I can't decide if this will be one of those longer blogs or maybe one of the shorter ones. It's after 10PM and I just finished all of the P4P Hotel updates.
What I wanted to write about is my thoughts and ideas about what our industry calls the "Race to Zero". I'm sure the phrase was coined sometime and some place long ago. For the last 25 years we've used that phrase quite often to explain a brief explanation of the copier service business model.
It's my belief that the "race to zero" is over for those that want it to be over. I heard a recent conversation about a bid for copiers/MFP's where the service and supply cost was at .002. That dealer principal stated that they believed the dealer needed to win the bid because of decreased COVID revenue.
That previous statement sends a salvo to my message that the race to zero is now over. However I'd like to point out my thoughts as to why I believe what I do.
1. Inflation is now hovering around 5%. Everything is going up, heck when my wife got back from the supermarket last week she told me a 1lb package of bacon was $10. We all understand that everything is going up and why not increase our maintenance and service costs now, because we're going to need it very soon.
2. Our industry has a technician problem with aging techs (many are boomers and gen x). Many of those younger techs are now leaving the industry because they are being offered jobs that pay more, have better benefits and they don't have to travel to multiple offices every day and may get exposed to Covid. Our industry will need to increase our pay rate and benefits to offset the loss of existing techs and create some type of program to bring younger people into our industry. Which means we'll have to increase our pricing for copier/mfp products and services.
Just a thought here, maybe it's time to offer tiered service response time. We offer clients guaranteed service response times for x price for x amount of hours. Two hour response is an extra $100 per month, 4 hours for $50, 6 hours our regular charge.
3. Staying with the technician issue, I believe that many of the dealerships that are not diversified will not weather the storm. Decreased page volumes, increased inflation along with the loss of techs that can't be replaced will sound the alarm that many of these dealers will need to fish or cut bait. Many will choose the later and cut the bait to sell what they have an get out while they can. Thus the need to increase our revenue to prepare for additional acquisitions.
4. With the age of Covid mixed with another year of supply chain issues, clients that need print devices are not as concerned about cost per page (maintenance/supply agreements), nor the price of the device but are fixed on how soon can we get our device. Thus there's an opportunity to increase prices as long as the dealer has the equipment available for both maintenance/supplies and GP margin.
5. Many clients in the last 18 months have experienced the ravages of COVID with our industry. There was a time when many clients were not in the office but there were many companies that were deemed as essential companies. Those essential were open and conducting business and having to work with many dealers that furloughed or laid off technicians. Many of those techs never came back and many of the clients remember what they went through to get someone on-site in a timely manner. Those essential clients became service/response sensitive and understood that there is a price to pay for better support. Better service and support commands a premium for that business.
There will still be many dealers that will play in the Race to Zero as we move to the end of 2021 and into 2022 especially for RFPS and bids.
I believe everything has changed during the last 18 months, what was up is now down and what was down is now up. Dealers that are well financed, well endowed with faithful employees and offering diversified products will be able to write their own successes.