The Death of the Cost Per Page Billing Model

 

Guess what's coming to your business neighborhood?  Did ya give up yet?

Yes, the cost per click aka the cost page could become the billing model of the past. 

Seat Based Billing with Print Audit

About a year ago Print Audit released a Seat Based Billing model for MPS  engagements,  The gist of the billing model is to bill a monthly flat fee per employee in order for the user to have printing rights.  The amount billed per employee covers support, parts, software and consumable items for those printers.  Print as much or as little as you like, the client now has a predictable budget.  Death to the old cost per page billing model for MPS!

The thought of my client not knowing their print volumes is awesome! Think of it this way, a competitor knocks on the door and gets an appointment with the DM.  One of the first questions that rep will ask is, "how many pages are you producing per month?" Our DM states, I have no clue, we just print and print and our vendor is just AWESOME!  Kinda takes the competition out of the equation, right?  Special thanx to West McDonald for helping me understand SBB.

HP & Samsung

Back in September of 2016, we saw the first salvo from HP with the acquisition of Samsung.  Keywords in the HP press releases and interviews were compete, A3, disrupting, reinvent, outdated, and seven replaceable parts.

Ok, so HP is Chicken Little and the sky is falling, right? 

Reading through the many interviews and press releases from HP, you realize that there are quite a few bread crumbs to be analyzed.  Many of those bread crumbs, along with SBB from Print Audit and a recent event has me thinking about the future of our cost per page billing model.

The second salvo is suppose to be coming this spring with HP releasing their new A3 line of PageWide disrupting copiers aka MFP's.

Last week, I had visited one of my friends businesses and she stated that she was dumping a few OCE 900's (gonna mothball them) in lieu of two new HP PageWide XL5000's.  I was floored because I knew she had just entered into a few long term leases for the Oce 900's last year. I asked why?

My friend then showed me the maintenance and supply pricing for the new HP Page Wide XL5000.  There was no cost per page,  with wide format we call it price per square foot.  There was a monthly device charge for maintenance, however the square footage overage charges were non existent. Print as much as you want for the flat monthly device charge.

Yup, I saw it and the first thing I thought is that there has to be a catch.  So, what's the catch?  Was it the fact that the customer has to pay for ink, print heads or maintenance cartridge?  I looked up those costs for the HP PageWide and the most expensive item was the print head.  When compared to other print heads from other manufacturers the cost really isn't that much.  Thus, there seems not to be a catch, just plain old disrupting technology.

Will the new HP A3 devices follow the same device billing model?

Well, if I read the bread crumbs right, I would say that that's a yes.  Samsung MFP's have been around for years and I haven't seen a disruption from those toner based A3 devices.    Price has been a little bit of a concern, but I've been dealing with price issue for copiers since 1981 and the price objection is always going to be out there.  Not a big deal for me, been fighting that battle for years.

What Does Concern Me

Is that these new HP PageWide A3 devices will incorporate the new PageWide print technology.  I'm thinking that there's a chance that those bread crumbs are for telling the future of device based billing with unlimited clicks.

What happens with the device billing model with no overages comes to our beloved A3 toner based devices?  Do we dare to compare .012 per page for A3 toner based to A3 PageWide which may cost $45 per month with unlimited clicks.   What will our accounts say when they get a call from a competitor stating they can eliminate overage charges? Or better yet, what do we say when our account states they are going to leave us if we don't give them unlimited clicks?  Scary stuff indeed.

Clients are fed up with overages

Since, I've been around for such a long time in the industry, this seems to be more like a trip down memory lane.  Back in the early eighties there was some device billing going on.  Clients had to pay for consumables, some contracts included drums and some didn't.  The art of collecting meter reads in the seventies and eighties consisted of service calls, courtesy calls, and phone calls.

Overage billing in the clients mind is just another rip off by the copier companies. However those clients also understand our billing model, and puts up with those overage charges because there is no alternative.  Clients want predictable expenses from their vendors. 

The Future of Cost Per Page

The future is here, the cost per page  billing model should be put to sleep. 

