Copiers, MFPs and "The Power of the .001 (one thousands of a penny)"

The Power of the .001 (one thousands of a penny)

It's getting kind of late but thought I'd give a stab at this.  The lowly penny and the power of profit that can be collected from Copiers, Printers and MFP's that are under maintenance contract is astounding.  

Years ago, with out the aid of copier maintenance software it was interesting to see what machines were pulling a profit and which were not.  When I was a newbie in the industry I can remember the service manager coming to me with a service card that outlined the cost that incurred with "x" machine and he had to make the call either try and get the system out of the field (thanx for the lead, just what I wanted to deal with a customer whose machine was breaking all the time) or to lose money on the system and raise the maintenance contract next year.

Today, maintenance software to monitor and track profits is now the norm for all dealers and manufacturers.  Thus with low profit systems or those systems producing a loss can be identified ASAP and measures can be put in place to make the system profitable.  The easiest way to make them profitable is to raise the cost of the maintenance agreement.  Most maintenance agreements sold now are all inclusive, meaning all parts, PM kits, consumables (toner, developer) and labor are included. Thus the cost per copy (I call it the cost per page) now rules the industry for most contracts.

So, what the heck does a penny get you?  Not much anymore, can you add a penny per page to a cost per page program, well you can if you 'd like to lose customers!

Here's some quick calculations on the power of the penny or in this case .001 (one thousands of a penny).  We'll deal with assumptions here for easy math.

XYZ Dealership has 500 systems that are on a cost per page contract. Each system generates 5,000 pages per month on average for a total of 2.5 million pages per month.  The XYZ dealership needs to generate additional profit because the owner needs a new boat. By adding .001 to each renewing contract each month, the added profit is $2,500 per month. Over the course of a year that's $30,000.  That's enough for the boat payments!  Really, if your current contract cost was .01 (penny) would you (the customer) be upset if the monthly increase was .001(one thousands of a penny) = $5 per month (Don't think so). What about an increase of .002 for each page, well now we're talking $5,000 per month and gee the owner can get an even bigger BOAT!

Now, here's some really crazy numbers for you.  The XYZ Dealership has 3,000 systems that are under a cost per page contract and each machine averages 10,000 pages per month.  The average monthly page volume is 30 million pages!  Adding just .001(one thousands of a penny) per page will give a profit of $30,000 dollars per month and a cool $360,000 dollars for the year. Now we're talking about a really really big boat!

Can the 3,000 systems averaging 10,000 pages a month be achieved, you betcha, it may take awhile but the opportunities are there especially with the emergence of managed print services in the last few years. 

Most profits from dealers go right back into the company, higher wages, additional people, new technology, cost of living.  I just thought it was neat run the numbers and see where they came out and have some fun!!

-=Good Selling=-

Copier Manufacturers Need to Step Up to The Plate!

Over the last few weeks I've had a chance to speak to a few dealer principals, a few direct branch managers and quite a few sales people. When asked how is business, I would have to say that 80% of those asked stated that they were holding their own. Many agreed that the commercial business is down as much as 25% and the ability to put back to back months of good sales numbers are not as easy as it once was.

I'm out in the field, pounding the pavement and making the calls, heck I must have made 60 calls today and got two appointments for new business. Plus, I'm hearing what everyone else is hearing:

1. We're just gonna stay where we are right.
2. We're not committing to anything long term right now, even if we can bring our monthly costs down.
3. Call me in three or four months.
4. We've laid people off.
5. We are going out of business.
6. I'm going to keep what I have (buy from leasing company) and try to get a few years out of what I have.

So, where does that leave us, the guys and gals on the street. Most of us are low salaried and need sales to support ourselves and our families.

It all just got me to thinking what can the manufacturers do to help increase sales? After all they nned the boxes in the field the same as we do. What is going to make businesses buy or lease new equipment NOW! I have a few ideas, some may seem far fetched however if things don't change soon, there's going to be alot of dealers in trouble very soon. I've already seen three dealers in the NY metro area close their doors.

1. On all new models raise the MSRP of the device. This will allow dealers to get over funded more dollars so they can pay off existing leases.

2. Institute monthly spiffs to the end users. Almost similar to cell phones, at the end of the month its over! It will create urgency to buy or lease now.

• Pay the first three or six payments for a new lease.


• Have a Customer Loyalty rebate if they upgrade with the same manufacturer.


• Offer Free Supplies for a specified term (Supply rebates can be directed to the end user or the dealer)


• Offer Free Service for a term (Service rebate to be directed to the dealer so they are comp'd.


• Offer true no interest financing, where the customer owns the equipment at the end of the term.


• Reimburse for lease returns of equipment (end user or dealer)

3. Stop giving dealers rebate credits for trade-ins, most of this money never makes it to the end user. Give them directly to the end user in the form of a check or a rebate taken right off the initial sale. The dealer can then submit the invoice and have their account credited for the rebate.

4. Stop giving Dealers take down rebates for competitors systems, focus on giving to the end user, they are the ones that count right? Give it directly to them for buying or leasing your equipment!

5. Load up the Dealers warehouses with machines on consignment, they sell the unit, and then the manufacturer gets paid. Get the DSM's to make monthly visits to track whats been sold, and evaluate inventory for the dealer, more like inventory management. Thus the DSM is at every dealer every month, that's better for business right? If the dealer can't move a certain model, then the dealer need to call the DSM to get this model moved to someone who can.

6. Offer FREE trials for up to 30 days.

Again, some of these may seem far fetched, but in today's economy you've got to be creative to succeed and have the gumption to go full speed. Customers will buy or lease NOW, but there has to be a sense of urgency to make that happen.

-=Good Selling=-