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Wide-format Graphics: Factors affecting print profitability

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Photos courtesy EFI

By G. Scott Wood
The large-format sign and display graphics sector continues to grow and represents a significant portion of today’s marketing mix. According to InfoTrends, a strategy and consulting firm for the digital printing and document technology industries, the retail value of large-format graphics increased by a compound annual growth rate (CAGR) of 7.9 per cent from 2010 to 2015. From the world’s largest brands to small businesses, non-profit organizations, schools and even individual consumers, the demand for short-run, wide-format graphics for promotions, special events, point-of-purchase (POP) displays and other applications has never been greater.

With this sustained year-over-year growth in the sign and display graphics business, wide-format digital inkjet printing continues to represent a strong and attractive profit opportunity for printing companies. As a result, many print service providers (PSPs) are now bolstering their product offerings with wide-format inkjet-based output.

In some cases, they are helping their existing customers expand into signage and further large-format graphic applications. In other cases, they are seeking to attract new customers with the in-house ability to produce high-quality, high-margin graphics on demand.

Buying a new wide-format digital inkjet printer, however, is a significant investment that must be carefully considered beforehand. It is important to analyze the true costs of running the machine, among other factors that can affect its return on investment (ROI).

The first step in determining the ‘bottom line’ involves evaluating the current state of the business and its existing graphic production platforms. Many PSPs and sign shops already have some type of digital inkjet printer and may even already be fully digital facilities, but not all of these output devices are created equal. They can differ in terms of both ‘hard’ and ‘soft’ costs, inks, printing capacity and volume and environmental sustainability, among other factors.

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The demand for short-run, wide-format graphics continues to grow across a broad variety of organizations.

Productivity
For many shops considering a major investment in a new printer, the natural inclination may be to look for the best deal, but this does not necessarily mean choosing the lowest price. ROI and ongoing profitability are based on more than the initial cost; they will also depend on what types of jobs the printer will handle, how many square feet of graphics it will output each hour (i.e. throughput), the quality of that output, the colour gamut and the types of inks.

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All of these factors must be considered together to make the right decision. More important than how many square feet of graphics can be printed in an hour, after all, is how much profit the shop can make from selling each of those square feet.

Further, production capacity that goes unused or output that will have to be heavily discounted will erode the value of the printer. So, it is important to calculate how many hours of production per day or week, based on a level of work the shop can reasonably expect to sell at the right price, will be required to achieve a reasonable ROI. The equipment should pay for itself as quickly as possible within this context.

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