It was back in 2010 that Laura Hardy, VP Director, Ogilvy, speaking at the PIRA Geneva Conference, made the following observation:
“One of the most useful services a company can have, from my point-of-view, is a cost calculator on their website. This is incredibly attractive for buyers who are constantly juggling multiple potential projects for clients who may or may not be entirely clear about what they want and what the available budget is.”
Three years earlier, in September 2007, Steve Vaughan, former chief executive of Communisis plc, had forecast a complete overhaul of the way pricing works within the industry, publicly declaring in the UK’s leading trade magazine, PrintWeek, that:
“The most significant technology of all is automated online estimating”.
He speculated about the way in which online quoting tools would alter the landscape of the sector, stating they could “act like an enema on the market” before concluding, “Whether it’s our solution or another quoting system, the market will become more lubricated … this can make a much bigger difference than faster presses.”
Vaughan compared the effect automated online estimating would have on the print industry as being equivalent to the impact internet booking has had on the hotel trade. The British Printing Industries Federation (BPIF) former chief executive Michael Johnson agreed with Vaughan at the time, stating “We would endorse that this is the type of technology we have to adopt as an industry now. It’s a decisive moment. Get ready.”
Ten years later and the question is where is it all? Where are the instant automatic online estimating solutions so eagerly anticipated by the most influential names in the sector at the time?
The answer is somewhat complicated. Printers themselves do recognise the need for providing customers with access to instant prices, but have never quite figured out how to do it well; or cost effectively. In the marketplace generally, this has led to one of three typical approaches:
1. The printer develops a home-grown system based upon price matrices. Not only is this a tricky technical piece, but also means maintaining a large array of pre-determined pricing for a fixed range of products. It is not very flexible and is cumbersome to administrate.
2. The printer engages a third party to provide the instant pricing service for them. This may be similarly based upon price lists or, in some cases, a print production algorithm. The latter is better than the first option in terms of product flexibility, but can be similarly complex to set up and maintain. Also, the results are often not ‘production-correct’ – even in systems that make a claim for it.
3. The printer decides not to give the customer access to automatic online pricing but, instead, uses desktop estimating tools locally to get back prices ASAP to customers. Whilst this method can be effective, it is not, in Laura Hardy’s own words “incredibly attractive for buyers who are constantly juggling multiple potential projects for clients who may or may not be entirely clear about what they want and what the available budget is”.
In all cases, then, whatever system is deployed by a printer, it can end up becoming perceived as ‘more trouble than it is worth’. That there is a need for automatic online pricing, however, does not appear to be in doubt.
Heavy duty maintenance
By way of an example, say a printer wanted to offer the following pricing options for a range of products in its website:
- 4 size options
- 2 printed side options
- 26 paper options
- 2 orientation options
- 3 colour options
If the approach is to provide the simplest pricing mechanism possible, that of bolting on an additional price for each option selected, then this product will require 37 fixed and 37 variable prices to function correctly – 74 in total.
It won’t be a particularly sophisticated pricing model if done this way; but it will be relatively practical. Bolting on price blocks piece-meal, however, rarely reflects the way an actual cost is evolving with each new production variable. Nevertheless, it is a limitation that must be accepted if price matrices are to be adopted for the purpose. Neither does a single fixed and variable cost approach accommodate very well the variances encountered with greater productivity gains for changing quantities. It is therefore likely that pricing points based upon discrete quantity bands will be used. Even if the bands are relatively broad – blocks of 1,000 say – then this will add an increasing number of dimensions to the pricing required for the model to function effectively.
If we assume a practical price band structure of blocks of 5,000, say, this will result in a twenty-fold increase in prices required to construct the pricing for a single product on the website (where a maximum quantity of 100,000 is practical). So, 74 prices now become 1,480 prices needed – for a single product.
Now imagine there are 13 automated price products listed on the website. If we assume the same requirement for basic pricing for each of these, this brings the total initial quoting exercise for the site to function adequately to 19,240 pricing elements.
