Monday, 8 June 2015

Should You Supply Your Own Paper to Your Magazine Printer?

This is a question that has surfaced numerous times over the course of my career. Honestly, I always have hated to hear it because I knew that the publisher asking it would be skeptical about my answer. I think its pretty safe to say that most everyone knows that printers make money when they supply paper to their customers. The amount varies by printer as some view paper as a source of additional profits and others just want to cover their associated costs of acquisition and handling. Does it matter how much a printer is making on the paper that they are supplying to you? No!, it shouldn't; but that is only provided that their prices are market competitive AND you are getting what you are paying for. The big AND is because I have worked with a magazine publisher recently where the paper they were actually getting was at least 2 grades lower than what they were paying for. They had no idea until I brought it to their attention and it had been going on for quite some time. To make matters worse, they were overpaying by something like $10.00/cwt (assuming they were getting the grade that they were paying for, which they weren't).
Anyway, as a result of this fiasco, this publisher asked me my thoughts about buying their own paper. Again, I have been asked this questions numerous times over the course of my career, mostly during very soft markets when paper merchants are out actively trying to get rid of excess paper. Regardless of whether this question was asked 20 years ago or is being asked today, my answer remains the same:
If you are a small trade and special interest magazine publisher with 1-5 titles (and without knowing your specific circumstances) the general answer would be no, you should not. The following is my support for this answer:
A consumer of paper has 3 potential options for buying paper - a) through the printer b) from a paper broker or c) mill direct. In the case of most trade and special interest magazine publishers, you are going to be too small to buy mill direct so I will not include the pros and cons of that option. So lets check out the other two:
Printer Supplied Paper
First, there is really only one perceived "con" to buying your paper through your printer and that is that in most cases you are paying a mark-up. Again, the percentage varies from printer-to-printer. Now, this gets somewhat complicated because, although you might be paying a mark-up, it doesn't necessarily mean that you are paying more for your paper. Its like anything else, it just depends on what you are comparing it too! Just don't assume that if there is a mark-up being applied that you are overpaying. The bottom-line on pricing is that you have to compare the quoted price to something of similar specs to make a determination on a fair price.
Let's look at what you are getting for the mark-up that is applied to paper supplied by your printer because, I am telling you, in the end, it's worth every penny!
1) Administration. Believe me, administration is a hassle. Remember, when you supply your own paper it is your responsibility to make sure that there is enough paper on the floor to complete your job. This requires coordination between you, your printer and your broker. It may seem simple enough however it is time that most don't have these days. And it's equally critical that you manage your inventory so that you do not have too much paper sitting on the floor costing you money when it's not being used. When your printer supplies your paper, this becomes their problem and they know how to manage it effectively!
2) Flexibility. As a magazine publisher the chances are that you don't make many major last minute changes in page count or quantities. But, if you do, will your broker be ready and able to respond? And, if they can, at what cost? Again, printer supplied paper make this their problem, not yours.
3) Quality. Buying paper through your printer guarantees quality. In a soft paper market, brokers are typically able to supply high quality, A-grade paper because it is readily available. However, when a market tightens, many times what brokers have available to them are "seconds" or mill/printer rejected paper. I recall an incident when a publisher supplied their own paper to our printing company and we found that it had been paper that we had previously received directly from the mill and had rejected it for quality reasons. The bottom-line - it didn't run! The cost to the publisher, for this one problem, was far more than the planned combined annual savings that would have been realized by supplying their paper to us. We worked to provide some relief to this customer but they immediately went back to "printer supplied" paper.
4) Availability. Again, when the market is soft, availability is generally not an issue. However, when the market tightens up quickly, it can suddenly become one. Again, I had a customer who insisted on supplying his/her own paper. There came an issue, for reasons that I do not recall, where they were suddenly unable to get their paper to us in time. As a result, they were pleading with us to help them out and find them the paper that they required. The problem was that we simply didn't have it to give them. We were ultimately able to find them the paper that they needed however it came at a cost so great that it far surpassed the combined annual savings that they had planned to realize by supplying their paper to us.
5) Carrying Costs. When you buy paper from a broker, you will typically have 30 days from the time of delivery to make payment (although there are some brokers who will bill upon use rather than delivery). With printer supplied paper you will have typically have 30 days (or whatever your credits terms might be) following shipping of the magazine to pay your print bill, which includes paper. Obviously, if you are not working with a broker who will bill upon usage rather than delivery, this ties up your money prematurely.
6) Printer Handling Fees. Almost all printers charge a handling fee to customers who supply their own paper. This fee can range anywhere from $.75/CWT to as high as $2.00/cwt. Regardless of which end of this range you consider, the percentage the number represents of your overall savings per CWT for buying through a broker is significant. Printers who want to discourage customer supplied paper will be at the higher end of the spectrum while printers who do not mind customer supplied paper will be at the lower end.
This brings up another point worth mentioning:
There are some smaller printers who simply do not have the volume to purchase paper cost effectively and efficiently as they are required to purchase paper from brokers rather than mill direct. I worked for a printer in my past that just could not guarantee my client that their paper would be consistently of the same mill, brand and quality unless the customer used a weight and grade of paper that they (the printer) specified. These types of printers (typically not magazine specific printers) have no problem with their clients supplying their own paper. It is extremely important that you work with a printer who can, and will, get you the paper that YOU want rather than what they can get. Again, if you have to supply your own paper because your printer cannot get you what you want/need, then you are with the wrong printer.
Broker/Merchant Supplied Paper
Unfortunately there are few advantages for a small trade and special interest magazine publisher, in my opinion, to buying paper from a broker/merchant. There can be a price advantage under some circumstances however, again, do not simply assume this.
In all honesty, I just have never been a fan of smaller publishers buying their own paper. While there can be some minor savings to be realized, the risks involved are far to great. I have seen too many publishers experience disasters and the associated costs have been almost deadly to their businesses.
Do your homework! Speak with someone who knows both sides of the equation. Retain the services of a professional who can provide you with unbiased advice.
There are some unique ways in which it's possible to realize the best of both worlds. Again, the services of a professional consultant who knows magazines and who knows magazines as related to paper, print and distribution can provide you with an overall picture and ensure that you are getting the best deal available and are producing and distributing your publication as efficiently and cost-effectively as possible.

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