I spoke with a prospect recently who was very concerned about paying the lowest unit price for all of their printing products. That makes sense, I mean who wants to pay more than necessary, but sometimes, especially with printing, focusing on unit price can end up costing much more.
The company uses posters in their retail offices to promote their message and seasonal specials. The buyer decided they should pay less than $10 for each 18 x 24 custom 4 color mounted poster. Under $10 for a large full color custom poster is a good price, particularly if produced using traditional offset printing, the problem is you need to buy a lot of posters to get the price that low.
They discovered that if they ordered 1000 posters they could achieve the goal of paying under $10 per poster. Now 1000 posters is a lot, but not all the posters had to be the same, they could get 10 different posters as long as they bought 100 of each version for a total of 1000. They figured it was a bit of a stretch but they hoped to use them all within the next 6 months.
They placed the order, produced the posters and had them sent to their warehouse for distribution to the field. They notified their offices of the poster availability and encouraged each office to order what they needed directly from the warehouse. Six months later the warehouse did a physical inventory and found they still had 940 posters in storage, at $10 each that adds up to $9400 worth of posters most of which were now obsolete.
The company could have paid twice as much per poster and saved a ton of cash.
For $20 - $25 per poster they could set up a Print On Demand program, produced the posters as they are ordered, and saved themselves over $8500. with Print On Demand you only pay for what you actually use, you can change the design or look as often as you want, and you never have to worry about obsolete inventory.
Print On Demand doesn't make sense in every situation because the unit price is higher, but there are many times when paying more per unit, even two times as much, can actually mean paying whole lot less.