Friendly industry adversaries met for the second time at AMM to debate pricing structures in front of the Managed Print Services Community, which met Wednesday afternoon during CompTIA’s Annual Member Meeting.
“Pages are in decline, but it’s what we call a slow burn,” said InfoTrends’s David Ramos, playing devil’s advocate for the per-page pricing model.
“A fire’s still a fire,” PrintAudit’s West McDonald shot back, kick-starting the lively back and forth. “Just because it’s slow doesn’t mean it’s going to kill you.”
Full disclosure: Ramos volunteered to side against the alternative per-seat pricing for the purposes of the pricing debate, which covered protection, simplification, alignment, profitability and stickiness.
Pages On The Decline
Despite their differing views, Ramos and McDonald agreed that the number of pages companies print is in decline, meaning a managed print service provider using a per-page model will continue to lose revenue. The only question is how fast.
“I truly believe per-seat billing can help us with that,” McDonald said. “Our margins go up in that model.”
Ramos mentioned unforeseen economic forces that nobody could predict, like the economic decline in 2008. “We saw a 15 percent decline in unit placement and overall volume. When you look at that graph, it’s like a cliff,” Ramos said. “At the time, we thought we’d see those workers come back, but they didn’t.”
The future holds no guarantees, they agreed. Printing has also been hit by the introduction of the iPad and a new generation more likely to use the cloud to store data than a file folder. “It could be a slow burn, but it could be — and I hate to say this — but it could be a Kodak cliff,” West said. “They saw the change coming, but they didn’t know how fast it would happen.”
In the per-seat pricing model, margins increase as people print less, West said.
Simplicity of Managed Print Services
Subscription-based models like Netflix are more common than they used to be, and should be considered for managed print, West said. “In our world, we need to look up away from the page, we forget to look up and look at people. In every office, it’s a person doing something,” West said.
Per seat printing also saves managed print service providers time by simplifying the billing process. “When we start to use the page information to understand the cost and what our spend is, on the billing side it becomes easier on us, too,” Weset said. “It’s just simplification.”
The two spent an hour debating the new model versus the old, with input from the very engaged audience of managed print and managed service providers.
“The crux of your argument would be your ability to do a really good assessment. How many of those dealer reps are really good at assessments?” Ramos asked. “I want to hear about that one rep and how they’re really good at assessments.”
West countered that he’s conducted dozens of assessments over the years, walking through client locations, taking pictures and conducting interviews about the way the company prints. Most companies don’t know how much they spend on color versus monochrome, for example, and exhibit natural print behavior. “People are already printing the way they want to,” West said. “It’s already an open bar.”
The change to per-seat pricing won’t likely affect that — just because employees have the ability to make each PDF they print a full-color, full-bleed document doesn’t mean they will. “If history is any example to what we’re trying to do here, you’ll see the new model is just a billing mechanism.”
Stickiness
The per-seat model also increases stickiness, according to West. “Under a per-seat billing model, you’ll fold in the toner, maybe the hardware, and the more you fold in, the harder it is for them to leave,” West said. “You can layer that stickiness with software, with services, with managed IT, and with that stickiness it will be very hard for your customer to leave — they won’t want to undo that ball of yarn.”
Ramos agreed on the stickiness of the model, but noted that getting the new contract in place can be a challenge. “If you’re successful in getting it in place, it is hard to unwrap it,” he said. “If you can be successful with all of these potential pitfalls, yes, you can have a great mechanism for customer retention.”
Michelle Peterson is a communications specialist for CompTIA.
