Colour matching – is it worth paying for?

Today it costs around £100 to complete a colour match.  This figure may surprise customers because historically the masterbatch manufacturing industry has never charged for this service. The cost has always been classed as an overhead. As a result every customer pays a contribution towards the cost of colour matching.

Some customers request few colour matches and order thousands of pounds worth of product while others ask for many colours and order only small quantities of masterbatch.

Should the few subsidise the cost of colour matches for the many?

Is this an equitable way to do business?

Does the customer value the service?

Would it not be fair for each customer, or potential customer, to pay for the colour matches they request?

Background
In the early days of colouring plastics standard or stock colours ruled the waves. These were mass produced in varying shades and offered as off-the-shelf-products. Manufacturers lived off the profits from selling standard products. Back then larger batches were generally produced, there were fewer colour changes and costs were lower.

Over the years stock colour ranges were expanded to meet demands for more colours but in recent times colour has become a powerful marketing tool and key product differentiator. Everyone wants a unique colour because colour sells. Brands have built reputations on it and continually seek new and exciting colours that define the latest trends and products.  Demand for different colours in plastics products and packaging has increased a thousand fold over the past decade and this continues to raise consumer expectations.

Virtually every colour is now bespoke. Very few customers want a standard off-the-shelf colour anymore.

Many colours are now produced speculatively for processors who are happy to offer their customers as many colours as they want because they are free. Masterbatch samples make it simple for them to quickly produce examples that demonstrate how an item will look in a certain shade. While this enhances processor creditability it may lead to more colour matches than are really required.  

Also colours can be rejected simply because of a change in ‘marketing direction’. More matches simple add to costs for masterbatch manufacturers. Another modern day problem is that colour lifespan is far shorter than it used to be. In some sectors, for example fmcg and fashion, colours reach their ‘sell by’ date within months.

To meet these demands and grow their businesses colour masterbatch manufacturers have invested in colour laboratories staffed with technically qualified colourists and equipped with high value colour analysis computers, compounding extruders, injection moulding machines and tooling. Also consider the knowledge and expertise imparted. We advise on pigment choice, effects on physical and processing performance, and the impact of REACH compliance, food approval and suitability for use in toys to name just a few areas. Today the risk and responsibility issues for masterbatch producers are far greater than they were even a decade ago.

Colour formulation has always been part of what masterbatch manufacturers do. However, the unrelenting search for new colours has turned this occasionally offered service into a mainstream activity which is time consuming and technical resource hungry. Thirty years ago a manufacturer would undertake just a few colour matches each week and so they were offered free.  Today masterbatch manufacturers match colours all day and every day.

The seismic shift in the balance between stock and bespoke colours represents a dramatic increase in cost for colour masterbatch manufacturers and this has ramped up the pressure to fund ongoing investment.

How should costs be apportioned?
How many times are masterbatch manufacturers asked to supply multiple sets of colour swatches and samples from 300gm to 25kg depending on the application? 

Ongoing KPI analysis of process efficiency points to an average of three or four mixes to achieve a successful colour match.

Technical staff costs in a typical masterbatch manufacturer could account for 25% of employee costs.

How many colour matches do you undertake per annum? How much does this work add to your overheads?  How many lead to a sale?

Combined, these costs can amount to a significant impact on gross margin.

Not charging for colour matches distorts the true distribution of costs.

How many masterbatch manufacturers have adapted their costing systems to reflect current operating and trading conditions?

Discussion points
To be transparent and open with customers should we not begin an educative programme that would seek to create greater understanding of the colour matching process among customers?  The aim would be to demonstrate colour matching as a technical process that adds value.

Surely what we do is complex, high value and therefore worth paying for? 

By not charging are we undervaluing the product and our investment in people, premises and equipment, in effect cheapening what goes into a colour match?

Perhaps a better option would be for customers to pay for each match and in return enjoy more a more aggressive pricing structure based on what they actually order, given that larger customers probably receive free colour matches anyway?

Should we consider annual service agreements covering a specified number of colour matches?

Would charging help customers focus more on what they are trying to achieve with colour? Wouldn’t this help the masterbatch industry to get closer to end users and work in partnership to get the desired results? Would this encourage users to give us a tighter brief in the first place?

Under the present system we should ask ourselves if our customers would be happy to learn that they are subsidising all colour matches, particularly those for disorganised and inefficient customers who take up more time than those who are clear about what they want.

Economically, isn’t it now the time to address these issues and challenge the ‘because we’ve always done it this way’ mindset?

Let’s examine:

• Revising standard ‘Terms & Conditions’
• The introduction of a fixed fee to cover costs
• Refunds against orders
• Partnering with the BPF, or a similar independent industry organisation to develop a fair charging system

Benefits
Greater transparency with customers, closer relationships

Reduced overhead costs and increased profitability

Tighter controls could reduce waste so everyone gains and the process becomes more sustainable.

Would sharpen up sales efforts and relations with distributors/agents

Conclusion
Colour matching is not ‘an invitation to treat’. It is a meeting of art and science that creates added value for our clients. Offered free it is perceived to be of little value. 

Free samples are not generally offered for custom made products. We pay for specially mixed paint colours, company literature and other custom produced items. 

Requesting a colour match is in effect a commission, an order for something to be produced specially, so isn’t it worth paying for?

© Colour Tone Masterbatch

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