Color Print on Demand (POD) Economics

There’s a pretty strong consensus amongst publishers using the big print-on-demand / distribution providers that grey scale production is lousy. So how can we even be dreaming about color print on demand if they can’t nail down a commercially acceptable product for black and white photographs? Well, for one thing, color POD has been demonstrated, though with the difficult economics I’ll get to below. For another thing, Lightning Source, the largest provider of POD with distribution services has promised color print on demand in the first half of 2006. The question isn’t whether industrial strength color laser printers can do the job, it’s whether they can do it economically, and that depends on the workflow.

Print on demand has always been more about the work flow than the technology. Anybody who has seen the HP Indigo in action might convert to digital printing, but the Indigo isn’t used for print on demand, and even though it employs toner (in liquid form), it functions like an offset press rather than a laser printer. Economical print on demand requires an industrial book production setting, with hundreds or even thousands of different interiors being produced a day on a single piece of equipment. There’s no palette for each title to be fork lifted from spot to spot as in an offset facility, and collation has to take place at the time of printing and cutting. The interior has to be matched with the cover and glued, without being hand carried to the other end of the factory floor one title at a time. In other words, the whole printing process has to be as quick and automated as possible to keep the costs down, which results in compromises in the way the printers are run. The miracle of print on demand isn’t that they can produce short runs of 50 or 25 books, but that they can literally print one book at a time.

So the first question publishers will need answered when Lightning Source moves their out-sourced beta color program standard issue in-house production is whether they’ll be able to run the machines for single title printings at a profit while maintaining quality. Unless the machines are leased under a full service contract with a fixed cost per page printed that Lightning Source can mark-up, it may take a while before anybody really knows the answer to this question. My suspicion is that they’ll have to run the machines in a manner to produce high quality consistent output because no publisher is going to pay color prices for the sort of quality they currently get on POD grey scales.

The million dollar question is price. The best price I’ve seen batted around yet for color print on demand is 10 cents a page. Compared to the color copier at your local copy shop, that may sound inexpensive, but how often do you go in and make a hundred or more color copies? At 10 cents a page, compared to the 1.3 cents a page that publishers currently pay Lightning Source for the smaller cut size into distribution, the publisher cost per book rises dramatically. A book a publisher can currently print for $3.00 or $4.00 dollars, discount 25%, sell for less than $15 and earn half the cover price, would cost $17 to $24 in color. Taking the cheaper of the two, which would run around 160 pages, if the publisher priced it at $24, with a 25% discount, the publisher would earn just $1.00 for each book sold. So, introducing color and adding $9.00 to the list price of the book turns an $8.00 per book profit into $1.00. In order to earn the same $8.00, the publisher would have to price the 160 page book a little over $33.

Due to the workflow requirements of commercially viable print on demand, it’s hard to picture a process in the near future that will allow color inserts (ie, a limited number of color pages) to be added to a black and white POD book. Running some black and white pages through a color printer at a discount might make sense to a publisher, but it would be hard to track and even harder for the printing company to justify. I don’t want to speculate too much until Lightning Source actually takes their program out of beta, but unless they create a sea change in color printing costs, it will only be viable for higher priced titles. If the publisher can justify a $40 cover price for a 160 page book by adding color, then the profit leaps to $13 per book at a 25% discount, with smiles all around.