Is selling at cost the future for print hardware?

This was the title of a recent blog/article I found on http://www.channelweb.co.uk/cr...gives-print-hardware

Here's the article:

Deptford reseller ABT Office Supplies has started offloading its Ricoh and Canon multi-function devices (MFDs) at cost price, subject to a delivery charge and service agreement sign-on.

The dealer claims the move is to save the cost of printing for businesses by encouraging a switch to MFDs rather than stand-alone printers, copiers and fax machines.

“A recent study has shown that few companies have any true understanding of just how much they are spending on photocopying and printing,” the company said in a statement released to the press this morning.

“For most organisations, printing is typically the third highest expense behind rent and payroll, yet research shows that replacing the traditional photocopier with a new MFD can reduce printing costs by over 50 per cent. Such a decision will save even relatively small companies many thousands of pounds each year.”

ABT, founded in 1997, is advertised as a low-price supplier of new office equipment. However, it said this was the first time it had offered MFDs at cost.

Would like to hear everyone's comments on this!!!
Original Post
I think this is hilarious. When all else fails within your business model turn to being the low price leader. What ever happened to selling value. I thought business were in business to profit. I would be curious if they stole their current business model from RBS. Being the low price leader will get you somewhere for segment 1/2 but you sure are not going to be a very healthy & profitable company long term.
quote:
Originally posted by Larry Levine:
but you sure are not going to be a very healthy & profitable company long term.


Hrmm, well, sure they are.

Notice it doesn't say anything about Service or Supplies, we can assume those are either at their normal rate or slightly elevated.

It doesn't say anything about lowering the lease rate on this MFD you are buying at "cost" either, so we can assume those are also either at normal or slightly elevated.

If we also assume that their sales will increase by X amount due to the promotion, the only loss they could expect from this is if X amount of additional revenue doesn't cover the profit from the previous selling price of the MFD.

Since they were a "Low-price" seller before, the amount they have to make up in this scenario is probably minimal.
Without a value statement that goes beyond copiers and even mps at this point --- people will be selling at cost, because they are transient, non-professional, and either don't have or have confidence in their skill set.

The Trick is to work with companies that aren't in the market to buy copiers---I guarantee that their are other challenges that they are facing and trying to overcome...When you do this you can sell at retail, because there is no competition and you earned that commission.

Why sell just to sell? That's stupid. I don't know anyone who got into sales to sell something. I got into sales to make money!
There were many questions I had, but the real question is define cost? Does cost includes overhead , sales commissions, taxes,dealer salaries,gas, lights, heat. You know all the expenses that's goes into running a company.

That is cost. Not want the dealer accuracy pay for the equipment.
Merlin --

you are absolutley right...like any business there are several costs. but you never know if a dealer had special terms with a their manufacturer to order x amount - or if they were trying to acheive a certain level to hit their quoata or win some award?

Really hard to speculate on a business model which we don't know anything about.

But the one thing that I do know is that - these idiots are everywhere.....

And quite frankly -- the people who want that type of partnership would by their copier from walmart if they could. Let them have that business....It seems to me the less someone pays - the more they expect.

The more margin that is in a situation the more accomodating and understanding the client is to realize that copiers break, jam, and anything unforseeable can and will happen....and we usually work on this at the front to create a contingency plan - which leads to an additional device...So many ways to add value vs. taking all value away...

Just think when their business model changes, and they try to upgrade their base. someone with a 50-70 ppm machine will be asking them to invest an additional 200-400% most likely, and they will potentially lose all credibility.
quote:
Originally posted by 5050:
Really hard to speculate on a business model which we don't know anything about.

But the one thing that I do know is that - these idiots are everywhere.....


If you can't speculate, how do you know they are idiots?

The business model of selling products at a loss to gain future revenue is not new. Microsoft loses money every time someone buys an xBox, Dell gives away printers costing $1,000 for free, Razors and blades, etc.

All of those examples have been very successful for years.
I have good relatioship === but employer is a little big...


I am positive that equipment is dirt cheap, lease rates are bumped, but just like any other company, overhead to run a company has to be built in somewhere...Business's are in business to make money.....Even Non PRofits.....

Merlin, are you a principal?

I think the real point that should be taken away from this thread is that people have the ability to look at their company from a different perspective, not just the side of a salesman..

If we would all do that we'd realize what the company pays for just to turn the lights on everyday - and have the people who are around you that don't sell anything but support what you are doing....I feel safe to say that 99% of the people, who can take that view, would be shocked as to how much less money they find their company makes, and how much more valuable the people are, and can turn that incorporate that into a tremendous part of a value statment.

I do.
Interesting approach to the sales process. Strikes me the next promo is for 10% below sticker price...of course unlike cars, manufacturers don't put a sticker price on MFP's to advise the public what the price is supposed to be. At this point we find the margin we are able to obtain on most sales of hardware barely covers the cost of sales for the product...any business profits come from services bundled around the hardware, either connectivity plans, support plans, supplies for colour etc. Many large HP dealers have been going under cost price on bigger deals for years...one of the reasons for not selling HP for many dealers. The big HP players count on the rebates for volume to give them a return on the sale.

Pricing models vary by client size, region and brand...but in the end you have to make a profit on your install base to stay in business and to provide a good level of support...good clients understand this and value your efforts...poorer clients will milk you for every cent they can get. Our task is to find more of the former and fewer of the latter.
quote:
..of course unlike cars, manufacturers don't put a sticker price on MFP's to advise the public what the price is supposed to be.

You might find this interesting:
When I sold cars I learned that the "sticker" on new cars is the maximum sales price allowable by law. (this did not apply to trucks, SUV's, or used cars).
No industry needs that level of Gov't interference, especially ours.

Add Reply

Likes (0)
Post
×
×
×
×
×