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I've been giving this quite a bit of thought during COVID19.  For years the staple of our maintenance agreements has been to lock clients into minimum monthly, quarterly and annual volumes.  I also don't know what the percentage is for clients that were not meeting or exceeding those minimums pre-COVID19.

I do think that those maintenance plans like the 1Rate, all in, and Flat Rate are now flash in the pans.  This pandemic has or will change our industry forever.  No longer will a C level Exec allow themselves to be tied into a minimum or flat rate program.  They are all realized they have done more with less during this pandemic.  For now there is nothing they can do with some of these long term contracts.  

We've never been an industry that gave our clients the freedom to choose.  It was our way or the highway with annual, monthly and quarterly minimums in the SMB space.  

As an industry we can make changes and one of those changes is to stop the nonsense of tying clients into minimum clicks.

I believe we can make offer "Pay as you Print" as the new model moving forward.  Of course Pay as your Prints means that the client would only get billed for what they print per month or per quarter.  I would not offer an annual Pay as you Print.  In addition I would change the way we structure our services to our clients.

It's my belief that we include too many of our valued added services in our maintenance agreements.  I believe we can charge a monthly fee for on-site support, phone support, remote support, and auto updated firmware support.

My idea would be to lower the cost per page of every device and give the client the freedom to print.  We can then offer services for each device. Something like $3.00 per month for each value added service.  It also doesn't have to be $3.00 per device (I just picked a number).

So let's say you have these in play:

  • Remote Support $5 per device
  • Phone Support $3 per device
  • Auto firmware updates $3 per device
  • Auto Supply Fulfillment $4 per device
  • On-site service $15 per device

These would total $30 per month or a little over $360 a year. In addition we would have a click charge.   Again the prices can be anything we want and we could offer a discount for all of the options. 

This would give us the month or quarterly revenue stream that we need, in addition we would still collect click costs. I keep thinking about how a client would not want to pay $15 a month for on-site service.  I think as an industry we can get smarter about our value points along with giving our clients the chance to pick and choose what they want.

My initial idea is to roll something like this out for A4 devices as a trial to see how it works.

I'm just thinking out of the box here and thinking of ways to let our clients print more without tying them to minimums.

Would love to hear comments

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I've always thought a minimum CPC service contract holds a weaker argument today than it did 10 years ago.  Further, bundling the lease with a minimum service allowance exclusively benefits the dealer.  I've landed a lot of net new deals during our county's SIP order from DMs upset that they've been paying for a lease payment + service with a minimum allowance for a machine they've hardly been using this year.

As for your price model: everything's turning into subscription services for businesses and DMs/purchasers are more familiar with this type of price model than they were 5 years ago.  Microsoft Office, Adobe, Salesforce, etc. are all just as essential and common in companies as print, and they usually pay a "$X minimum or Y% of their subscription per year for upgrade assurance, service support, remote assistance, etc".  Sure there's a difference between hardware that consumes ink/toner than a simple software license, but the resources we have today give us so much data that we can drill down on profitability without having to worry so much about how many pages a toner cartridge will yield or how many parts will fail out of warranty.

The hard part is convincing old heads in the company that changing from the traditional CPC billing model to a SaaS model isn't as risky as they think.  The second hurdle is presenting this a la carte service to customers and convincing them it's in their best interest to buy apples instead of oranges.

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