I read a post on LinkedIn that was highly critical of monthly all you can print solutions. After challenging the author on the reasons he thought it was a horrible program, I decided to explain why it's an essential tool for all dealers to adopt today.
How does the program work?
- Dealerships select a few reliable, low cost-per-page single function printers and MFPs.
- They then calculate the monthly cost of each device over a set time (e.g 36 months plus hardware, supplies, and service based on an assumed average monthly volume.)
- Add a gross margin.
- Provide customers with an automated mechanism to select a device based on a set of standard questions.
A critical point of an automated subscription is that it should function without salespeople. Or at least, commissioned salespeople.
So, why is this better?
1. It gives the people what they want: Monthly subscriptions are all around us. From software like Microsoft, Zoom, HubSpot, and Salesforce, to entertainment like Netflix, Amazon Prime, and Spotify. Buyers like subscriptions. For service providers, high-use customers cost more than low-use ones. But the average is the key focal point. In all situations, usage will change month-to-month, but they’ll pay a premium for predictability. Do you call Netflix and tell them you only watched 8 hours last month? And do you think many customers track and audit their monthly page usages?
2. It lowers costs and earns you higher profits: Your sales team is expensive. You’re not just paying their commissions, but also their salaries, travel, and other expenses.
3. It’s the appropriate response to lower monthly page volumes: Data indicates that overall page volumes have been reduced by ¼ since Covid’s start (Nexera, 2022). Of course, those reductions aren’t uniform. And depending on your geography and your vertical market concentration, you may be a bit better or worse than average. In my experience, dealerships make most of their operating income and profit on the post-sale maintenance and monthly page billings. As volumes decrease, the appropriate hardware to meet volume requirements is smaller and less expensive. A product offering that automates those smaller placements means you don’t need to give all/most of the hardware sale profits to the sales team.
4. You should be changing the way you sell in 2022: E-commerce has taken off in almost all facets of our business and personal lives. What’s different in the Print and Imaging channel? Well…nothing. Except we (you!) have constructed a product offering that disables e-commerce and “requires” face-to-face sales. There’s still some need for face-to-face sales, but it’s by no means all you need.
Here’s an appropriate exercise: look at all your contracted devices. Divide them up based on AMPVs. Assume that devices within the 1,000 to 4,000 range can be automated. Devices above 4,000 pages are likely still candidates for face-to-face sales. Below 1,000 are likely transactional sales better suited for e-commerce.
5. It can take some profits away from leasing companies: Much of the profit goes to salespeople when you lease A3 printers, but a significant portion also goes to the leasing partner. When you change the package to a subscription, you also change where gross margin is created. If you consider that the basic product for a subscription is a device that costs $1,200, then the real hardware portion of the lease is $30/month. Spread out over 36 months, that’s $33.33 a month. If you assume your average client will print 2,000 pages, and your blended CPP is $0.03 (or $60/month) this program is profitable at $149/month. Most lease companies won’t touch a $1,200 lease. Those that do will charge exorbitant effective interest rates. Rethinking how you manage asset leasing, even creating your own asset pool, could help increase your profits.
6. You can move into other small ticket subscriptions: Businesses have shown an increasing acceptance toward subscriptions. Rather than telling them they’re wrong, why not swim with the current instead of against it? If your customer base has a large small business segment, then offering other hardware based subscriptions for things like laptops, software, AV, or other products could help solidify your position with the account. Learning the basics of subscriptions will help build your business in the office print channel and beyond it.
What is the primary message here?
The print industry and the dealers are sliding into irrelevance with their customers. They're failing to adapt their product offerings to the latest advancements in technology, work from home, and e-commerce. Data gathered by BEI/Nexera supports this assertion. The number of devices being monitored haven't decreased. What's changed is the type of devices people are printing with. There's been a significant shift towards small MFPs in the 30–60 PPM range, and most of the devices are printing below 1,000 pages.
I'd like to close by sharing one of my favorite quotes in life:
"You are not in charge of the action, only the reaction. The data proves that what I thought would happen, happened. You have no ability to change that action, but you do have control of how you react."
So, with that in mind, we should talk. Book time with us today and let's get started.