LMI BLOG

Pros and Cons of CPP (Cost-Per-Page) Managed Print Programs

Posted by LMI Dealer Content Team on Wed, Jul 31, 2013 @ 12:10 PM

costPerPage

We met with a dealer recently who was looking to simplify his Managed Print business with a cost-per-page MPS infrastructure program supported by LMI.

He’s been selling Managed Print for a couple of years and was interested in looking at the advantages of a pure “buy – sell” model where a 3rd party provides the infrastructure on a cost-per-page basis. To help him determine the best option for his business (and possibly yours), here’s what we shared with him regarding what other dealers tell us are the Pros and Cons of a CPP model regardless of whether you partner with LMI’s cost per page model or someone else’s.

How does a CPP (Cost–Per-Page) model work?

The dealer buys a Managed Print Service on a cost per page basis from a vendor partner. The dealer then resells the pages to the end user at a profit to his customer under a Managed Services Agreement.

In this case, the dealer essentially outsources the responsibility of printer supplies, monitoring, and service to a third party. Then a third party like LMI Solutions would manage all moving parts behind the scenes while the dealer signs up customers under their Managed Print Pith their brand or label.

In a basic sense, the dealer becomes a sales agent for the program with the ability to brand the MPS offering their own and resell the pages at a monochrome and color rate per page to his customer. Quite often there is a price sheet that specs out the cost per page based on the printer make and model and volume commitment from the customer.

Essentially this simplifies the reseller’s financial investment and the management associated with the infrastructure required to build a recurring revenue model at minimal cost.

Below are some of the most common Pros and Cons we hear from dealers across the board. Keep in mind that these CPP programs have been around for years and have been tried and tested by the wide variety of MPS providers we serve including traditional Copier Dealers, IT Service Providers, Office Products Retailers, and OEMs as well.

The PROs of CPP (Cost-Per-Page) MPS Reseller Model

  • Low cost of entry to start building recurring revenues
  • Total focus is on sales and customer growth
  • Ability to brand the program your own
  • Visibility into all customer print activities (software access)
  • Scalability to expand easily with page volume growth

The CONs of CPP (Cost-Per-Page) MPS Reseller Model

  • Lower margins because of 3rd party infrastructure costs
  • Lack of control over all customer touch points
  • Exposing customers to 3rd party partners
  • Vulnerability with experienced MPS buyers (lack of accountability)
  • Limited price flexibility

So what should you do? The answer tends to be dependent on where you are at in your managed print business cycle. If you are just starting out in MPS, the CPP model has some very attractive elements that may allow you go to market quicker without having to invest in people, inventory, and technology to manage your customers print environments.

Conversely, we see very few (if any!) tenured MPS providers revert back to the buy-sell CPP model. For them, they like to control their customer experience and the profitability that comes with the do-it-yourself model. Most have read about this for years in industry blogs such as theweekinimaging or popular publications such as Recharger, ImageSource, or Office Technology Magazine.

When you bake it right down, it’s somewhat similar to the decision you make at the gas station when you stop to put gas in your car. Do you want to pay a little extra to have somebody else do it all for you? Or do you want to take a few seconds and pump your own gas and keep the price difference in your own pocket as MPS profit Only you know what’s right for your business and if you’d like to evaluate a customized cost-per-page model for your business, we’d be pleased to share our knowledge and experience as part of your evaluation process.

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

Jumpstart MPS sales

 

Tags: copier dealer, cost per page, MPS, managed print services, Value added reseller

What's Holding Your Dealership Back From Getting Into Managed Print?

Posted by Gary Willert on Thu, Apr 19, 2012 @ 11:18 AM

What's Holding Your Dealership Back From Getting Into Managed Print?

If you are a copier dealer that hasn’t gotten into managed print business yet, relax you’re not alone. In fact a recent BTA industry survey suggested that a surprising 42% of traditional copier dealers are interested in starting an MPS program but are unsure where to begin. And for that same reason, maybe you too haven’t entered the managed print business.

By now, surely you’ve seen your traditional copy volumes migrate to desktop printers and you probably agree that you need to figure out a way to get all those printed pages under contract. You’ve likely also heard from industry experts spout off statistics and reasons why you are missing the boat, but are you?

Last week we met with a successful dealer who runs a $10 million dollar business. His operation featured a traditional copier model including a mixed tenure hardware sales team, a seasoned service department, and a veteran admin team who seemed to be more than capable of making both internal and external customers happy - but no MPS.

When we asked the owner why he had chosen not to expand into managed print, here’s what we heard.

  • “It’s confusing to sell and to service”
  • “The sales cycles are too long”
  • “We don’t have the infrastructure to support our customers”
  • “It’s expensive to get into the game”

Perhaps you can relate?

As we listened to all the good reasons so many dealers have for not engaging in MPS, we took the opportunity to ask this dealer a few questions of our own.

  • Are your competitors selling Managed Print Services? (we had the list to prove it)
  • Are you experiencing margin erosion like other dealers?
  • Could your marquee customers benefit from a managed print strategy?
  • What is the long term monetization plan for your business?

After lots of great conversation we found this dealer, like most, had the “will to get into MPS” but simply needed the “way to get into MPS” – and of course be successful.

Despite all the emails he’d received, all the seminars he’d attended, and all the noise we all hear on a daily basis, somehow he couldn’t see his own path to profitability in MPS.

Like so many of his peers, this dealer seemed relatively uninformed about how quickly his operation could become a formidable MPS provider and how low the cost entry has become. Today a dealer can access the best assessment software on a pay per use basis for a fraction of the cost of acquiring and hosting the same software only a few a few years ago. Additionally, you no longer need to wrestle through the complexity of supplies inventory, online ordering, and accurate fulfillment. To that end, many of our most successful MPS dealers have reduced their inventories by up to 80% by letting us ship directlyto their customers with their name and their brand on the box when it arrives. Your customers only see that it came from you, not one of LMI’s warehouses. And when printers need more than just toner, recent advancements with our 3rd party service providers allow dealers to see real time call status reporting and receive call close out confirmations to ensure customer satisfaction.

If you haven’t made the step into managed print yet, perhaps now is the time to do so.

With our MPS Business Executionprogram, this dealer’s competition will soon realize he is an MPS force to be reckoned with in his accounts and in theirs. The long term recurring revenues we are projecting from his customer base alone have both his sales team and his book keeper smiling. Like so many traditional copier dealers, this business just needed the “way” to get his MPS business off the ground with the help of our consultants who have done it with hundreds of dealers, hundreds of times.

If you’re still on the fence about getting into managed print, why not book your seat to join us at the ITEX 2012 Expo and Conferencein Las Vegas on April 18th and 19th. Join over 2,000 of your peers walking the isles and networking to find innovative ways to grow their business just like yours. Only you know what’s best for your business, maybe it’s time you took a second look at how easy it has become to start offering your customers a comprehensive managed print solution.

What’s holding you back from getting into managed print? We’d like to hear your thoughts!

 

Suggested Resources

 

LMI MPS Opportunity Calculator

2012 MPS Dealer Guide

Tags: copier dealer, MPS, managed print services, drop shipping, ITEX Expo and Conference, inventory management, copy volumes