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PROFIT: Where does the profit come really come from?

Last week Tim and I made a swing through Southern California calling on old friends who have been loyal our customers  dating back to when we were the Ryobi dealer in SoCal – more than 25 years.  With friends who have been with you that long the conversation usually moves past the niceties and into the real in very short order. 

At some of our stops we asked about their toner based digital machines and, to our surprise, we were given the same review from several seasoned veterans of the printing game. At the end of the day, they said, very short run digital printing just does not provide enough profit to keep the doors open.  Offset, as it turn out, is still the driving force behind the net income that allows them to survive and thrive. 

They all agreed that toner based equipment was necessary to their operation. Likewise they all agreed the image quality was excellent and the technology was getting better and better. New machines are including features previously unavailable and, as always, they all seemed to have variable data capability. So what’s the problem we asked?

They told us that when the final number is crunched there was plenty of profit in the very short run digital market, it’s just that most of it doesn’t wind up in their pocket.  Their appraisal: the costs are just too high.  The substantial machine cost, materials, service, clicks and the cost of borrowing money all conspire to siphon profit from the printer and transfer most of it to the manufacturer/seller.  One expensive lease follows right on the heels of another.  The technology, while impressive, is touchy and sometimes requires the purchase of more than one machine to positively ensure that at least one will be running at all times.  And variable data just doesn’t amount to a high enough percentage of their billing to significantly effect the bottom line – never has. We were told that, while necessary to keep market share, toner based machines in the final analysis really just keep the customers you already have. 

And to a man (Ok, Ok…a couple of them were women) they all quickly identified what really makes them profitable:  Offset.  It seems that no matter how high the technology blasts into the stratosphere the laws of cost v. sell price must still be obeyed. The fact of the matter is you need to run a lot of 100 and 200 runs to equal the profit of a couple of high quality 5000 runs printed on a fast automated offset machine.  With the break even point at about 750 sheet, used Ryobi DI technology keeps looking better and better.

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