The copier industry has undergone significant transformations in its billing models over the last 10 years. As competition among vendors intensifies, those who adapt quickly to new billing strategies stand to gain a significant competitive advantage.
So it’s important that we explore the evolution of billing models in the copier industry, draw comparisons to the cell phone service and video consumption industries, and discuss why dealers should embrace change to stay ahead of the curve.
The Early Days: Time and Materials
When the copier industry first began, customers were typically billed for time and materials—the actual time technicians spent servicing their machines and the cost of any parts used. While this model was straightforward, it lacked predictability for both the client and the vendor. This is similar to the early days of both cell phone service, when users were billed for the actual minutes they used, and the video rental industry, when customers paid for each individual rental.
The Introduction of Service Contracts
As the industry evolved, vendors began offering labor service contracts. Under this model, customers paid a fixed fee for labor while still purchasing consumables and possibly parts separately. This provided some level of predictability for clients, as they knew their labor costs upfront, and is comparable to the introduction of monthly plans with a set number of minutes for cell phones.
Parts and Labor Contracts
The next stage in the evolution of billing models saw the introduction of contracts for parts and labor, charging customers one fixed fee for both and giving them even greater predictability and budget control. However, consumables were still purchased separately by the client. This model is similar to cell phone plans that included a set number of minutes, texts and data.
The Rise of Cost Per Copy
The current dominant billing model in the copier industry is cost per copy (CPC). Clients are charged a fixed rate for each page printed or copied, with rates often differing for black and white versus color pages. Service and supplies (excluding paper) are typically included in the per-page cost. This provides a high level of predictability for both the client and the vendor, as costs are directly tied to usage. This is comparable to the video pay-per-view model, in which customers are charged for each individual video they watch.
The Future: Flat-Rate Billing
As the industry continues to evolve, the billing model of the future is likely to be flat-rate billing. Clients would be billed a monthly payment that is based on a negotiated rate rather than clicks or usage. This offers several advantages, including:
- Simplicity: Clients know exactly what they’ll pay each month, regardless of usage.
- Budget control: Flat-rate billing makes it easier for clients to budget for their copier expenses.
- Flexibility: Vendors can tailor flat-rate plans to meet the specific needs of individual clients.
This is similar to cell phone plans that charge customers a fixed monthly rate for unlimited minutes, texts and data, or subscription-based video services such as Netflix and Hulu that charge a fixed monthly fee for access to a vast library of content.
Dealers who move quickly to adopt flat-rate billing will likely gain a competitive advantage in the market.
Overcoming Resistance to Change
Some dealers may be reluctant to embrace new billing models, fearing change and uncertainty. However, by understanding the reasons behind the shift and implementing safeguards, dealers can successfully navigate this transition. Here are a few strategies:
- Conduct thorough research and analysis to understand the benefits and potential risks of flat-rate billing.
- Develop a clear implementation plan that addresses concerns and mitigates risks.
- Communicate openly with clients about the benefits of flat-rate billing and how it can meet their needs.
- Train sales teams and technicians to effectively sell and support flat-rate billing plans.
Embracing change is essential for success in the ever-evolving copier industry. By staying informed, adaptable and proactive, dealers can position themselves for long-term growth and profitability. The transition to flat-rate billing represents an exciting opportunity for forward-thinking dealers to differentiate themselves and provide unmatched value to their clients, just as the cell phone and video consumption industries have done in the past.
