Sunday, November 1, 2009
Is selling at cost the future for print hardware?
This was the title of a recent blog/article I found on Print4Pay Hotel Message Board to see what everyones response would be. Here's the article:
Deptford reseller ABT Office Supplies has started offloading its Ricoh and Canon multi-function devices (MFDs) at cost price, subject to a delivery charge and service agreement sign-on.
The dealer claims the move is to save the cost of printing for businesses by encouraging a switch to MFDs rather than stand-alone printers, copiers and fax machines.
“A recent study has shown that few companies have any true understanding of just how much they are spending on photocopying and printing,” the company said in a statement released to the press this morning.
“For most organisations, printing is typically the third highest expense behind rent and payroll, yet research shows that replacing the traditional photocopier with a new MFD can reduce printing costs by over 50 per cent. Such a decision will save even relatively small companies many thousands of pounds each year.”
ABT, founded in 1997, is advertised as a low-price supplier of new office equipment. However, it said this was the first time it had offered MFDs at cost.
Replies from Print4Pay Hotel members:
Larry from Oxnard replied with:
"I think this is hilarious. When all else fails within your business model turn to being the low price leader. What ever happened to selling value. I thought business were in business to profit. I would be curious if they stole their current business model from RBS. Being the low price leader will get you somewhere for segment 1/2 but you sure are not going to be a very healthy & profitable company long term."
Jason from Tennessee replied with:
"Hrmm, well, sure they are.
Notice it doesn't say anything about Service or Supplies, we can assume those are either at their normal rate or slightly elevated.
It doesn't say anything about lowering the lease rate on this MFD you are buying at "cost" either, so we can assume those are also either at normal or slightly elevated.
If we also assume that their sales will increase by X amount due to the promotion, the only loss they could expect from this is if X amount of additional revenue doesn't cover the profit from the previous selling price of the MFD.
Since they were a "Low-price" seller before, the amount they have to make up in this scenario is probably minimal."
5050 from Pittsburgh replied with:
"Without a value statement that goes beyond copiers and even mps at this point --- people will be selling at cost, because they are transient, non-professional, and either don't have or have confidence in their skill set.
The Trick is to work with companies that aren't in the market to buy copiers---I guarantee that their are other challenges that they are facing and trying to overcome...When you do this you can sell at retail, because there is no competition and you earned that commission.
Why sell just to sell? That's stupid. I don't know anyone who got into sales to sell something. I got into sales to make money!"
Merlin from New York replied with:
"There were many questions I had, but the real question is define cost? Does cost includes overhead , sales commissions, taxes,dealer salaries,gas, lights, heat. You know all the expenses that's goes into running a company.
That is cost. Not want the dealer accuracy pay for the equipment."
lep524 from Ontario replied with:
"Interesting approach to the sales process. Strikes me the next promo is for 10% below sticker price...of course unlike cars, manufacturers don't put a sticker price on MFP's to advise the public what the price is supposed to be. At this point we find the margin we are able to obtain on most sales of hardware barely covers the cost of sales for the product...any business profits come from services bundled around the hardware, either connectivity plans, support plans, supplies for colour etc. Many large HP dealers have been going under cost price on bigger deals for years...one of the reasons for not selling HP for many dealers. The big HP players count on the rebates for volume to give them a return on the sale.
Pricing models vary by client size, region and brand...but in the end you have to make a profit on your install base to stay in business and to provide a good level of support...good clients understand this and value your efforts...poorer clients will milk you for every cent they can get. Our task is to find more of the former and fewer of the latter."
Note from Art: These were just a few of the threads that were posted by Print4Pay Hotel members, to read the rest of these click on the P4P Hotel link and become a member of the largest group of MFP, MFD, Copier Professionals in the World.. Go ahead it's FREE!!