by Cassandra Balentine
It is not recommended to stay inside of your comfort zone. Print providers know this and continue to evolve with demands for shorter runs, reduced turnarounds, and added customization. Consumers and corporations alike embrace embellishments. Offering more than CMYK is becoming increasingly essential. “All print jobs must have embellishment. Print by itself if not enough,” states Anthony Gandara, partner alliance manager, Duplo USA.
Above: A number of Duplo finishing products enable embellishments.
Print embellishment and enhancement comes in many forms, including digital embellishment, lamination, spot coating, embossing, hot and cold foiling, and even die cutting. These are attractive to a variety of markets and segments, including labels and packaging, direct mail, and promotional marketing pieces.
From entry-level solutions like lamination and sleeking, hybrid solutions, standalone digital embellishment presses, and specialty inks/toners on production presses, reasonable options exist for every budget, especially when you consider return on investment (ROI) and the revenue potential that these technologies present.
Rate of Return
One of the biggest considerations leading up to investing in new equipment is determining when you can expect to see the return. When it comes to embellishment, the rate of return can be very fast. This will depend on a variety of factors, including the capital investment, total cost of ownership, and use and volumes.
Depending on products and pricing, achieving ROI can happen in as little as three months, but typically more in the range of six to 12 months.
John Dembia, manager, product marketing, Industrial Print Products, Konica Minolta, says that generally ROI is very quick, provided the print service provider (PSP) doesn’t commoditize this type of output. “Embellishment is the ability to enhance or decorate CMYK printing to a higher level that is more actionable and valuable for the print buyer or brand. PSPs can charge and get a premium for this type of work.”
Gandara feels that ROI depends on how effective the customer is able to promote and sell the value of the embellishment, application type, and how much they will charge. “It is recommended that an embellished job be marked up at least three times, if not more.”
Søren Ringbo, GM, Nilpeter digital products, agrees, noting that at high volumes he’s seen customers hit ROI in as little as six months.
Michael Aumann, director of digital embellishment solutions, KURZ, points out that companies who embrace digital embellishment as a value-added service are able to drive ROI from initial installation.
“We see clients recouping the capital cost of equipment in the increased profits off of one project,” shares Neil Drever, product consultant, Skandacor.
Dragan Nikolic, manager – business development, Nobelus, says for its embellishment equipment, ROI is generally realized between 18 and 30 months.
Mike Pruitt, senior product manager, Epson America, Inc., points out that machines like the Epson SurePress allow print shops to produce embellishments with one machine, rather than needing a separate machine.“Given this, ROI is significantly established in a shorter time, and ROI for short and medium runs can also be profitable.”
“Customers see an ROI on our RICOH Pro C7200 entry-level device almost immediately. By simply investing in the device and expanding their offerings beyond CMYK, they’re increasing their offerings,” shares Mark C. Little, senior manager, marketing and business development, commercial printing, Ricoh USA, Inc.
Kelly Leahy, production lifecycle manager, Iridesse Production Press, Americas Operation, Xerox Corporation, agrees, noting that she sees customers profiting from day one.
Print providers can and should expect high profit margins on embellished prints.
“Research has shown that print buyers, agencies, and brands will pay up to 82 percent more for printing that has some kind of enhancement or decoration. Of course, this will differ depending on industry, product, or job specification,” says Dembia.
Nikolic suggests PSPs can expect to be able to get a 30 to 50 percent profit margin on embellished prints.
“Although the retail value will change quite a bit with the different markets that each printer is catering to, one thing that remains common is that embellishment is very high profit. We have seen clients increase the retail value of their prints by 800 percent with only a ten to 20 percent cost increase,” shares Drever.
Leahy says many of the customers she speaks with share that they see between 20 and 50 percent increased profit on products that incorporate features beyond CMYK. “Many have seen over 100 percent for specialty applications.”
In general, by replacing an analog process with a digital process, Ringbo says you will gain a cost reduction of approximately 50 percent. So the profit margin will depend on how big the part of the cost reduction is on the cost of the label.
When it comes to labels, Pruitt says embellishments are often applied across several products within the nutraceutical, craft spirits, health and beauty, and cannabis industries as those are sold separately and generate revenue independently for the respective business. “By investing in digital varnish, shops can drive competitive advantage by helping customers stay on the leading edge of label innovation—and offering what competitors may not be able to offer if they haven’t made the same investment. Additionally, there aren’t any plate costs to pass on to customers, and registration is controlled automatically. Given this, digital varnish can help shops achieve better margins.”
