This week’s look into the State of the Industry report on production print examines the opportunities offered by supplies and service revenue, as well as its challenges. But what can really spice up a dealer’s production catalog, and provide that extra boost to profits, is the added revenue that can be garnered through in-line, off-line and near-line finishing equipment and other ancillary embellishment tools that can make a printed piece pop.
This is hardly an “offer it and they will buy” scenario. Service can be a unique proposition when it comes to addressing the needs of production clients, notes Josh Salkin, a partner with EDGE Business Systems of Atlanta. It calls for the dealer to have an exceptional service department backed by extensive training.
“Response time and device uptime are especially critical to these clients, so often that means outside the boundaries of the traditional Monday through Friday, 8 to 5,” said Salkin, who added that his dealership partners with Duplo and Formax to provide offline finishing equipment.
The typical production device doesn’t require the frequency of service that an MFP demands, as it offers a better MCBS (mean copies between service calls), notes Richard Ostrowski, professional services manager for Docutrend of Totowa, New Jersey. He points out that most devices include supplies as part of the contract.
“We have not done much with specialty toners,” Ostrowski noted. “We do offer a number of finishing devices for our customers, some of which we directly service and in some cases we work with the manufacturer.”
Volume is the biggest variable at work. Paul Archer, president of Automated Business Products (ABP) in Centennial, Colorado, points out that while margins can be smaller on production print, the service and supplies revenue is much more significant.
Quality Volume
Archer cautions against avoiding the trap of high revenue, high effort and rock-bottom margin. He cited an example that illustrates the importance of dealers being aware of costs and more judicious in the kinds of customers that are brought on.
“We secured one customer that did very high volume,” he said. “Over a year’s time, it averaged $25,000 per month in service revenue. Our margins were very, very low—about 10%. On top of that, the customer paid us very slowly. We collected the $100,000 outstanding receivable, and then discontinued the relationship.”
One of the perks in the production print world is the need for supplies in the binding and folding segments of the workflow. Chip Miceli, president and CEO of Pulse Technology in Schaumburg, Illinois, notes the supplies and service add-ons can be much more profitable for dealers.
“Businesses need to do a lot of offsite production to justify an investment in an in-house system,” Miceli said. “For those who do choose that direction, the advantages are the extra layers of control that they have internally in job production. For a company that has the need for many short-run print jobs, this is a sensible solution.
“The downfall is that a business needs someone who understands how to use the products. There is the need for lots of training and hand-holding to get the right support and get it done.”
Fair Pricing
Despite the abundance of supplies and service opportunities in production print, there are other challenges confronting dealers. Ray Bullins, production print and business solutions manager for Systel Business Equipment of Fayetteville, North Carolina, notes that clients expect a high level of service performance at a low price point.
“At Systel, we are committed to the highest level of customer service and satisfaction, and while we may not have the lowest costs, we certainly provide the best return on investment,” he said.
Systel also offers a variety of near-line and in-line finishing gear through its partnerships with Duplo and MBM. Mailing, inserting equipment and print embellishment tools are also on the dealer’s menu.
Production print provides a large volume of monthly revenue for Advanced Imaging Solutions (AIS) of Minnetonka, Minnesota. Stephanie Keating Phillips, director of solutions, notes this paves the way for both supplies and service opportunities, but it also requires the dealer to have a strong and skilled production team to drive growth.
AIS also offers off-line and near-line finishing options in addition to finishing equipment. “We have partnerships with all of the common names in this area of production print to help round out our offerings,” she said.
Great Expectations
When it comes to supplies and service for production print, requirements and expectations can be vastly different from those in the MFP world. Justin Rex, production print specialist for Fisher’s Technology of Boise, Idaho, points out that production customers expect a faster response and more parts/supplies on hand.
“A large print order for one customer can reduce supplies quickly so when you have a fleet of production equipment, it is important to constantly monitor usage and supply levels so there is no delay in services,” Rex noted.
Fisher’s is also seeing an uptick in demand for embellishment equipment, but most of that is still on a larger scale than the average production customer. “With so many in-line finishing options available these days, there are fewer requests for additional finishing equipment,” Rex added.
