Inkjet prints now ‘less than silver’

It official! The cost of a dry lab inkjet print is 11 cents! Well, semi-official. In an informal kind of way. For HP printers at least. If you don’t haggle…

Epson Surelab D3000

Epson Surelab D3000

Dry lab technology – be it inkjet or dye transfer – has had a halting start in the Australian and New Zealand markets. Severe discounting by Harvey Norman and Big W from the very start of the transition to digital photography has had the dual impact of discouraging photo specialist retailers from investing in what has been turned into a low-margin segment of their business; and creating an environment in which retailers are more concerned than they perhaps should be about consumables costs, as opposed to potential retail profits.

That one, two or three cents extra per print – even though it’s arguably a superior print – has had a much bigger impact than it should on investment decisions.

While K-Mart and Ted’s Cameras in Australia opted for the HP system (which will be phased out over the next couple of years) and NZ group Warehouse Stationery earlier this year disengaged from HP and opted for around 60 Fujifilm DL600 inkjet labs (manufactured by Epson), most retailers have just kept their old or refurbished wet labs ticking over.

Yet there are now three active players in the market: Noritsu (Noritsu Australia, IPS) Epson (Epson, Photo Direct, Kayell) and Fujifilm, and dry labs are into their third generation of technology.

‘- Eleven cents is the list price,’ confirmed Photo Direct’s Steuart Meers. ‘After that, it comes down to how good your negotiating skills are. It will be of no surprise to anyone that not all retailers are on the same rates!’

Mr Micawber’s observation: ‘Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and sixpence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.’ (Great Expectations, Charles Dickens) – seems to be playing a big role in the thinking of retailers focussed on survival in a trashed-out 6×4-inch print market, rather than seeking new directions for their business.

Photo Direct’s breakdown of the component costs for a 6×4-inch print from an HP ML1000 is:
Ink:    .036 cents
Paper:   07 cents
Consumables:   .004 cents
TOTAL:  $0.11 cents

Given the oft-quoted truism that inkjet ink is more expensive than its own weight in gold, it’s surprising to see that in the costings above, it’s just half the cost of paper.

‘It will vary from supplier to supplier,’ said Mr Meers. ‘The Epson print price is about the same. The ratio between ink and paper may change.

‘If I was a manufacturer I’d probably skew it towards the ink rather than the paper, as it’s much harder to substitute than the other way around.

Retailers seeking to reduce their consumables bill by sourcing third party inks or papers may find the exercise costs more than it saves in the long-run.

‘Ink is very, very difficult. It’s not like Cartridge World where you can just bring an old cartridge in and get it topped up or whatever. The ink is manufactured specifically for the printhead,’ explained Mr Meers.

‘It’s technically easier to put someone else’s paper in the printer, but the reality is the printer manufacturers have spent a lot of money optimising the right paper with the right ink to get the right colour gamut, etc.

Noritsu QSS Green with auto duplexing unit.

Noritsu QSS Green with auto duplexing unit.

‘If you go to a substitute paper you might save one cent per print. This could potentially prejudice your colour output, but more importantly there’s an issue with inkjet printers of paper fibre floating around in the machine. The ink droplets being put down measure in microns. If you pick up a tiny piece of fibre somewhere then you are going to start wasting paper very quickly.

‘When they cut paper from a master roll it depends on how well that’s done, whether they vacuum away all the dust, that sort of thing. So you can save a penny but it might end up costing you a heap. You are buying into more trouble than what it’s worth.’

Silver halide 12 – 15 cents?

Mr Meers actually challenges the prevailing notion that silver halide printing is less expensive than inkjet.

‘Are consumables more expensive than 11 cents a print for silver halide? I think they are. I think they are more in the 12 – 15 cent range depending on who you are buying them from.

‘Just like the issue of ink coverage, I don’t think anyone has nailed down the [silver halide] chemical cost either. Then there’s the long-life consumables like chemical filters and splicing tapes and back-marker ribbons.

‘And silver halide paper prices have gone up a from Fujifilm and even APS I think. So I don’t know if there really is a massive difference any more. Don’t forget some of the box movers are asking those low prices using dry.’

Mr Meers argues that obsessing about the cost of a 6×4 is futile. Photo specialists need to lift their vision above the irretrievably commoditised 6×4 print.

