In the wide-format graphics market, gross margins are approximately 50 per cent, with net margins ranging from 10 to 20 per cent, depending on the specific application.
Companies looking for the most profitable growth may want to focus on the higher-margin applications, such as window, wall and floor graphics, soft signage and interior decor, depending on which product line extensions make sense for their business model. Working with vendors with expertise in equipment, inks, media, workflows and support across such applications can help a PSP set short- and long-range goals in this respect.
That said, another option is to grow the business beyond its existing customer base. Growing markets for wide-format graphics include not just the likes of retail, food service and entertainment, but also health care and construction, among others.
Another important consideration is the expected lifespan of the newly purchased equipment. Wide-format printers are typically used for only three to five years before another technology that delivers faster speeds and higher resolutions becomes feasible, while finishing equipment may last for about 10 years. Of course, it is ultimately up to PSP to determine when the business is ready to advance to the next level and upgrade its equipment.
Beyond printing and finishing, there are also in-house business opportunities in kitting and installing wide-format graphics. Again, the needs of the PSP’s customer base will help determine if these opportunities are viable now or at a later date.
In other words, when shops expand into wide-format graphics, it is beneficial to consider all aspects of the process. Wide-format printing may represent a natural extension of a shop’s product line, with the current customer base providing demand for lots of work, but the key is to evaluate how exactly the company will sell those graphics, in which volumes, to which specific customers.
Steve Fournier is a wide-format media and applications business manager for Agfa Graphics, based in Mississauga, Ont. For more information, visit www.agfagraphics.com.