The pricing/branding conundrum

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magcloud
The MagCloud website
The MagCloud website
The MagCloud website

We had a major problem with a small, and simple solution, requiring the reprinting of a modest number of copies of one of our publications. I called the printer who we have used for the entire project, asked if the company had the necessary digital files on hand, and if so, if their representative could provide me with a working quote. It took a couple of days, but the price arrived — $100.00 including shipping. This is such a small number, and we had sufficient trust with the printer, that I gave the immediate go-ahead.

Then, on a whim, I decided to cross check the pricing with another digital printer, HP’s MagCloud. I’ve always seen this service as being “not cheap” and indeed it is downright expensive for larger jobs. However, the MagCloud system has an instant pricing calculator. I plugged in the same numbers, and (depending on shipping options), discovered I could have the same work done, delivered in a timely manner, for a bit less than $70.00.

Our business is not that huge, but we routinely spend $10,000 or more per month on printing with four printers, selected for their capacities, location, credit terms and, last on the list, but nonetheless a factor, pricing. I immediately emailed the printer whose rep had quoted me $100.00 for the what-can-be $70.00 job, and told her: “Please hold this work.”

Her response:

I am . . . checking with our Pricing Manager to see if there is anything that we can do to help.

A rearguard action, of course. What happens if the original printer now arrives with a quote for $60.00?  My immediate and instinctive reaction is to speculate how much I’ve been overpaying for the other, larger jobs — or that the printer is prepared to take a loss on a very small project to retain client loyalty.

The branding damage has been done, however. MagCloud may not deliver highly personalized service — I’ve never spoken to a real person at that organization, as everything is online and automated — but the organization has always delivered the low-run digital projects in a timely manner. I’ve never believed we were getting a  bargain-basement price from them, however, and have always hoped/imagined that there could be a better price.

Not, however, it seems, from the alternative printer who we were using for some of our US projects, at least for print runs this size. Rationally, I can see and explain the pricing difference. The $30 to $40 savings would easily be eaten up by the time/resources in a human preparing a one-off pricing estimate, allowing for the time and paperwork to co-ordinate the quotation process.

Nevertheless, some branding damage has happened. Not quite to the level of another, former supplier, who had been charging us $500 a month for services readily available from other suppliers for $250. In this case, when caught out, the overcharging supplier came clean and offered — without prompting — to refund the entire overpayment for a year’s services. He preserved the relationship.

The branding concept — and marketing’s foundation — relates to trust and the ability for the successful marketer to earn less price or sales resistance for the marketing investment.  If we can collect a higher price for the “same” services, we achieve exceptional profitability. Alternatively, if our branding effectiveness reduces direct sales costs because the potential or repeating client doesn’t question the relationship or require sales effort/energy to decide, you reduce your sales costs, and again profitability.

However, there is a boundary here. The bottom line still counts. I won’t throw the over-charging printer out because of the pricing gap here, especially since it can be explained by hard estimating costs. But I’ll cross-check every quote from this printer for the next while — so the printer will need (if smart) to also against MagCloud’s visible quotation system and be sure to be competitive, if the company wishes to retain my business. All the branding and “customer service” in the world don’t make much difference, in the end, if the pricing can be reduced to commodity specifications — when you know both suppliers can effectively deliver the same quality levels.

Marketing/branding has its limits in the real world, it seems.

(I won’t name the higher-priced printer here, in line with my policy not to negatively identify individuals or businesses in this blog.)

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