‘Independent retailers have to say to themselves, well, I’m not going to do 6x4s at a loss  – but accept they are not going to make any money out of it.

‘So let’s call your costs 11 cents. My strategy would be to ask 15 cents or maybe 17 cents and that’s it.’ – A kind of ‘set and forget’ approach where the 6×4 is given the weighting in the marketing mix its low profitability deserves.

He sees the 6×4 having shifted to the mass market permanently, with the consequence that the minilab machine will play a smaller role in the contemporary photo store, with the wide-format printer and finishing options really bringing home the bacon.

‘I don’t think you can get away without having a minilab, whether it’s wet or dry. To use a “Robbo-ism”, it’s like a service station selling petrol – you’ve got to do it to otherwise the people won’t come through the door.

‘But the other prices I supplied give you a perspective. Though smaller enlargements are also being catered for by mass merchants, it’s really when you get up into that wide-format range and a wide range of alternative media that a profitable market opens up.’

epson4880‘You can put in a 24-, 36- or 44-inch machine and make that your real focus of the business while your minilab is your “have to have”.

‘It’s hard to engage with someone around a stack of 6x4s. It’s much easier to engage with them if they have gone to the trouble of getting a 16×20 canvas done and put a frame around it and are paying you a decent price.’

‘It’s all about retail – you’ve got to give the customer a good retail experience.’

Here are some other examples of cost-breakdowns generously provided by Photo Direct: :

Wide format price examples (HP)
11×14: $2.72 ($0.99 ink, 1.69 paper, .04 cents long life consumables)
20×30: $8.50 ($3.85 ink, $4.48 paper, $0.17 consumables)
24×72: $22.41 ($11.09 ink, $10.83 paper,$0.49 consumables)
Canvas (DGI-branded)
11×14: $5.25 ($1.37 ink, $3.82 canvas, $0.06 consumables)
18×24: $11.53 ($3.27 ink, $8.13 canvas, $0.14 consumables)

‘So a 20×30-inch print costs let’s say $10,’ said Mr Meers. ‘If you sell it for $20 you are a million miles in front of doing 4×6 prints. If you sold it for $30 – which you probably could – how many 6x4s which you’re making 5 cents on do you have to do to make $20?’

(That would be 400!)

But, he says, it’s not just a matter of making the print, rolling it up in a tube and handing it over.

‘It’s actually about getting the sizzle going as well. I would rather put my emotional energy into making $100 a job than a couple of cents.’ So it’s worth presenting the finished product ‘with a bow around it’ and going the extra mile in terms of putting a floating frame around a canvas, offering a range of mounting or framing options and those sorts of added value extras, as the profit margin allows for it.

Dry lab cost of ownership

Mr Meers addressed the pros and cons of dry labs. Energy costs are a clear advantage: ‘If you look at wet labs there are three sets of chemistry and probably six or eight tanks – all with 300-watt heaters in them. And then a dryer with a 5- or 600-watt heater in it and then fans and stuff – so they do gobble through a bit of electricity and so they needed three-phase power to make it all work.’

He noted there’s another potential cost: shopping centres can demand installation of extra air-conditioning at a cost of many thousands of dollars to counter the heat output of a wet lab.

Maintenance is another clear saving: ‘Wet machines have chemicals and racks and things which are moving. By their nature they need more maintenance by you the owner or someone paid to come in and do it. The dry labs still have a maintenance cycle and still need a technician to visit but it’s not as expensive over the life of the machine.’

He said maintenance visits for a inkjet lab were driven by volume, but were around six  months on average.

Then there is the environmental costs: The dry lab doesn’t need waste disposal. You don’t have to go get a waste permit or pay to have someone to take your used chemistry away.

There is a limited choice of paper stocks, but that’s more by way of the mass-production nature of a minilab and applies to a certain extent to wet labs as well.

‘Minilabs are fairly specialised beasts – if we call a minilab a thing which is going to handle up to 8- or 12-inch paper. Its real purpose is to do single-sided prints at volume. So to get reasonable volume, you don’t want to have 100 different papers going through it.

‘What you can do if you want to get into very specialised paper is do it on a wide format machine.

‘You’ve got all those other media we are starting to sell like metallic paper and self-adhesive vinyl that goes through the wide formats. You can do signage, you can do point-of-sale material.

‘If you are put your energy into all that kind of stuff you can expect reasonable money for it. Tony Borg down in Point Cook, for instance, is doing all his shopping centre’s point of sale.’

Volume is not the strong suite of current inkjet technology. A recent Fujifilm US webinar on dry labs quoted 800 prints per day as a ‘sweet spot’ for installation of a Fujifilm inkjet lab. Mr Meers questioned the sweetness of an 800x 6×4 prints throughput.

‘It depends on what you include in your break-even analysis. If you do 800 6x4s a day, even if you make 10 cents on them, it’s not a lot of money.’

(No, that’s only $80!)

‘Is the consumer going to pay 50 cents a print? Even then, you are only making a couple of hundred bucks a day.

‘There is a lot less stress, and lot better bottom line and a lot nicer engagement with the customer because you can spend more time with someone placing a $200 order for a canvas or something.

‘And you don’t have to have everything in-house – it’s easy to run it out the back door to somewhere and you don’t have to tell the consumer that.

‘We need to change the way stores present to the consumer. A one-hour photo sign doesn’t mean anything to probably 50 percent of the market any more. There needs to be some better catchphrases out there.

‘I’ve seen some stores – nothing in Australia to date but a few internationally – doing a very good job of turning themselves into sellers of wall art, using their own images or the customer’s.

He said it’s not a matter of $100K investments, but a change in the ‘go-to-market’ strategy.

He suggested that retailers go out and find some some commercial work, perhaps doing POS for a few neighbouring shops.

‘In fact we’ve found with a few customers if they start doing their own POS work for their store, suddenly they get it and it clicks in their mind and then they are more easily able to talk to other people about the opportunities available – from A0 posters to 8×10 or whatever, folded brochures, some self-adhesive signage for the front window….’

He added that Photo Direct was searching for products which can be finished in-store without elaborate tools ‘to hand the product back to a customers at a higher value’ – such as mounting boards which can be used to mount prints in-store as opposed to say investing $10,000 in a new laminator.

NEXT WEEK: The rise of the ‘Print Service Providor’ (aka commercial printers) as a competing channel.


16 thoughts on “Inkjet prints now ‘less than silver’

  1. Current cost of silver paper is maybe 5 cents, add maybe 2 cents for chemistry, total 7 cents, cheaper than 11cents for sure. Paper is cheaper than it ever was. One supplier is putting that up by 7% or so but not as Stuart says, the other supplier of that brand, APS.

  2. I would be pushing inkjet too if I wasn’t in the silver halide game. Still playing catchup using our silver halide labs, with Stuart in another life sticking us with a $330,000 debt. How easy they forget 🙂

  3. Like you Phil, I’m on to silver halide lab number 6 or 7, some of which I purchased off Stuart. I have a new Frontier 570R now, courtesy of the earth moving, and am still charging 60c for a 4R, with a bottom price of 45c. I have never changed my price, we just print at a profit for folk that care. See you in Melbourne, cheers, greg.

  4. Enjoyed the inkjet story and it’s a good reminder of how in an industry where change is the name of game it’s surprising how few retailers are prepared to consider transforming their business for the better. Especially when you consider the short term payoff is about enjoying the benefits of running a growing, profitable business while the long term payoff is all about a happy and enriched exit strategy (i.e. retirement the way you want it!). There’s no question there’s heaps of pressure for change on most independents but few have a clear, shared vision of where they need or want to be. Articles like this bring a degree of clarity to the choices you could be making. What will it take for those that need to change to realize it’s time to stop working less in your business and start working more on its future viability and the vital role our industry plays in the community!

  5. Good article that highlights some interesting points and hopefully opens some eyes to the various options available to retailers. Australian Photo Supplies has NOT raised the price on Kodak, Noritsu or FujiFilm paper that it supplies to retailers in Australia. Also to assist in comparisons, currently to make a 6 x 4” print on Kodak Royal paper including chemistry is approx. $0.08 If any retailer needs more information on our product range or a detailed price list please email me at [email protected]
    Shane Martin – Australian Photo Supplies

  6. Very interesting article . We have been making Dry labs for 9 or 10 years and with that experience comes great clarity. We still offer both Wet and Dry machines . We have all been in this market for a long time and its important to be able to supply the customer the correct machine for there business weather its a Wet machine doing big print numbers or a Dry Lab doing smaller quantities.
    Both have their place and advantages in the market .

    regards
    David Small

  7. the ‘debt’ your refer to is an investment. it’s a fixed cost and it’s a suck cost. inks and papers are fixed cost but it can be variable, depending on which supplier you get it from. maybe you strike a good deal, you got ripped off by that supplier or technology has advanced in manufacturing those products and hence prices of consumables gone off the cliff. if some stores can pay it off in the time frame they set, why can’t you?
    bare in mind, these equipments are cash cows. they are not cars which depreciate and don’t produce profits except non-monetary returns, i.e. personal satisfaction/status. if you are unable to turn the (figures) from red to black, then you shall question and review your business model instead of blaming on the equipments themselves.
    this is really a basic economy theory which everyone who studied that in high school will know.
    what i feel about the owners is ‘okay, i know there is a problem in my business. i shall ask someone to solve the problem for me than using my brain and my own hands. So i can still sit back and relax and enjoy the money i earned in the past and live like a king. But, i ain’t gonna pay them anything.’
    things change and the world evolves. competition is getting more fierce than before but it doesn’t mean everyone has no space to breathe. similar to cars and mobile phone industry. you need to find a space for yourself. if you can’t see the opportunity, too bad, your kingdom is finished.
    take Nokia for an example, it was an industry leader but now Samsung is. even before it, Apple was the leader but Samsung has taken over. Motorola was once a gigantic mobile technology and now is being acquired by Google. why? same theory. i seriously feel pity for those whiners.

  8. Raising prices in this market is a bit naughty – especially when others are holding – or even reducing them. Can’t help thinking this must be because they’re trying to sell dry machines – or support a business model more suitable to the good ‘ole days?

  9. I’m pleased to see people talking, the detail isn’t the important bit. I don’t mind wet, dry, 8 cents, 50 cents, whatever – the main thing is people are talking and considering options or different ways of looking at consumer needs and ways to move forward and improve the bottom line and create a stronger industry.

  10. The costs of consumables in the dry v wet is only part of the story. It seems to me the wets have never owned a dry! This argument is only about figures and not about which is best.
    If you take into account all the costs associated the story changes.
    Based on 800 6×4 prints or equivalent per day.
    Chemistry, paper, wastage, power, labour, Maintenance, interest on investment, footprint on retail space.
    Wet costs are 20 – 23 cents per 6×4.
    Dry costs are 17 cents per 6×4.
    If you think these wet figures are wrong work it out yourself and be honest with your figures.
    I have used both and know the costs.

    • (Amended). Dry is more contrasty, but colour is always constant. Prefer dry, especially Noritsu. First copy every day is out in 3 minutes of turning machine on and colour is perfect! B&W are actually B&W. Jim

  11. Hi all, PSPA is doing a session as follows at PMA. Just an FYI, if interested, cheers Paul

    PSPA CONVENTION – SATURDAY 14 SEPTEMBER 2013

    Registration Opens 7:30 am

    8.00am to 9.30 pm
    P1 DRY-PRINTING

    Chairperson: Michael Reed – Arthur Reed Photos.

    Panel of Presenters:
    Steuart Meers – Photo Direct
    Stuart Holmes – Independent Photographic Supplies
    Phillip Rennell – Currie Group Curriegroup.com.au

    With technology ever on the move, in-house printing is fast becoming a high quality option for small to medium size photographic businesses. And with the prices coming down, companies now have the chance to get in and expand their product range while seemingly reducing their costs. This session will focus on the pros and cons of a few different processes and explore some of the latest printers that are available on the market. This panel of Industry gurus will discuss their products and be ready to answer your questions.

  12. Love the discussion, not too sure about some of the figures. I can make numbers do amazing things even graphs depending on what I want them to show and what numbers I leave out and what other assumptions I leave in. What may appear to be better for one won’t work for another lab. Too may variables. Initial cost, depreciation schedules, print size requirements, client base, volume etc. just to name a few. If you want to quote figures as being the gospel truth they must be able to be substantiated by others. In other words, like a scientific paper is judged by peers. You must declare exactly how, supplier etc, how you arrived at these numbers and therefore the conclusions based on those numbers. Still love the discussion.

  13. Good comments Matt, in fact all good stuff, but for me it still comes down to the actual print. I still don’t quite think the prints are quite as good from any dry lab over wet and am certainly not looking forward to the day when my wet lab gasps and quietly dies ! My customers the same !

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