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.
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