines and service.
    Paul Edwards

  4. Howie Fenton

    I agree with Henry image quality and reliability is an important consideration. But its also true that “drift happens”!

    I have tested many electrophotographic devices for manufacturers and end users and in my experience drift occurs with almost all of them. The presses where it occurs least are those that have measurement devices built inside them (densitometer, spectrophotodensitometer) which monitor and attempt to compensate for drift.

    It is typically worse with the less expensive devices then more expensive devices. The way most electrophotographic devices work you start to see drift around the time that maintenance is due. And you know you have a real problem is when you see drift and maintenance is not due.

    Maybe we should take a page from the traditional pressroom consultants who tested and “Ok’ed” the presses before finalizing the transfer of ownership. When I worked for GATF there was a team of pressroom consultants who would do press testing either before or after a multimillion press was shipped. In other words the testing could be done before shipping (i.e. Germany) or after shipment and assembly in the plant, or both.

    The process would start by quantifying the performance of the press in the contract before it was signed and include the provision that if the press failed it would not transfer ownership until it passed the test. In the contract we would include measurements of drift while the press was running over a certain number of sheets.

    My good friend and press room consultant Ray Prince has done more of these then anyone. Traditionally with offset presses, density was used as measurement and drift is defined as plus or minus a certain density over a certain number of sheets. I have done this for manufacturers and end users with toner based devices and typically average delta E, maximum delta E and the standard deviation is the measurement, over a certain number of sheets.

    And last but not least I agree that testing, ongoing measurements and use of performance and maintenance logs are a great idea, especially if you get a lemon, because there is no lemon law for printers!

    Howie Fenton
    Senior Consultant, NAPL

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