Business Tip: Be sure your suppliers have not become uncompetitive

Here is something I learned recently. I had a great relationship with the company that printed our magazines. I had been getting my printing done with this company for about 6 years, and was very satisfied with the customer service and quality. When I first switched to this company, they also offered the best price as well. In the first couple of years following my switch to this company, several other printers quoted our publication, and my printer was always lower in price. After a while, when a printer would call to ask if they could give me a quote, I began to tell them that I was very happy where I was, and that I was not planning on switching.

Last summer, I was looking over the costs for printing Villa Rica News & Views, and I noticed that the cost of printing the last issue was over $1,000 more than the cost of printing the same size magazine 6 months ago. Since the page counts were different each issue, it was always somewhat difficult to detect fluctuations in printing prices, but in this case it was for the exact same number of pages and quantity and the cost had increased by that much. I sent the printer a rather unfriendly email :) telling him that I would have appreciated knowing if my price was increasing. My rep said he would look into it, and as it turned out, they had made a mistake in punching in some of the numbers. So, Lesson One in this blog would be to always go over your expenses with a fine tooth comb. Companies can make mistakes, and this one would have cost me over $1,000.

Lesson Two would be to be certain that when you bill a customer it is accurate. Had they not made the mistake, I would still be with this company.

However, this is only part one of this story. I am a firm believer that God has had his hand on this business from day one, and what follows I really attribute to His workings. It turned out that the day after I discovered the price difference, and day before my printer told me about the error, a printer in another state called and asked if he could give me a quote on my magazines. At this point, I was still not very happy about what I thought had been a large increase in my printing cost. I told the rep that I would be willing to take a look at what they had to offer. This company was one of the ones that had quoted the magazines early on, so I was not expecting much. I also told him that I wanted the price they would charge on a regular basis, not a special discount to get me in the door. He called back the next day and gave me the prices, and my jaw dropped. I really thought he had made some kind of mistake, because the price was several thousand dollars less than what I was paying every month. I actually went over the figures with him, just to be sure. At that point I was really interested. The company flew me up to their plant and gave me a tour, and I was very impressed. Just out of curiosity, I decided to check prices of other printers in the Southeast to see how they compared to my current printer, and the one with the great price. It turned out that out of the 5 printers I called, EVERY one of them had a substantially lower price than what I was paying.

In talking with the different printers, I found that it was not so much that the current printer I had been using all of these years was gouging me. Instead, over the course of the time that I had been with my printer the magazine had grown from 10,000 circulation to 38,000 circulation, and the page count from 64 pages to 112 or more a month. I had really outgrown the range in which my current printer was competitive. There were several reasons for this. My current printer ran 8 pages at a time, and about 30,000 sheets per hour. The new printer ran 16 pages at a time, and 50,000 sheets an hour, so combined they were running about 3 times the speed. The current printer's equipment was about 30 years old, and required more people to run the press than the one year old, state of the art press at the new printer. There was only about 15% as much wasted paper between pres runs at the new printer. The technology of the newer press resulted in about 70% less down-time between sets of pages. The new printer is in a small town, and has low overhead, whereas my current printer was in Atlanta.

This whole experience was a Godsend, because during this recession, sales had declined somewhat, like just about everyone else. Also, paper costs had risen, especially during the time of high fuel costs. We do not like to raise ad rates unless we can give the customer something more for their money, so our bottom line had been declining. The lower printing prices have enabled us to maintain our profits to the point where we will not have to raise rates, and have even allowed us to add a little more content to the magazines, which do not generate income.

The Moral of this story: Even if you are very happy with your current suppliers, you should get quotes from other vendors at least every year or two. You will either save money, or at the very least be comfortable in knowing that you are getting the most for your money!