Digital Press User Forum, Barcelona Spain, September 17-18

Waleed AshooPresident/CEO LithexcelPresident/CEO, Lithexcelwashoo@lithexcel.com

(505) 243-8560 2408 Alamo Ave SE

Alb N M i 87106 USAAlbuquerque, New Mexico 87106 USA

www.lithexcel.com

Content

• Introduction• Waleed Ashoo Background and History• DICE (Digital Imaging Customer Exchange)• Lithexcel, Communications Services Provider

• Value Pricing• Cost Plus use for Commercial Printing – low margin• Value Pricing for Digital Print – high marging g g g

• Successful transition from Conventional to Digital high margin work

• Value Based Campaigns• Value Based Campaigns• Building the Business Development Team

Waleed Ashoo

• Involved in Graphic Communications since 1977.Involved in Graphic Communications since 1977.• Began the conversion process of Lithexcel from a

commodity commercial printer to a high margin digital printer in 2006printer in 2006.

• Frequent speaker at various Digital Printing related conferences and other Printing Industry related events.

• Member of Xerox Premier Partners and workshop leader at Xerox Thought Leadership Workshops.

• President of an industry group Digital Imaging CustomerPresident of an industry group Digital Imaging Customer Exchange “DICE”

• Member – PODI & PODI S3 Peer (Solution Selling)

Digital Imaging Customer Exchange

• DICE, is the only membership organization run byDICE, is the only membership organization run by members who own a variety of digital presses. 1st

year member ship is free www.dicegroup.org• DICE a user group of over 400 members• DICE, a user group of over 400 members

operating digital presses from HP, Kodak, Xerox, Canon, Xeikon and Presstek.

• Online Technical Forums helping with solutions to daily problems 24/7

• Owners managers and sales professionals canOwners, managers and sales professionals can deal with far-reaching business issues on dicemail.

2008 DICE Conference

• April 26 27 28th 2009• April 26, 27, 28th 2009 • Bally’s Resort and Hotel in Las Vegas, Nevada,

USAUSA• Profit University with three tracks:

• Sales and Marketingg• Operations• Data Services

Register online at www.dicegroup.org or Contact Waleed at washoo@lithexcel.com for information on DICE

Lithexcel, Communication Services Provider

• Lithexcel – Commercial Printing & MailingLithexcel Commercial Printing & Mailing Company started in 1989

• 1992 Introduced Laser Image-setters to produce punched registered filmpunched, registered film.

• 1993 B/W Digital Printing Systems added• 1996 Added Color Digital Proofs1996 Added Color Digital Proofs• 1997 Computer to Plate System, eliminating film• 2001 Color Digital Press HP 3050• 2006 Color Digital Press Xerox iGEN3, 110 #1• 2007 Color Digital Press Xerox iGEN3, 110 #2

Developing a Value Pricing System

• Traditional Cost Plus Method to set minimum

g g y

• Traditional Cost Plus Method to set minimum acceptable prices in the market place.• Pricing at or below this level puts undue downward margin

pressure on the company and the market place

• Value Pricing to enhance operational margins• Value Pricing to enhance operational margins.• Considers things your clients value beyond just price by providing

total value for the solutions.

Cost Plus Pricing Example g

Value Added Pricing Drivers for S i P idService Providers

• Clients/Customers• Clients/Customers• Target the correct level of buyer

• Executive level or “C” level vs. mid level manager or lower• Bottom line responsibility, ROI vs. Price responsibility

• Products and Services• M lti t h k ti d t d h t it i th• Multi touch marketing products and what it is worth• Unique services provided and the value

• Peak Load PricingPeak Load Pricing• Varying your prices based on capacity and required turn around

time.

Quick Pricing for Digital Printingg g g

1 49 50 99 100 249 250 499 500 999 1000+

Printing based on 9 X 12 inch or 22.86 X 30.48 cm1-49 50-99 100-249 250-499 500-999 1000+

4/0 .90 .84 .78 .68 .58 .48

4/4 1.80 1.68 1.56 1.36 1.16 .96

K/0 .25 .22 .19 .16 .14 .12

K/K .45 .40 .35 .30 .26 .22

P i ti b d 18 X 12 i h 30 48 X 45 721-49 50-99 100-249 250-499 500-999 1000+

Printing based on 18 X 12 inch or 30.48 X 45.72 cm

4/0 2.00 1.80 1.50 1.20 1.00 .80

4/4 3.00 2.90 2.10 1.70 1.50 1.30

K/0 .30 .25 .23 .21 .18 .16

K/K .55 .45 .40 .38 .34 .30

Additional chargesg

• Additional charges to • Additional bindery chargesAdditional charges to page matrix• Cost of paper +50%

y g

• Folding $15.00/1000 sheets• Scoring $20.00/1000 sheets• T i i $1 00/ t/500 h tp p %

• File set-up of $50.00 or $85.00/hr which ever is greater

• Trimming $1.00/cut/500 sheets• Saddle stitch $20.00/100 books• Perfect Bind $48.00/100 books• Coil Bind $78 00/100 booksgreater

• VDP + mail sort cut + stack set-up $200.00

Coil Bind $78.00/100 books• Hand Work $58.00/hour• Lamination $.35/side/sheet up to

