Printer Purchased Paper – eight questions
the catalog or magazine publisher needs to ask
By William Lufkin
In all the years I have been working with catalog and magazine publishers, I am always amazed at how many of them casually accept printer purchased paper as a part of their print contract agreement and miss out on opportunities for significant cost savings.
While the printer purchased paper model is appropriate for many, the publishers should consider the following eight questions before conceding the printer entitlement to paper purchasing.
1. Is the paper mill supply allocation in the printer’s name or the suppliers?
In a tight market the publisher may not have flexibility to move to another printer if the paper
allocation iis with the incumbent printer.
2. Is the printer’s purchasing power that much better than the publishers?
Many medium or smaller printer’s have no particular edge over many publishers that could
utilize the services of larger paper merchants or brokers to leverage size and relationships
with the mills.
3. Is the printer’s markup reasonable?
In most cases the markup percentage is not overtly stated. Normally, the printer will not share
information on their true net cost. Paper is a profit center, just like manufacturing, and printers
attempt to make as large a margin as they can.
4. During a declining paper market, does the printer pass on paper price reductions in a
timely manner?
During the last down cycle, paper prices dropped rapidly and while a printer may have given
the publisher a $2.00/cwt. price reduction for a given quarter, did the printer’s cost actually go
down $3.00? During times of escalation, the printer passes on full price increases right away.
5. Does the printer share the sometimes price advantage of a spot paper purchase with
the term contract publisher?
The answer is likely no. Most spot paper purchases are aligned with specific spot printing jobs.
6. Does the printer keep the cash payment discount?
Yes, whoever pays the mill is entitled to the discount for paying within
20 days of mill shipment.
7. Who gets to keep the value of paper underconsumption?
In most cases of printer purchased paper, the printer is entitled to underconsumption,
if any, on an annual accounting basis. When the publisher purchases the paper, the value
of underconsumption is usually shared 50/50.
8. If the publisher prefers the simplicity of printer purchased paper, does the printer
allow the publisher to specify which mill the printer should utilize?
Most likely, the answer is no unless the print contract award is contingent on the publisher
retaining the right to direct the purchase.
In these difficult economic times, the catalog or magazine publisher should not overlook the potential cost savings opportunities in purchasing your own paper. In considering the eight questions above, you may uncover the value of controlling your paper purchasing. Soft paper markets may be the best time to reevaluate which paper purchasing model makes the most sense for the publisher.