2008

Printing Cards— Revisited

Paul Dirienzo, Director of Engineering, Spartanics

Perhaps you are like other commercial printers who one day considered expanding into printed card products but found the high cost of entry into this market prohibitive (e.g. £100,000). There’s reason to revisit the return-on-investment for equipment required to get into producing printed card products. One factor is the sustained and growing demand in the UK for the variety of card products that are now quite popular worldwide – especially for the short runs that smaller commercial print shops would find within their scope. Another significant factor is that now the price of entry into this market is considerably less— now in the £25,000+ range, instead of the hundred/s of thousands of Pounds investment required before.

Which types of printed cards do we mean? The beauty of this market opportunity is in fact the number of different types of printed card applications there are in the standard wallet-sized card dimensions (called CR80 cards). Membership cards are one example. Libraries, schools, clubs, membership organizations — the potential roster of local customers who will need membership ID cards of one type or another is considerable. It’s quite plausible that membership card customers would come your way simply by responding to signage in your shop announcing membership card printing capabilities. These are usually repeat customers. While some ID cards, such as drivers’ licenses, often involve adding security features beyond the scope of typical commercial print shops, a healthy number of membership ID cards are not secure cards and do not require extra equipment.

Phone cards are ubiquitous, but it was not so long ago that they were a rarity. Indeed, most of the global leaders in phone card products started out as relatively small commercial print shops. There is still room for others to enter this market, but developing a niche in phone cards will probably require more than initial equipment investments and making signs announcing your card printing capabilities. You will need to call on businesses already established in the prepaid phone card niche to see if outsourcing actual card manufacture is consistent with their business model.

Gift cards are another market, already quite popular in the U.S., and now taking hold in the UK and Europe. Those of us familiar with how this gift card market mushroomed so quickly in the U.S. are well aware of how the third party transaction processors helped drive the market. Recently one of the more prominent gift card transaction processors, ComData, opened additional European offices, a clear sign that the same market dynamics that have made gift cards such a profitable niche in the US are spreading. You may consider this a uniquely American phenomenon but the history of the US gift card market suggests otherwise. Consider that a decade or so ago in the in the U.S., gift cards were a rarity and commonly perceived as a second rate gift choice. Data from the 2005 holiday season reflect how quickly this dynamic changed. It was reported that 76% of adults had purchased one or more gift cards. The average purchase was 4.7 gift cards. The average card value was US$38+. Actually, it was not so much gift card manufacturers that drove this market but the significant sources of profit these type cards provide for retailers.

Similarly loyalty cards are now commonplace. Here too it is the tremendous financial return that such cards give retailers that is driving this market. As early as 2003 it was reported that 85% of UK households had one or more loyalty cards. Customers like the perks that such cards provide. Retailers like the mountain of information on shopping patterns that enable them to better structure pricing and the like for higher return.

Hotel key cards are another card product that could hardly be imagined a decade ago that today is quite commonplace. Here too the run length for these type printed cards is usually relatively short and within the scope of smaller print shops that are equipped for card manufacture.

What does it take to create cards? The equipment expenditures are quite reasonable. Many card products can be made with the offset presses whichpresses, which many commercial print shops already have. Some cards are made with other printing methods (screen, digital) as well. Many card products will require thermal laminators that cost approximately US$45,000. Laminating film can be purchased with magnetic stripes already on it or striped can be applied after die cutting using a hot stamping unit that costs approximately ______.

The biggest expense in making printed cards has traditionally been the card punching equipment. The best-in-class systems that provide the highest throughput for large runs and for extremely tight cut-to-print registration by registering each cut in three dimensions (X, Y, and Rotational) cost at least £100,000+. The top end systems can output up to 70,000 cards per hour, and have many automated features that enable them to streamline card punching at such high volumes. Now however, for lower volume requirements on the order of 72,000 cards/day or less, there are card punching systems available that cost about £25,000. These are quite small foot print systems about the size of a photocopier and do not require the type of space of the more advanced multi-featured card punching systems designed for high volumes. Similarly, while training on the more sophisticated high volume card punching systems might require 16 hours, training to operate the low-volume card punching systems, because they involve far less automation, only requires an average of 8 hours or less. For those that have flirted with the idea of printing cards this more attractive price for card punching equipment makes it far easier to get started.

Don’t be daunted by the number of card manufacturers one can find on the Internet. Most card manufacturers have well-developed niches in high value financial cards or multi-layered security cards that require considerable investment in secure manufacturing facilities and processes. These companies, especially if they are relative behemoth-sized, have considerable overhead and many cannot be competitive in short runs of cards without expensive security features. However, it should be noted that many of the world’s high profile card manufacturers started out as commercial print shops.

Luckily one does not have to go it alone when considering how to start a niche in printed cards. Reputable manufacturers of card punching equipment provide consultations, free-of-charge, on how to set up card punching operations and other tips on how to break into these growing market opportunities.

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Paul Dirienzo is Director of Engineering for Spartanics , the manufacturers of optically-registered card punching and die cutting systems, laser cutting systems, screen printing equipment and other technology for finishing flat stock material used in converting and similar industries.