Cost Efficiency in CD/DVD Manufacturing

Written by Brent Tallent

A lot of people call and ask, “at which quantities do you give the best price break?” As soon as I hear this, I know that the person needs some help thinking about his or her situation. I will often push this question back at them – “How much money can you have in your closet and how long can you afford to leave it there?” Let me explain what I mean by this. The prices per unit naturally go down as the quantity goes down. So a person can always decrease his cost per unit by increasing his quantity. I see a lot of people get caught up in the emotion of feeling like they have achieved a low cost per unit even though the quantity they are purchasing is higher than they might need. A lot of times people will purchase several thousand CDs and still have 700 of them twelve months later. So in reality, their cost per unit ended up being 3 or 4 times what it would have been if they had just ordered 300 CDs. Now eventually, after two or three years, these same people might sell all their CDs and then have maximized their profit… sort of. They probably would have earned more on the extra money by putting it in a mutual fund. At any rate, this is why I ask, “how much money can you have in your closet and how long can you afford to leave it there?” We also have customers who purchase 2,000 CDs and need more a few days later.

When ordering quantities under 500, there is a compromise that has to be made – the disc imprint. The traditional “store-bought” CD has a silkscreen or offset imprint on the disc itself. Again, this process can only be taken advantage of in quantities of 500 or more – the best quantity is 1,000. I’ll explain that in a minute. So when you’re in a situation where you need less than 1,000 units in order to maximize your cost efficiency, you need to go with a different imprint for the disc. The most cost efficient is a black imprint and the second most cost efficient is an inkjet full color imprint.

The black imprint looks very much like a silkscreen if it is designed for the process. Its strengths aren’t photos and full coverage, so if the design is more about text and logos it will look great.

The inkjet process has come a long way since I first started all of this. In a lot of cases, people can’t tell the difference.

I’m sure I’ll get shot down for saying this, but the reason that people usually care about the difference is something I find a little humorous and I think I could probably persuade a lot of people to lose the idea if I had enough time. Most people are concerned about looking “local.” They know what the latest hit CD looks like and they want to look just like that. Usually they want this so badly that they are willing to throw any idea of cost efficiency right out the window. Now I’m not suggesting to simply use a sharpie to write your name and song titles on a CD and try to sell it. I am suggesting, though, that the above processes are not enough of a compromise to matter. The rest of the packaging, the printing, packaging, barcode, etc are all identical. So it is possible to have a retail ready package in a quantity as low as 25 units.

There is one evil number though and I try to encourage people to stay away from it unless it is absolutely clear that they will only need exactly that quantity or if their timeline requires it. The number is 500. Unless you know you will never sell a single unit over 500, you should always get more or less. Either way, you will always come out better. The reason for this is that at 500 units, you are usually only about 10 to 15% of your overall cost from having 1,000 units. So you either need to decrease the number to meet your immediate need or increase it a little.

Sometimes we will talk to customers who are in a rush and must have 500 CDs for a weekend show, but will be coming back in the next week or two for another 500. We will go ahead and give them a rate at 1,000 and complete the first 500 and then do the second 500 when they need them. This helps the cost efficiency and allows the customer to accomplish what they need to for the weekend. This situation usually only applies to CD-Rs, depending on the time constraints. We also require that they pay the balance for the whole 1,000 when taking the 500.

Another thing I hear a lot is the idea that people will just buy the extra units and use them for promotion if they don’t sell them. This reminds me of the first time I bought a house after living in apartments and rentals for a long time. I thought that since the payment was the same, I’d be coming out exactly the same and getting a tax break. I didn’t realize that owning a house means having to pay for all the problems that come up. It’s not an exact analogy, but what I’m suggesting is that using a CD for promotion generally requires that you spend even more than the cost of only the CD. If you’re going to ship them out, you’ll need a special container to protect the CD and then postage to get it out. You’ll probably need to pay for a mailing list. Some people might argue that advertising to them is passing them out of the back of their car. I never understand why they don’t feel “local” at this point. Advertising and promotion is definitely the time to present a reliable image. And is should have some intentionality to it – a plan.

The essence of what I’m saying is that if you really want to make the most for your dollar, think about what you will actually need, when you will need it, why you will need it and how you will maximize your investment. Don’t simply look at a cost per unit because that might lead you away from more important issues. When you’re working with a company that can deliver a retail ready product in as little as two days, time constraints should no longer an issue. So the best way to make your dollars efficient is to know what you’re big picture actually needs.