I remember when plain paper copiers used rolls of paper and not sheets. I remember when the glass on the copiers had to move back and forth. I remember when copiers used liquid ink (toner) to produce an image. I remember when you used a dial to set how many copies you wanted to make.
Yup, it’s been a pretty incredible journey to see the industry evolve over the last 38 years!
Back in the early 1980s, there was only one plan for a copier maintenance agreement. We included x-amount of pages that either included all parts and labor except for drum and toner or x-amount of pages that included the drum and no toner. In most cases, the only way we knew how many pages were used on the copiers was from a service call or a courtesy call. Courtesy calls were used to keep techs busy when they had no calls. Techs would stop in unannounced, clean the glass, the mirrors, the lens and the covers and also get a meter read.
Even back then, we had issues when clients went above and beyond the x-amount of pages they were contracted for. There wasn’t a cost per page back then, or let me say at least not for the dealers I worked for. If a client went over their contracted pages, it was a hassle to get the extra dough out of them. Bad business for the dealership and clients were not happy, either.
At some point in the late 1980s or early 1990s, someone came up with the brainstorm to include toner in the annual maintenance agreement price.
Toner Included?
How can that be possible, it can’t be done, how can they turn a profit? They’ll be out of business in a few years. Those were some of the rumblings that we heard from other dealers and industry pundits. The toner included was the birth of the cost per page. Dealers charge clients a per page cost, multiply the annual volume and all consumables are included paper and staples. Dealers found a way to make some tidy profits.
Thirty years later, I’m hearing the same type of rumbling when the likes of the Konica Minolta One Rate or a dealer’s Flat Rate is mentioned.
Empirical Analysis
In baseball, we hear about sabermetrics, which is the empirical analysis of baseball. Statistics that measure in-game activity. I’m no guru when it comes to all of the analytic software that’s used in the copier industry. However, I do believe that someone has done the homework on thousands of copiers in the field and have come to the conclusion that if we charge x-amount per month for “x” model of MFP that we’re going to make the margin of profit that we need. Even if a certain percentage of the MIF goes over the monthly volume. Pages printed in the office are declining. If you don’t believe me, just ask some of my friends at Print Audit. In fact, when the next recession hits, which it will, office printed pages could decline by another 6 percent (I remember this from a recent education event for BTA).
Reasons Why Cost Per Page Will Be an Obsolete Billing Model
- Clients want a predictable expense that will not disrupt their budgets.
- Clients are tired of paying overage charges.
- Clients will get excited when you have something to offer that they’re not expecting.
- No more counting pages for dealers, will which reduce labor costs with dealerships.
- Elimination of billing errors on cost per page invoices. (I’ve seen it, the MA calls for color at .07 and black at .012 and when it comes out of accounting, the invoice bills color at .012 and black at .07. That’s great if the black volume is high and color volume is low, but what happens when it’s reversed? Do you think the client is going to tell you about the error?)
- Fosters a better business relationship for both client and dealer. (Nothing is more detrimental to the business relationship when a client finds out that they have been billed for 60,000 color pages per year and 60,000 black per year and they are only print half of that volume.)
As with all contracts, there are ways to minimize a dealers risk when offering a “Flat Rate” for unlimited pages. It’s more about the program that each dealer or manufacturer will offer and how much risk they will entertain. The “Flat Rate” (kudos to Ethos Technologies for the term) may not be right for every client and does not have to be offered to certain vertical markets.
The “Flat Rate” or “One Rate” cost for unlimited pages is here to stay because clients want predictable expenses. In addition, dealers have done their sabermetrics with their fleets and have come to the conclusion that it’s a profitable model when done right.
On Sept. 14 at 4 p.m., we’ll be hosting a webinar centered around the Konica Minolta One Rate program. Spots are filling fast and we can only take x-amount of attendees. If you’re interested, send me an email and I will send you the details.