12x18• VDP run $.25/side/sheet• Proofs $10.00 per form

• Coating (Aqueous) $48.00/1000sheets

Value Pricing – High Marging g g

• Strategy Development Fees $135 00/hrStrategy Development Fees $135.00/hr• Creative Services Fees $185.00/hr

• Stock Images at Cost + 50%• Stock Images at Cost + 50%• Writing Cost + 50%

• Programming for Web site $135.00/hrProgramming for Web site $135.00/hr• Web Hosting at Cost + 50%• Email Development at Cost + 50%• Email Development at Cost + 50%• Postal Handling & Delivery Fees $50-$350

Market Strategygy

G tti i iti i ht l ti t titGetting your price position right relative to competitors

P rice to B enefit Map

d pr

ice

Perc

eive

d

V alue equivalence line

P e rce ive d be ne fits

The Price LeverThe Price Lever

Increase Price

101.0 10.1

Profit Increase9 1

1% Improvement in Operating Profit Improvement (%)

Price11

Increase Priceby 1%

Profit Increaseof 11%

100.0

9.1

66.4Variable Cost 7.3

24.5

Price FixedCost

Variable

Cost

OperatingProfit

Volume 3.7

Fixed Costs 2.7

Source: The Price Advantage

Value of Services PricingValue of Services Pricing

Campaign Servicesp gCampaign Brief $6,000Creative and Copywriting $10,000Technical Implementation (Template Creation) $12,000Data Processing $5,500Post-Mortem Analysis $2,000Project Management $8,000Total Services $43,500

Print MediaList Research and Acquisition $8,000Print Cost $12,000Postage $8,800Online Media Placement $4,000Services per drop $4,000Subtotal $36,800Total Campaign $80,300

Pricing StrategyPricing Strategy

Value

Competitive

CustomerCustomer

Transaction

Pricing Formula Opportunity –E l J b S ifi M kExample: Job Specific Markups

Add d V l Hi h LAdded Value High LowOrder Complexity 1 0Available Capacity 0 1Available Capacity 0 1

Incremental Markup 2.50%

ComplexityAvailableCapacity Total Sum Markup

Order had high complexityCapacity is low on that date 1 1 2 5%p yOrder has low complexityHigh capacity on that date 0 0 0 0%

Watch Your Discounts.K Y P k M iKnow Your Pocket Margins

100% 0.53%

66%1.24%

0.67% 97 56%Cash Discount Rebates

Freight

66%97.56%

12%

COGS 14%

Sales Exp 5%G&A

Invoice Price Pocket Price Pocket Margin

• Are customers who get a discount for paying quickly really paying quickly?

• Do customers who are getting a volume discount qualify?g g q y• Are you giving away freight?

Transition From Commercial printing to Di i l Hi h M i CDigital High Margin Company

• Learning to sell the Content and NOT theLearning to sell the Content and NOT the Printed Page.

• Developing a Business DevelopmentDeveloping a Business Development Executive and NOT a print Sales Rep.

• Building a Fast Strike Digital TeamBuilding a Fast Strike Digital Team• Getting to VITO – Very Important Top

OfficerOfficer• Selling Value Only

Value Based Campaignsg

• Database for Target Market = 40 – 45%Database for Target Market 40 45%• Define target market and research clients data for sweet spot• Cleanse and enhance the mailing list by mining the data

• Offer = 40 – 45%Offer 40 – 45%• Prepare a relevant offer• Optimize offer

• Creative and Content = 10 15%• Creative and Content = 10 – 15%• Impact of direct message copy• Strong use of graphics and stock photography

• Ti i 5%• Timing = 5%• Be mindful of time of month, week and any holydays

The Digital Teamg

• Web Page builders• Web Page builders• Graphic designers for Digital• Digital Prepress team and content coordinators• Digital Prepress team and content coordinators• Press operators and Maintenance Techs• B i D l t M• Business Development Managers• Customer Service

i l d• Executive leaders

Business Development Team

• No Printing Knowledge sell the content• No Printing Knowledge – sell the content not the printed page

• M k i bili i V i l M k• Marketing abilities – Vertical Market Specialist

• Data Driven with Mining experience if possible

• Train with Strategic Plan and Marketing

Compensation

• Base Pay for Business Development Execs• Base Pay for Business Development Execs• Commissions of 10% on gross value of all

d l d f i h dprograms developed for six months and then 5% after six months

• Bonus based profitability shared among the team. 30% of all quarterly profit shared among the Digital Team

Additional ResourcesAdditional Resources

• IPA (www.ipa.org): The Association of Graphic SolutionsIPA (www.ipa.org): The Association of Graphic Solutions• GATF/PIA (www.gain.net): Graphic Arts Information

Network• PODI ( di ) P i t O D d I iti ti• PODI (www.podi.org): Print On Demand Initiative• DMA (www.the-dma.org): Direct Marketing Association• 1 to 1 Magazine (www.1to1.com)1 to 1 Magazine (www.1to1.com)• Clemson University

(http://graphics.clemson.edu/VDPROI/)• DICE (Di it l I i C t E h )• DICE (Digital Imaging Customer Exchange)

www.dicegroup.org