Printing: The Untapped Services OpportunityBy Kathleen A. Martin | Posted 2009-05-22 Email Print
The printer vendors are reporting steep declines in product and consumables revenues. Is printing dead? Hardly. Printing and printing supplies are still a profitable venture when done in a services model.
Hewlett Packard announced its quarterly earnings this week and quickly analysts asked "what happened to the profit in printing?"
The decline in HP printer revenue—the former cash cow of the company—and the struggles of printer vendors such as Xerox, Ricoh and Lexmark—as many financial analysts and reporters believe the green (money) is gone when it comes to ink and toner.
Nothing could be further from the truth. Managed print services is the answer to putting the profit back into the printing business—especially for solution providers selling printers and managing/supporting end user printer fleets.
There are three key myths to managed print services:
- It is complicated and takes a long time to implement into your business
- It requires a large amount of money to get started
- No one cares about their printers and this is a hard sale
Adding a managed print service practice to your business is not only easy, it makes sense. If today you are selling printers or multi-function devices you are only seeing a profit on whatever margin you can squeak out on the hardware sale. If you sell supplies then you understand the nightmare of carrying inventory and that eats into your profits. And if you have the break/fix business, you are ahead of the game.
With a managed print service practice you can earn more than just hardware margins. You are earning consulting fees for the initial printing needs assessment, margins on either a hardware sale or equipment lease and you have the traditional margins associated with maintenance agreements or break/fix services.
You can also be earning profits on the supplies without carrying an inventory. In a MPS agreement you build in the cost per page and you drop ship the supplies. No need to worry about getting upside on a contract as it used to be with copier leases. Lexmark, Synnex, HP and Xerox all have programs that provide you the information you need to price your contracts accordingly.
Your initial investment often includes training and a look at your current sales resources. Selling services is different than selling hardware, but the benefits to the customer are so clearly defined that in many ways the service contract is an easier sell. You can reallocate a current resource as you are building up your practice and add more as needed to manage the demand.
There is not a purchasing manager, line of business manager or CEO who is not interested in finding ways to do more for less. The key benefits to your customers include savings on hardware, supplies and resources.
With you offering lease options and a full service contract including supplies, maintenance and a support desk your customer can reduce their employee’s loss of productivity due to printer errors and save money while paying a monthly cost versus a large hit every time supplies are ordered.
A fleet of multi-function products can pay for itself in less than six months. By networking the printers and standardizing the supplies there are no more last minute supply orders, delays on the network from randomly added machines and color can be controlled to reduce the garage sale fliers and birthday invitations.
Additionally, with today’s MFP products, you can reduce or eliminate the need for express mail and reduce printing. Many MFP’s offer print on demand, scan to fax, form storage and can route documents from desk to desk without every needing to be printed.
Offering end users time and money savings can set you apart, and provide your business with an all important recurring revenue stream based on solid-margin products and services.
Kathleen Martin is the special projects coordinator for Channel Insider.