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Regardless of how you go to market, you actually have a lot of flexibility in how you bill for the equipment, services, and supplies you sell. As a provider, it’s important you can do so in a way that protects your margins, but also keeps the needs of your customer in mind. Giving your customer the option to consume your products and services in a way that works with their budgets, habits, and accounting processes can really set you apart from the competition.
Today we will talk about a few of the more widely discussed billing options and solutions we see dealers implementing as they administer MPS contracts: Flat Rate Billing, Bundled Billing, and Usage Billing. While each of these options have unique flavors, we’ll evaluate the high-level differences in these approaches. Read on for a breakdown of each, as well as some considerations you can make to determine which options you should present to your customers.
What is Flat Rate Billing?
Flat Rate Billing allows you to structure your services offerings in a way that provides your customer a budgetable monthly spend. There are various flavors of flat options. Some are very simple, others can get quite complex.
Two common Flat Rate Billing examples include:
- Device Based Billing – billing usage based on the number of devices in a print environment
- Seat Based Billing – billing usage based on the number of users in a print environment
Why Flat Rate Billing?
When executed properly, a flat rate program can actually help you protect your profitability while also allowing an alternative to more traditional Cost Per agreements. Technology dealers are interested in Flat Rate Billing to help differentiate in today’s competitive marketplace because it allows them to:
- Offer a simple, predictable monthly spend to their customers Protect their margins
- Reduce administration time
- Easily layer in other products and services they offer, like software, supplies or maintenance
What Considerations Should You Make If You’re Interested in Offering a Flat Rate Program?
If you’re interested in a Flat Rate approach, several considerations should be weighed. For instance, you will need to include a way to monitor and manage user print behaviors, develop a solid assessment process, and implement an ERP solution.
What is Bundled Billing?
A bundled contract means you are combining the costs of the equipment, services, and supplies on one contract. The customer is delivered a single invoice that combines these costs into a single, streamlined payment.
Some dealers have concerns that a bundled contract goes against their mission to be transparent with the costs presented on an invoice. These dealers prefer to breakout the costs for the rent of the equipment from the services and supplies charges, but to do this effectively, it’s important you work with a leasing company that can accommodate a single invoice solution that clearly breaks out the various costs.
Regardless of the billing model you use (whether it be flat rate or usage based), you will always maintain the option to deliver an invoice that keeps your customers preferences in mind:
- If your customer prefers to see the nitty gritty details, you can opt to list a detailed breakout of the costs associated with each item within your contract. Additionally, you can still display the cost breakout on a single invoice, making it simple for your customers to process.
- If your customers prefer to have a single payment displayed on their invoice, you can choose to bundle the costs together for a more streamlined experience.
What is Usage Billing?
A usage billing program allows you to bill based on whatever metric you count to track usage. In the office imaging world, this usually means the volume you print.
Common examples of usage based programs in the office imaging space are:
- Cost Per Image (also known as cost per copy)
- Cost Per Square Foot
- Cost Per Linear Foot
Why Might You Bill on Usage?
A Cost Per usage programs allows the flexibility to bill in the way your customers consume no matter how your usage is tracked. On these types of contracts, you must have a way to ensure all meters are tracked properly to ensure any overages are billed accurately. While some dealers opt to bill for equipment or any overages separately, the right financing provider can help you simplify usage billing for your customers by facilitating a bundled payment on usage contracts including overages.
What Considerations Should You Make If You’re Interested in Offering a Usage-Based Contract?
If you want to provide the option to bill customers based on their usage, but would still like to bill all aspects of the unique services and solutions you provide via a single bundled contract, look for a finance source who has the integrations and bundling capabilities to help you more easily administer these types of contracts. A single invoice that includes costs for your products and services offerings will be important to your customers, but you need to have confidence in your finance source’s ability to bill and collect on usage-based contracts, including any overages, in an accurate and timely manner.
As an office imaging provider, knowing your options when it comes to the way you administer and bill your contracts will help you stay alert to the needs of your customers and keep them satisfied. Just as there are many flavors to each of these billing solutions, your customers, too, have unique needs you can help accommodate with the help of a capable finance source.
Want to learn some other ways you can accommodate your customers through customized billing experiences? Check out these entries:
- Fine-tune Your Office Equipment Contracts with Flexible Payment Structures
- How Can Office Equipment Dealers Customize their Invoices?
- Do or Do Not, There is No Try: Why Bundling is Crucial to your MPS Program