This is both a large upfront and ongoing administration cost in order to offer automatic customer pricing, especially as it is based upon price-list principles and not production principles. Granted, production estimates will have been calculated in the first instance to construct the price lists, but it is a well understood limitation of the methodology that these will not particularly accurately follow a production curve; unless they contain a significant number of production property / quantity break points.
What is what this ‘significant’ number out of interest?
In order for the website to provide price-list pricing that is approximately equivalent to genuine production-logic pricing curves, it would need to have a constructed price list of:
4 (size options) x 2 (printed side options) x 26 (paper options) x 2 (orientation options) x 3 (colour options) x 13 (product options)
= 16,224 pricing points per quantity requested.
Even if we took a short-cut and used quantity blocks of 100, it would still require 1,000 discrete quantity break points x 16,224 pricing points
= 16.2 million individual prices.
Assuming any sane printer is put off by the thought of first constructing and then maintaining 16.2 million prices on its website (a reasonable assumption), we can safely speculate that any website offering instant product pricing will have adopted a simpler approach; probably requiring the management of no more than a few thousand pricing elements.
It turns out then, that hosting a relatively basic website offering instant customer pricing based upon nothing but price lists is very heavy duty stuff to set up, manage and maintain.
The technical challenge of providing an online estimating tool should not be overlooked. Desktop estimating solutions are difficult enough to set up and use, let alone online automated variants of these – even for an expert. As discussed above, the sheer volume of estimating in advance and ongoing is enough to put many (most) printers off the task.
An additional issue is that of system isolation. Most systems that have been developed to operate online for the benefit of a customer are often quite crude and rarely integrate into the printers back-end MIS and workflow tools. This lack of integration creates the concept of ‘double-keying’ for a printer. With a focus on efficiency and streamlining these days, this has become the final nail in the coffin of the automatic estimating ideology; at least for printers themselves.
The dream of placing front-end estimating into the hands of printers’ direct customers, then, has remained largely unfulfilled until the present day.
Better late than never
It has been seven years since the benefits of online estimating were first discussed at the PIRA Geneva Conference and ten years since industry leaders were speculating on the rise and rise of automated customer pricing. The fact that these predictions have taken so long to manifest into the marketplace as actual products need no longer concern us, for 2017 will come to be remembered as the year in which the printing industry at long last began to adopt the practise of instant automated customer pricing.
Here’s how we are going to do it:
For the last ten years, Haybrooke Associates has been developing an instant estimating and pricing solution that is built upon pure production logic. Initially sold directly to printers for use in a desktop environment, ‘PDQ’ (predictive dynamic quoting) later became adopted as an online tool by professional buyers of print and used as a method to obtain instant automatic prices from their supply chain.
Now, we have been re-engineering our product to make it deployable as a printer’s online customer automated estimating and pricing tool.
Recall the 16.2 million prices you would have to prepare to setup and operate your pseudo-production price list environment? We can replace that with a 15 minute setup process. That’s it. 15 minutes and you are ready to begin inviting your customers to get instant automatic production-based pricing from your website.
It is not based upon price lists, templates, industry averages or any equipment similar to your own. It is based upon your actual equipment. Then, for every quote processed, our system creates a full production cost breakdown – exactly like your MIS – so you can see how the machines have been deployed for this job specification, with costs shown for all production elements calculated.
For your customers it is a joy to use. Clear product images, simple user interface, logical quote progression – all on one screen. Unlike price-list driven websites, all product variables can be accommodated. Any finished size, any quantity, any colour combination, and special processes and any other variation of specification a customer can imagine; no matter how diverse.
Then, the customer can place an order with you, simply by clicking on a link. This can activate any number of additional system checks and balances, such as internal order approvals, customer spend limits, capacity reservations checks and job progress; a true ‘Amazon-like’ buying experience for your customers.
For your convenience, our solution has a built in API that can be used to collect all quoting and ordering activity and pulled directly into your MIS. Our XML is JDF compatible, so integration with your MIS vendor should not be a problem, if needed – but it is by no means obligatory.
We call it pdqsaleshub. Get in touch today to find out how it can help your printing business thrive.
As for Michael Johnson’s words of 2007 “…It’s a decisive moment. Get ready.” We have just one thing to add: