When Should PSPs Outsource Print Products?

Marc Mascara and Colin McMahon
Jan 16, 2019

Print service providers (PSPs) exist in a competitive landscape. Despite being a mainstay technology used to address a diverse range of applications  print faces challenges in the 21st century. The digital revolution is in full swing with new innovations making headlines daily. On top of this, the print world itself is seeing a smaller upheaval in the form of digital printing as a replacement/supplement of traditional offset.

For those seeking to turn a profit, this pace of change means frequent challenges. The new landscape has altered customer demand, placing more emphasis on shorter runs and high value product applications. Businesses, especially those small to medium-sized, are constantly trying to eliminate the advantages of larger competition. One such benefit that large PSPs enjoy is a wide product portfolio – one that can meet most any customer demand.

To stay profitable, small to medium-sized PSPs frequently turn to outsourcing where they form an external partnership with another provider to guarantee they can give their customers that same range of products.

The Price of Outsourcing

Keypoint Intelligence – InfoTrends (InfoTrends) data shows that more than half of PSPs outsource at least some of their product offerings. Depending on the exact type of business a PSP is involved in, this number can climb as high as almost 75%. While some form of outsourcing is unavoidable, it is telling to see numbers this high.

Smaller PSPs can struggle with achieving a sustainable profit margin – one that allows their organization to grow and compete. While outsourcing can stimulate short-term profits, it may come at long-term expense. This is especially true if the outsourced product is a common item where the PSP is constantly splitting profits.

InfoTrends research found that three of the top five most commonly sold print applications were among the most outsourced, meaning that companies are not equipping themselves with the best hardware to meet their clients’ growth potential.

Knowing When to Take an Application In-House

PSPs know that the key to success lies in providing products where consumers are willing to pay a premium. That said, knowing exactly which items are the most popular can be tricky, especially when the data is not available and being tracked through a print management system. PSPs that wish to maximize profits should first install software to better track shipment totals, that way they can understand exactly which items are driving revenue streams (and which can be better labeled as “specialty products”).

By tracking this data, the balance of in-house and outsource can shift to better serve the PSP. In a competitive landscape, having a clear image of this data can translate into thousands of dollars reported in year-end profits – the difference between a successful company and a failing one.

Want to uncover more insights around applications and their impact to PSPs? Look for the new InfoTrends Applications in Digital Print on Demand: A Survey-Base Report conducted across 240 PSP managers operating in the United States and in Western Europe.

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