SBB (Seat Based Billing) has started with MPS and I believe will transfer to the copier channel with those dealers that are innovative (any why shouldn't it, MFPs are printers too).  Too me, it's the only way to combat the Device Billing model that may be the disruption that HP mentions.

I'm sure that if the Device Billing comes to fruition there will be Dealers that will develop their own unlimited click plans with their own devices. However, will they still be able to produce margins of 55%?

The Death of the Cost Per Page is looming and you need to make choice to either go down with your ship or board a different ship that is exploring uncharted waters.

Me, I'd love the chance to explore new waters!

-=Good Selling=-

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BCarroll posted:

Hi Art

The Pagewide service model is the one we use for our Canon ImagePROGRAF plotters. Based upon customer's needs, we quote an annual contract for service. This contract, like the original 1- year warranty from Canon, excludes user- replaceable items (ink, paper, printhead(s), and maintanence cartridge).

If the system includes a scanner, we account for that in the quoted price.

So essentially, we will repair / replace any item not user-replaceable. 

Canon offers the same "service" contract in the form of a Canon CarePak. We price our offering to be competitive with the manufacturer's offering (fortunately, customers want to do business with their local supplier).

Could this business model be applicable to a toner- based machine (with drums, fusers, etc.)?

Sure- but customers have made it clear that they want their toner included!

 

 

Thanx for this.  Thus the maintenance agreement for the ImagePrograf and provides a flat fee with unlimited prints, right? 

The user would then also pay for any consumables, do I have this right?

Hi Art

The Pagewide service model is the one we use for our Canon ImagePROGRAF plotters. Based upon customer's needs, we quote an annual contract for service. This contract, like the original 1- year warranty from Canon, excludes user- replaceable items (ink, paper, printhead(s), and maintanence cartridge).

If the system includes a scanner, we account for that in the quoted price.

So essentially, we will repair / replace any item not user-replaceable. 

Canon offers the same "service" contract in the form of a Canon CarePak. We price our offering to be competitive with the manufacturer's offering (fortunately, customers want to do business with their local supplier).

Could this business model be applicable to a toner- based machine (with drums, fusers, etc.)?

Sure- but customers have made it clear that they want their toner included!

 

 

Don't forget that Epson just released their new A3 inkjet MFP. Very interested to see how that pans out as well!

I can't tell you how many times I've lost a deal because a dealer "disguises" their a base amount of copies inside the lease payment. Customers are willing to pay more to not have to worry about monthly print usage and have a predictable monthly payment. This seems crazy at first, but then I thought about it and it's everywhere... We pay a flat rate cell phone bill instead of "per minute" usage. We pay a flat rate for unlimited Internet. Even utility costs like hydro and gas are included in house/apartment rent!

Most dealers are already billing a flat rate CPC for all the devices on an MPS contract to make it easier for the customer to understand and pay their invoices. Once a few large-sized dealers or OEM's begin successfully adopting it (and bragging about it), the rest will follow.

Hi Art,

Here’s my prediction for the future:

A3 MFP’s will be bought on the internet without any interference from sales-reps, print-specialists, installation-technicians, etc. etc.

I think the Copier Industry isn’t any different from Audio/Video, Household-appliances, Insurances, Phones, Vacations, Cars, and all other business of which we thought we would always need a technical- or sales specialist?

They will be delivered (and installed!) by DHL, FEDEX, UPS, and if broken, fixed by multi-branded-repair-specialist or ourselves. (who thought he would ever fix his own cell-phone by changing the camera, screen or battery? YouTube tells us how to do it!)

The final configuration is done by the end-user who determines which specifications/options he ‘releases’ through apps with a monthly fee.

It will have a distribution-model direct from the manufacturer to end-user without ‘interference’ from distributors or dealers.

Not a very pleasant thought for everyone in the industry, but the same applies (applied?) for all the branches that already transformed to the new way of doing business. It may take a couple of years but I am convinced the future is closer than we think.

Regards, Martin

 

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