OUGD502: Study Task 1 - Research: Pricing and Production

OUGD502 Study Task 1 - Taking Care of Business 

Research: Pricing and Production

The production of the magazine would ideally be subsidised in return of advertising within the publication. GF smith, fedrigoni and other quality paper merchants would all be contacted with opportunity to use their papers within the publication at a reduced cost for prime advertising placement within the book. Similarly Pressison would be the first choice for printers due to their creative experimental approach I learnt about during a visit to the factory at the end of level 4. Again offering advertising to subsidise the printing costs. 

To get a rough estimate of unit prices for the first edition I contacted a number of retailers to enquire about quantities and experience etc. Due to the specialist nature of the publication I contacted independent creative bookshops for example Village and Colour May Vary both located in Leeds. Colours may vary responded very helpfully giving estimated quantities of a new publication. This helps to but costings into perspective as if each independent bookstore ordered 10 copies this could be generalised to 10 bookstores throughout the UK in the major cities and those with art schools such as London, Manchester, Bristol, Glasgow, Liverpool, Leeds. This rationalised a first run of 100 units that could be sent to independent bookstores then with growing awareness and success this would be expanded in scale and even internationally. 

With a informed decision producing a run of 100 for the first issue, I started to look at pricing estimates, Looking online gave a rough instant quote for initial costing ideas that could later be refined through negation with paper smiths and printers for advertising as mentioned above. For an 80 page publication with a run of 100 I found quotes of £635 and £514 this creates an average of £574.50 dividing this by 100 gives a unit cost of £5.75 per magazine for the first issue. 

With an estimated cost price of £5.75 per issue I started analysing similar magazines to see their retail prices therefore informing our decision to fit within its competitors pricing brackets. Due to the high quality finishes within the publication these specialist magazines retail for more than general interest publication. Examples such as Supplement and Cereal both retail for £12 however this extends upwards into the £20+ for more detailed publications. 

Based on this we decided to market the our publication at a retail price of £14 which is still feasible for the target audience of students. The higher retail price ensures that quality materials, finished and stocks can be used to reinforce the higher price point and further engage the target audience. 

With an estimate of £5.75 per unit, we would sell the publication to the bookstores for £10 resulting in a £4.25 profit on each unit which is a 73.9% mark up for us. This would further result in a 40% mark up for the retailer who would make £4 profit per unit. 

Based on these estimates the first issue would result in a 42.55% profit margin with the actual profit being £425.50. This would then rapidly increase as the publication grows adding more retailers with higher volumes.