Contract pricing and the benefits of IP3 | DMA

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Contract pricing and the benefits of IP3


When it comes to contract pricing in any industry, the practice only works if both the buyer and supplier gain something in return for a long-term commitment. Ideally, this means protection from inflation for the buyer and protection from customer attrition for the supplier; but in the printing industry, the notion that contract pricing is the best option in 2015 is not necessarily true.

In an article we’ve already discussed by John Roche on LinkedIn, it is pointed out that the print industry is undergoing significant change. It is currently a buyers’ market, meaning that there is no need for them to commit to a long-term contract as it is likely that prices will remain in their favour for the foreseeable future. This does mean, however, that traditional matrix pricing may no longer offer buyers the best deal.

Matrix pricing is scalable, but will not necessarily provide details of the most cost-effective contract for a buyer. This is where the ‘instant pricing’ – or IP3 tool – from ourselves here at Banner comes in; in contrast to matrix pricing, the IP3 tool grants buyers access to the most up-to-date information on market rates. As a web-based tool, all pricing information is provided in real-time and allows for comparisons to be made between live suppliers in the market.

This is the unique selling point of IP3: it allows customers to take advantage of discounted capacity rates. The tool not only provides the ceiling price to a client – a price they know will not increase – but it also means clients benefit from capacity discounts offered by a sustainable supply market, not readily available with normal spot purchasing techniques. They therefore enjoy additional savings as they are made aware of any dips occurring below the ceiling price, providing them with a competitive business advantage.

Contract pricing used to be an attractive option as it allowed buyers to provide pricing details to end clients quickly and easily, and also allocate the correct amount into internal budgets, marketing campaigns and other types of price justification points. Now, however, there is much more scope for buyers to better understand the best deals available to them – and IP3 offers not only details in terms of the money saved, but also CO2 emissions of specific suppliers and savings measurement.

The tool is simple to use and allows clients to detail (and save, if they want to repeat the process) print specifications alongside assembly, package and delivery details before collating the results from a number of potential suppliers, in ascending order. The IP3 tool takes all factors into consideration – seasonality, current demand, capacity discounts and live market pricing – to provide the most concise and accurate printing price choices.

But as stated it’s not just pricing that is considered, the production methods and cost split by print, paper, delivery, buy and sell price and CO2 emissions are also provided. As well as this a market benchmark is provided for comparison.

While in the past contract pricing was preferable to spot-buying in the open marketplace (a practice that both buyers and suppliers will tell you is inefficient and time consuming), our new tool surpasses the benefits of contract pricing by providing a simple to use, highly intelligent alternative.

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