LMI BLOG

Time to Go Back to School on MPS Profitability!

Posted by Gary Willert on Thu, Sep 05, 2013 @ 02:14 PM

LMI backtoschool

Stat: “Toner represents 80% of the profit opportunity in Managed Print Agreements”

Some may say it's labor; some may say it’s something else. I think we can agree that it’s not the hardware driving the profit margins any more. It’s the service you wrap around your product that creates the value in today’s “services led” business model.

In most cases, selling a service (opposed to a product) allows you to mask margins and commit customers to pay you over a longer period of time. Not just recurring revenues for your business, but recurring profit streams as well. This is not a new concept but it sure makes a lot of sense with the amount of commoditization and channel saturation many of our MPS dealers are experiencing with hardware.

So how do you make the big bucks in Managed Print?

Ask some the the top dealers in the Unites States. At LMI, we are fortunate enough to call many of them our customers. If you asked them how they have achieved the margins they have, they would probably all suggest that you “partner wisely” for your core consumable – toner. This is because they realize that the toner component of their cost-per-page models drive up to 80% of their profitability.  Yes, 80% of the bottom line profit in most Managed Print agreements.

So since it’s September, and many of us are sending our little ones back to school, maybe it’s time you rethought your toner strategy to make sure you’re on the road to maximum profit per page.

In addition to a fair price per cartridge, here are some important factors when it comes to effective toner management and profitability:

  • Ease of ordering – is there automation and integration with your ERP system?
  • Online Tracking – can you see your order status?
  • Fulfillment Speed – where are distribution facilities located?
  • Order Accuracy – can you place a specific name and location on the toner box?
  • Packaging and Labelling - can you “brand” the cartridges as your own?
  • Blind drop shipping – why warehouse inventory of you can have it shipped direct?
  • Recycling Programs – can you differentiate yourself with a better recycling program?
  • Return Policies – what is the vendor’s track record of making returns easy?
  • Color & monochrome – Can you get both quality products from one toner vendor?
  • Yield – this is critical for profitability, when’s the last time you performed a test? 

And arguably of course, the most important determining factor in your profitability is the overall performance and print quality of the print cartridge.

With the effort required to secure a new MPS customer these days, the last thing you want to do is disappoint your contact or their end users with toner issues. If you’ve been in the Managed Print business for a while, you know complaints about leakage, inconsistent quality or yield can be extremely time consuming and expensive issues to resolve. Never mind putting your Managed Print Program at risk.

There is an old saying “Success Leaves Clues”, and if you are wondering how the to drive more profitability from your current and future Managed Print contracts, maybe it’s time to go back to school and see if your toner is really working for you or against you.

Click here for your free e-book on how to jumpstart your MPS sales in 30 days:

Jumpstart MPS sales

 

Tags: LMI Solutions, managed print services, print cartridge recycling, toner cartridges, control print costs

Ink Jet Printers: Don't be Deceived by the Low Purchase Price

Posted by Gary Willert on Thu, Oct 25, 2012 @ 10:10 AM

ink jet printersWith more and more businesses turning to managed print services to help control printing costs, some very interesting trends are coming to light. As the price of printing technology has dropped in recent years, many companies have turned to personal ink jet printers as a solution to their printing needs. While the cost to purchase factor can be a powerful lure, in the long run, inkjet printers can be a major source of hidden expenses to your company’s bottom line.

Let’s take a brief look at some of the pros and cons of ink jet technology.

The Lure of Ink Jet Printers

Most business people are initially attracted to ink jet technology for several simple reasons:

• Low entry price. A good ink jet printer can be purchased for as little as $99 dollars.

• Ink jet printers are very easy to set up and easy to use.

• While the quality is not as high as with laser printers, it is sufficient for most office applications.

• Personal color printing is another attractive feature offered by ink jet technology.

Because ink jet printers have a small footprint and use less space, employees can have a printer on their desk. This can be a great convenience and even work to boost productivity. Since ink jet printers are generally connected directly to individual computers and not usually accessed via your network, there is also the benefit of added security. 

What you Don’t Know Can Cost You

On the surface, ink jet technology looks like a cost effective solution to most company's print needs. But if you look at the actual costs involved, it can be eye opening. Many business owners are shocked to learn that a black and color ink jet cartridge in many models can actually cost more than the printer! It’s a classic "razor and razor blade" model of high cost consumables. Replacing your ink cartridges can get very costly. Multiply this cost by the number of printers in your office and you begin to understand the effect this can have on your bottom line.

In the industry toner is commonly referred to as “black gold”.  Ink jet cartridges are expensive and have terribly low yields which translates to very high operating costs. Statistics have shown that the ink in your printer is among the world’s most expensive liquids. One ounce of HP ink, used in an ink jet printer, costs an amazing $62 per ounce! Compare this to Chanel Number 5 perfume at $23 per ounce or Dom Perignon Champagne at a reasonably affordable price of only $4.62 per ounce and you can see how unnecessary printing can impact your bottom line.

What Can You Do To Control Costs?

While it’s always better to research and understand operating costs before you purchase, there are solutions you can employ to help reign in your print costs. Simple systems can be put in place to help monitor your companies print usage. By keeping track of your employee printer usage with print logs, you can begin to monitor your print costs.  Centralization of office supply purchases can also be beneficial to your bottom line. But developing and implementing these systems can take valuable time away from your primary goal of building your business.

An even smarter business solution is to call in an expert. Managed print service company's specialize in analyzing your companies print needs, usage and costs. By hiring an MPS company to come onsite and provide a low cost assessment, you can begin to control spending in areas you didn’t know existed.  As an MPS professional, you can work with customers to analyze and address their print environment, and set up easy to manage systems to track usage and expenses. In these difficult economic times, doesn’t it make sense to control your expenses? Eliminate expensive and toner chugging ink jet printers during your MPS assessments and grow your business!

Click here to get your free guide on how to jumpstart your MPS sales in 30 days

Jumpstart MPS sales

Tags: total cost of ownership, MPS, black and white toner, color toner, control print costs, ink jet printers