Sunday, April 8, 2012

KYOTIER Hybrid Color 3-tier Cost Per Page Pricing tool

In recent weeks I've had a couple of blogs referencing a Kycoera Dealer in California that was or is going to start advertising for full service and supplies for color pages @ .02 cents per page.  The kicker of course, is the coverage. How much color coverage will "you"" the dealer allow on the page to charge .02 cents.

A few days ago I had an email from a Print4Pay Hotel member that asked me to forward him any information that I had about the color coverage amounts.  After a few emails I found out that the Print4Pay Hotel member also sold Kyocera, and that they had been doing some research on other Kyocera Dealers that are advertising the customizable tiered pricing for color.  I was sent a dealers advertising document (clicking the link will take you the file on the Print4Pay Hotel forums), KYOTIER, now I'm not sure if this is the name the dealer gave the pricing plan or if it's Kyoceras but I'm thinking it's the dealers. 

This dealers flyer (dealers advertising document) is stating three tiers of color.  The first tier useful color, which states "all black and pages with useful color".  Off to the right is a sample of useful color stated 5% coverage. Basically it's two color images maybe a little bit bigger than a quarter and the cost per page for useful  color is .01 or same cost as black based on a monthly volume of 12,500 pages of black and useful color.

The second tier is everyday color, which states "pages with a little more color". Off to the right is a sample of everyday color stated at 15% coverage. So, color coverage from 5.1% to 15% will cost .025 per page.  The sample coverage shows a color photo that I estimate takes up 20% of the page and then two more color logos that look like they are about a half dollar in size, along with some black large header fonts and some very small black fonts. more on the next page

The third tier is expressive color, which states "pages with normal color". Off to the right is a sample of "normal color stated at 35% coverage. So, color coverage from 15.1% to 35% will cost .05 per page. Since there is too much to describe the color coverage in this document, go here and take a look at what Les Olson Company states is 35% coverage for a color document.

Now for the juicy stuff, on the bottom of the flyer from the dealer there is a disclaimer stating that "color coverage in excess of 35% may result in an additional charge".  There's nothing stated as to what the charge is, so it's pretty open ended at least on the flyer. I'm sure the order/MA document will have the overage coverage charge.

All of this tiered pricing is troubling to me (and it's not because I don't have it). I blogged about the colorqubes tiered billing when it first came out. I thought the idea was interesting however I was not and still am not a fan of the colorqubes image process.  When I look at other samples of color page coverage and all you have to do is google "color page coverage" to find a few of these.  Well, it seems that none of them are close. Let me explain, the 35% color coverage document from Les Olson Company seems that it has much more color on it than what they dealers flyer has.   Les Olson's 15% coverage documents seems like it has the same amount of color coverage that the dealers flyer states is 5% or useful color.

I viewed additional documents as well and all seem to conflict with color coverage. I did find a software that you can use to calculate color coverage named APFill. There's a 30 day free trial on this software. I downloaded this and then tried a few documents to see how they rate in color coverage.  The app is cool, however I'm not so sure of the numbers they represented were right either, especially when I took documents that stated they had "x" amount of coverage and the app came out with something different.  I'm chalking this up to my inexperience with color coverages.

There's so many questions to be answered with tiered billing, as one dealer stated that they are concerned that they may be lowering their profit margin on service and supplies.  Will the day come when we (sales) have scanners or software and we'll have to evaluate every ones color usage and the consult on what percentage they'll use of each tier?  What's stops someone from showing a customer that this page is 5% coverage when it's actually 15%, and 35% when it 50% coverage? Plus how about the additional billing time to break down the tiers, and then answer all of the questions that may arise from the tiered color billing. Is it all worth it?

Hey, I'll admit, I'd like to have it because the Jones have it. But I'm not sure I'm ready for the learning curve, and then the sales questions that will come out of this, like, well xyz company told me this a 5% coverage and you're telling me it's 10% coverage.  It's a nice FAB (feature, advantage, benefit) to have, but I'm not sure if it's right for our industry.  Just because Xerox jumped off a bridge would you also jump off one?

-=Good Selling=-


Anonymous said...

Actually the tiered color metering is a fabulous way to differentiate from your competition, most of whom do not have this capability. The Kyocera solution is accurate in it's coverage settings because it is customizable and not suggestive. For example if you the customer give me a document with minimal color, URL address, simple loge etc. the technician can scan that document and determine precisely the CMY coverage for that document. That would be threshold #1. Threshold 2 would be "normal documents calculated from customers document in the same way, no ambiguity and it's agreed upon with the customer. Anything above that would be level 3 and billing for this is agreed upon at contract time. It's not for every account but it is a way to seperate yourself from the competition. It's definitely not a "bridge" you're jumping off, it's provididing our dealers and customers every tool to help them be more productive.

Art Post said...

Kudos on your response! It always helps to get a better understanding of the product when you can hear from someone from the manufacturer!

"It's definitely not a "bridge" you're jumping off, it's provididing our dealers and customers every tool to help them be more productive".

Other dealers have emailed me and they just not sure if this is right for them, they are afraid that they will be lowering their maintenance billing, they will still keep the same margin of profit. However billing dollars for clicks will decline thus profit will decline. I'm only stated what was told to me.

I think the overage of 35% coverage is a good thing, but like you said that needs to be contracted and agreed upon at the time of the sale.

Thanx so much for the response!


Anonymous said...

Why make it so convoluted? Why not just make them pay for the toner???

Anonymous said...

Hello Anonymous

We have gone down the route of charging seperateley for toner, but all that happens is the cost per copy comes down to allow for the additional toner cost, then over time everybody decided to include toner again at the lower cost per copy just to steal the deal. Then we all moan because the profit marjins have dropped.


Chuck O said...

I am in the industry and have worked all angles for the manufacturer, from repairing in the field, network solutions and implimentation, document management discovery,sales and implimentation, MPS and now area sales manager. I see exactly where this fits, in competitive tight bids on color CPP, "how much is X charging you for this simple logo? I can do it for .02 CPP" X cannot or does not have the capability to differentiate the coverages! It is not for every customer but it is a great tool to win deals. Today's rep needs to think outside the normal box sale and get ahead of the competition..this does that well

Chuck O