Saturday, July 25, 2009

Prices - up? or down? Costs - up? or down? (and Recent Bid Results)

When I was in the reprographics business full time, I made it a habit to follow government bidding activity for procurements for reprographics services. To me, the importance of following government bidding activity is that it helps one determine the "low" end of pricing action in a local market. While competitors like to keep their "lowest" prices secret (between them and their larger customers), prices bid to government agencies are easily accessible by anyone who wants to see who bid and what each bidder bid.

Understanding pricing in your market is essential (at least I think it is!)

Now that I am not working in the reprographics industry in the U.S. (I'm not permitted to do that), I only have a passing interest in government bidding activity - - - simply an interest in following the action (old habits are hard to break) - - - which means that, from time to time, I will check on who's bidding what.

In a recent competition for reprographics services for Pinellas County Schools, and this procurement supports the construction and renovation program for that county school system, there was (evidently) a heated competition for the procurement, several Tampa Bay area reprographers submitted bids. If I were still in the business in the Tampa Bay Area, I would have requested the details of each bidder's bid. But, since my interest is "light", I only took the time to look at the winning bidder's detailed bid.

Florida Reprographics (of Tampa) was the awarded vendor. Two year contract. If you want to view the detailed bid that FR submitted, go to this web address:

Florida Reprographics bid $.04 per sq ft for large-format black & white digital bond paper prints. That price was less than the successful bid the last time this same procurement was bid. And, for the previous procurement, the price that was bid was less than the successful bid 3 years before that.

As a matter of fact (this, since I know the history of this procurement pretty well), the price FR bid for large-format b/w bond prints is the same price that was bid for diazo prints (bluelines/blacklines) several years (I think about 9 years) ago.

I am SO OLD that I can remember when reprographics firms charged cheap prices for diazo blueline and blackline prints, but charged fairly high prices for large-format "digital" bond prints, that service, at that point, was considered a "premium" service.

In the reprographics marketplace and regarding unit prices for different services, what starts high always eventually comes down. I can remember when we charged $3.50 per copy for an 8 1/2 x 11 color copy. I can remember when we charged $18 per sq ft for large-format color poster prints. I can remember when we got $1.00 and $1.50, respectively, for large-format black & white xerographic plain bond and vellum copies. Heck, I can even remember when we got $4.00 per sq ft to plot b/w on mylar.

The point being is that it is a given that prices (for any individual reprographics service) always trend down over time.

On the other hand, how many of you (reprographers) have incurred price increases for plain bond paper since the recession first began to set in? The paper industry (the industry that manufactures and converts) large-format bond paper could easily be described as an "oligopoly." When only a few firms are involved in manufacturing something, prices generally increase when any one of the manufacturers announces a price increase. In other words, one starts it, then the others climb on the bandwagon. And, they all benefit.

Since the this damn recession began:
1) have your prices for large-format b/w printing services trended up or down?
2) have your paper costs (for large-format bond paper) trended up or down?

If prices (charged) are trending down and prices (paid) are trending up, that's an awful thing, especially when volumes are substantially reduced.

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