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?