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On average, print suppliers have 30 percent idle production capacity and are constantly seeking short turnaround projects to fill schedule gaps. Because print companies operate on thin margins, even a handful of unsold hours cause their profitability to erode or evaporate, Snider explained. To obtain projects, such as government work, that fill idle production capacity, suppliers offer extremely low pricing, provided they can do so without establishing precedent that affects future price expectations or their ability to bid on future projects. This strategy is called “contribution pricing” because any income for suppliers out-of-pocket costs “contributes” 100 percent to the bottom line.
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- Companies:
- Government Print Management
- People:
- Deborah Snider
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