Does anyone have a clue as to how the CPC billing model started in the first place?

Cost Per Image, Cost Per Page, Cost Per Copy, Cost Per Print, whatever you call it, it all started with the copier industry.

 

The question above was posed by Greg Walters with a recent thread that was posted on LinkedIn.  I stated the reply of "I do, I do",  I was that eager kid in the classroom that was begging to give the answer, however after I hit the "comment" button I realized that maybe I don't know Cost Per Copy billing got started.

 

My first recollection of a copier billing model that preceded the Cost Per Page billing model was one that was used by Duplifax in the early eighties.  Duplifax was an Authorized Canon dealer located in Central New Jersey and they adopted a billing model that included something like three cartons of toner for "x" price but the kicker was that service, maintenance and parts were included for the life of the three toner cartridges (toner kit)!  This billing model was a game changer for those of us having to sell against Duplifax or trying to upgrade a Duplifax Canon box.

 

As sales people we were astounded that maintenance, parts and service was included when the customer purchased the toner.  The thought of including toner in a maintenance agreement in the mid eighties was unthinkable for most dealers, yet Duplifax turned it around and included the maintenance with the purchase of the toner.  Once the toner ran out, then so did the maintenance agreement.  After time we figured out that Duplifax was marking up the up the toner cartridges by 200-300% depending on what Canon model the customer had.  Thus when three toner cartridges had a retail value of $90, Duplifax resold the package around $375.

 

It was soon thereafter that some customers realized that they could get more bang for the buck by buying toner from another source at the regular price and using that toner to extend the life of their Toner Kit.  This unscrupulous act then forced Duplifax to start obtaining meter reads from the customer to make sure they were not substituting "extra" toners into their toner kit agreement.

 

The there was the regular billing model for maintenance in the early eighties and that model sold a maintenance agreement that did not include toner, and included "x" amount of pages.  There were no overage charges or let me rephrase that, for the dealer I worked for, and the dealers that I had to sell against you would sell a contract for $400 and it included 30,000 pages (again no toner, fuser oil and paper). These types of maintenance agreements led to a major problem, because in the early eighties there was no billing software (key note), there was no person calling for monthly meter reads, the only time we found out a customer was over the metered amount was when a service tech went to do a courtesy call (remember those) and or a repair call and the meter was logged.  Can you imagine how hard it was to tell the customer that even though the customer had expired you had to buy a new contract and that new contract was only good for 15,000 pages because they went over their allotted amount by 15,000.

 

Thus these two distinct billing models had their issues. It's my recollection and I could be way off, however I believe some of the early adopters of the cost per page billing was the direct operations of Xerox, & Minolta Business Systems due to the fact that they had the bucks to invest in early software billing programs that enabled them to offer the cost per page model.

 

Please, if anyone has anything else to had we would love to hear from you!!

 

-=Good Selling=-

 

 

 

 

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I remember a plan that didn't really take hold but it was a plan like the one John talked about and all accessories were proposed in the form of copies...you want a finisher, just commit to 10,000 additional copies per month. The CPC rate had an equipment portion attached to it so more clicks funded more equipment. If the CPC was normal plus .003, 10,000 clicks added $30/month which would fund $1,500 additional. Some customers that weren't willing to pay $1,500 would agree to 10,000 more clicks. Now looking back I realize we were doing MPS on copiers two decades before it became popular.

I remember it well and at ComDoc, in the early 80's we sometimes put the offer out there without it being a formal price plan. I think the customer realized that a lot of the toner they purchased and stocked was useless at end of the machines life.  It was like a primer with a customer who had that and TCO on their mind, it was a way to close them.

 

Equally, I remember taking it one step further in the early 90's with copy management - the first all inclusive (hardware, service, supplies)  program where the customer only pays for "Copies", no more equipment  purchases or leases. Those plans had a straight base CPC where rising volume swelled service revenues and made way for simple upgrades.  The higher commitment, usually lower service rates, and increased involvement with the customer kept competition out. 

 

Fax management, print management -- it all followed. 

 

Its interesting now with color CPC's getting squeezed to nothing, you wonder if buying color toner plans might return in return of getting a parts and service color cpc equal to black?? 

 

Its all interesting and keeps us arriving at the Branch early each day.  We all have toner in our blood, regardless of how it was obtained. 

 

Love the Hotel.

 

 

I've only been around 9 years, but when I first started, we were selling the old Ricoh AP3800CMF (A3 color printer w/ a scanner kit attached to make it an MFP) since the 1224c/1232c was such a bust.  In our Service Agreements, black toner was included in the CPP, but color toner was billable. When trying to get those customers to upgrade to the 2238c, I would create a cost per page analysis (since toner was included in our CPP for the 2238c) and had several furious customers who thought we had been price gouging them for years on toner for the 3800. 

What came next with some dealers in the Oz market, was a guarantee that the client's copy costs would not rise annually, above a maximum of 10% which most clients would agree to. Or that it would only rise by the CPI, which these days is a joke of a deal, as it is only around 2%. But some now guarantee to hold the pricing for the term of the rental agreement, which at 5 years is just down right stupid.This has now become a lot more prevalent, as weak salesmen sell (if you can call it selling) at the lowest possible price, in order to get the biz. So what do we do, after having put in a lot of hard work trying to get the deal. More often than not, we try to match it, and then get paid accordingly, well below what is commensurate, with the amount of effort we put in to obtain the biz in the first place......sheesh. And by the look of things, it is certainly going to get a lot worse, in this mature market of ours.

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