There are several approaches when it comes to pricing out embellished/enhanced work.
The number one suggestion is to not undervalue the product you are selling. Drever points out that clients looking for embellishment are used to paying the $275 to $350 setup and die cost for hot foil stamping. “We encourage our customers to sell the soft touch laminate film with digital foil at a similar cost, and often their clients are happy to pay that for the dazzling effects and quick turnaround.”
Determining what your peers are charging can be tricky, as many don’t want their competition to know how profitable embellishment is. “Customers are charging a premium price for the added value of embellishment. We estimate they are marking up the jobs a least three times—if not more,” says Gandara.
PSPs should consider sheet size, cost of goods, cost per sheet, quantity, setup cost, labor/time, and desired general purpose when pricing, recommends Nikolic.
Pruitt points out that the Epson SurePress features a cost simulator for quickly estimating job costs. “This includes the necessary inks required, including Digital Varnish, making it easy for salespersons to accurately enter the information into the estimate software and retiring the age-old practices of guessing on coverage.”
Leahy admits that pricing is a little bit of an art and a little bit of science. “There are a number of factors that should be considered. The value of their piece, makeready and setup times, creative services, personalization, and the ability to offer fast turnaround. The more value you can add, the higher your profit margins can go.”
Labor and Training
Finding reliable, skilled workers tops the lists of industry-wide challenges. One may think that adding new equipment would require more of this.
“In my experience, anyone who has an understanding of a typical digital press can produce high-quality output on our embellishment devices in no time. Konica Minolta offers standard and advanced operator training for each of the digital embellishment engines. In addition, we offer sales training for sales representatives to understand the market, value of the output, and how to charge appropriately for this type of output,” shares Dembia.
Ringbo adds that operator training should not be a big investment as press operators are usually skilled and familiar with embellishment processes. “Other staff are typically also familiar with embellishments effects. However, digital embellishment like high-build varnishes and foiling might open new opportunities.”
Digital often has an advantage when it comes to learning curves. “Analog spot varnish requires plates, registration adjustments, and a skilled team to oversee the process. On the other hand, Digital Varnish can be applied concurrently with white and CMYK ink. The artwork simply requires another color layer,” explains Pruitt.
“From a technical training standpoint there are some real advantages to digital embellishment,” agrees Aumann. He says the requirement of artisanship and craftsmanship is lessened versus conventional embellishment technology. “As a result, the level of operator is not as critical and time to being effective is shorter.”
Ricoh takes a partnership approach with its customers. “When you partner with Ricoh, training and education is built into the process,” comments Little. “Therefore, the biggest investment is time.”
For modern laminators, Gandara feels that the investment to train an operator and implement is minimal. “This is one of the key selling points of Duplo products. The machines can be installed, the operator can be trained, and jobs can be running in as little as two days. The Duplo DDC-810 and DDC-8000 are the fastest and easiest way to add value to print.”
Drever also feels that training costs are minimal with its equipment. “We found that including a training session with the installation helps the operators greatly and clients can take advantage of video training with our technical support team.”
Based on his experience, Nikolic expects operators to need about two to three days of initial training with ongoing follow up instruction as day-to-day challenges emerge with increased production. “Generally, we see fluid operation in less than six months so long as there is no turnover of trained staff.”
He advises staff also receive training, especially in environments where embellishments were not previously available as an upsell option.
Nikolic adds that beyond operators, other staff require training and education, like accounting personnel, will need to learn how to calculate the additional cost per sheet along with new margins.
The sales team will need to understand the downstream value these embellishments can offer brands to ensure a seamless experience that drastically improves sales results, he recommends.
Those involved in design aspects of embellished products also require training.
Xerox offers design and file preparation guidelines, how-to videos, and provides virtual, live designer training each month. “If the designers design, the printers print,” exclaims Leahy.
“Proper training for value-added selling is critical. In addition, technical sales knowledge regarding digital’s capabilities of versioning and variable data is important,” says Aumann.
Adding Value and Profit
Digital printing provides many advantages, which we’ve been enjoying for years. These include faster turnarounds, cost-effective shorter runs, and variability. However, as digital print moves to the masses, it is important for print providers to think outside of the box to avoid becoming a commodity. Embellishment, in the form of foils, varnishes, laminates, die cutting, and more all add value to a printed piece.
For more of a discussion on digital embellishment, check out our recent webinar.
Mar23, DPS Magazine