Investment Justification for MICRing Equipment

Assumptions

A Quick Printer receives one custom laser check job every 2 weeks, one color, 2000 sheets, which repeats once a year.  It is assumed that the Quick Printer already owns a small two color press capable of printing an 8-1/2 x 11 sheet.  Using, for the purpose of this justification, our costs and a markup from our wholesale prices (we print laser checks strictly wholesale), the Quick Printer could produce the job and charge for the job as follows:

After 6 years, the Present Cash Value of projected profits from the MICR equipment investment is $21,260, well over the $15,000 to $17,000 investment.  In other words, $15,000 to $17,000 invested in MICR equipment will yield over a 15% rate of return over the next six years. 

These are highly conservative assumptions.  Compare these assumptions to Caprock Business Forms's experience over the last five years.  Granted, our position as a business forms manufacturer is helpful, since these jobs naturally come in from our established dealer base.  On the other hand, we are wholesale only, whereas a Quick Printer would have our costs and yet charge a retail price.  Caprock Business Forms began producing custom laser checks on a competitive basis about five years ago.  This year, we have sales of approximately $100,000 a year, doing approximately 380 jobs this year.  Every year we do approximately $20,592 more in sales from the previous year.

Another possible stream of revenue from owning MICRing cability is an imprinted check program.  This involves stocking check shells (preprinted check stock with 2 perfs, a preprinted pantograph, and a backer).  Production of an imprinted check involves no presswork.  The customer's name, address, the bank fraction, other information and the MICR line are all put on the preprinted check shell by the laser printer, in MICR toner.  Care must be taken that no printing other than the MICR line is in the 5/8" clear band at the bottom of the check.  This could be a highly profitable venue for the Quick Printer, since preprinted checkstock could be supplied at basically the same prices as blank checkstock with a backer. 

With limited choices, say two colors and three formats (Check Top, Check Middle, perfs at 3-1/2" and 7", check bottom, perfs at 4" and 7-1/2"), the Quick Printer could produce imprinted checks for 80% of software compatible checks.  For an order of 2000 checks, the Quick Printer could charge Ennis's suggested retail price of $226.35 (196.35 + 30.00 ink charge), for a job that costs $89.72 to produce, for a profit of $136.63.  Of course, the Quick Printer could not match Ennis's offerings on choice of ink colors, but turnaround could be same day or next day, a big plus.

Two other possible revenue streams could be personalized deposit slips and internal bank forms for small local banks.