Tuesday, November 15, 2011

Copiers & MFP's A4 vs A3 Model "The War has Just Begun"

This question or statement was posed on one of the Print4Pay Hotel forums just yesterday.  I didn't think that I was in the mood to write tonight until I viewed this thread.
"I am interested in hearing feedback on the recently introduced Canon IR 1730/1740/1750 models. These look to be similar to the Ricoh A4 B&W models introduced at the beginning of 2011 - the Ricoh models appear to be slow sellers. Wondering if these Canon models will be accepted better than the Ricoh models..."

My response

The Ricohs have been slow sellers is not because of end user needs or wants. Basically ours is a quota/revenue driven business from the top to the bottom.
The preferred compensation model for commissions is that of a revenue based plan with commissions. Why have a GP driven comp plan for your sales people when your Dealership or Branch has a revenue based quota plan from the manufacturers?  It just doesn't make sense....


With that A4's from Canon, Sharp, Ricoh, and KonicaMinolta has presented their own issues. What's a Dealer Region Manager to do? His region may have sold 10,000 a3 color systems per quarter for lets say 10,000 each thus representing a revenue of 1,000,000 dollars for that color segment/speed. In pops the A4 color with the same speeds at half the cost, does he or she promote this right away to the Dealer Sales Managers or do they try and hold onto the A4 color systems as long as possible. The same holds true for the Dealer Sales Manager (the rep who handles the account for the dealer), does he or she want to push these devices only to see their revenue drop by 25% or more for the placement of the same amount of boxes? Also there's a good argument for the Dealer Owner or Direct Branch Manager. Revenue will drop, quotas will stay the same and along with the revenue drop will come a drop in profit. I believe that everyone has tried to hold out as long as possible with the coming of the A4's whether color or black. Now, more than ever all in involved have to turn to a service based model of solutions, and professional services to the keep the pace.

I see the Canon 1700 series as one of those game changers and it seems pricing like this for an A4 device will only increase demand when 11x17 is not needed.  I believe the price buyers will gravitate to this type of unit. Just recently Ricoh re-positioned the MP2500B (25ppm) an A3 Black device, lowered the MSRP to a little over 2K, lowered Doc Feeder cost and possibly the All In One Kit for the print/scan and fax. Seems like this box will have an MSRP of about $4,300. The knock on the Ricoh MP2500B is no color scan. This seems like it was a move by Ricoh on two fronts, one they were getting their butts kicked with the Canon iR2525 and Ricoh has been slow to introduce the new A3 replacements, with the new pricing model of the Canon iR2525, I'm thinking Ricoh needs to re think the pricing model on the new systems.

Once all parties involved embrace the A4 color or black devices I can see sales people may finally have the ability to drive profit, especially in major markets that are saturated with dealers and direct branches. We (us) will look to move customers from A3 devices to A4 devices and sell the savings, and the savings may help to hold margin, but we'll have to sell twice as many units to maintain revenue. So, when you've been moving 5-7 units per month, everyone will have to move upstream concentrating on multiple placements, and higher segments devices. This model will be short lived as the rest of the industry falls into the A4 model. A3's will still have a place where there is volume, or until a major player adapts the A3 cost per page model with the A4 systems, or when one of the second tier players get off thier ass and market their cost per page as a driving factor in Total Cost of Ownership.

For those of us that still sell copiers and don't dable that much in MPS we can continue with trying to eliminate printers, the new A4's will help. But, these A4's were pretty much designed for the MPS world and you can bet MPS players in your area will be dumping these devices to capture the clicks.

Agree, disagree, thoughts????

-=Good Selling=-

2 comments:

Adrian Leffler said...

I sell a pretty good amount of these A4 devices and you hit the nail on the head; I can save the customer a bit of money and hold more margin than I'd normally be able to in a competitive A4 deal… Sad but true. The introduction of A4 machines is a nice way to increase margin but for how long? It’s only a matter of time before we’re in a competitive situation and fighting to make 10% margin on a $4500.00 box. Revenue numbers don’t put food on the table; GP does (at least in my world). We have a small window of opportunity that will allow us to make a bit of profit on these little guys. Once the playing field levels and all the manufacturers are in the game, we're going to be in the same boat with much less revenue and even less margin.

Now is the time to start developing or perfecting your MPS program or Software offerings. Soon, Hardware will be as lucrative as selling a candy bar and you better have a back up plan.

Art Post said...

Adrian

Thanx for the comment, indeed a short window for all, is MPS the savior? Could be. Thanx for the comment!

Art