The Imaging Channel November 2011
Death of the Hype?
I’m not sure if you’ve noticed, but everywhere I look, it’s doom and gloom hitting our industry: the death of this and that, iPads ruling the world, HP imploding, more printer consolidation happening. Is the new device “ratio” 100:1 yet?
With all of this hype, I’m a bit shocked we’re still here. Then I found this post from IDC suggesting printed pages are expected to grow slightly over the coming few years. Interesting.
Photizo Group MPS Insights November 2011
Throwing out the ABC's for a new generation of sales reps
Have you ever experienced one of those October
evenings, when the cool air returns and all you want to do is sit and watch playoff baseball? Well, I was so looking forward to one of those evenings last week when the Tiger-Yankee game was rained out.
What to do? I wasn’t mentally prepared to crack open the laptop. That business book looked interesting but I was saving it for the flight to Vegas the following week.
Aha…the movie vault. I went into the archives and surfaced with the cult classic Glengarry Glen Ross. Alec Baldwin, Jack Lemmon, Al Pacino, Coffee’s for Closers and A-Always B-Be C-Closing. It’s the most quoted sales movie of all time and parallels much of the print/copier industry…not necessarily in a good way.
footPRINT MPS in the News
From Unhappy or Unemployed to $100,000+
The Imaging Channel December 2011
Why do so many employees feel trapped in their jobs these days? According to the latest survey from Right Management, an unbelievable 84% of employees plan to actively look for a new job in 2012. http://www.right.com/news-and-events/press-releases/2011-press-releases/item22035.aspx. When asked why, the answers seem to indicate a general lack of trust in management, feeling their leaders lack a strategy to grow the business and expand the opportunities of employees.
So, do you fit into the significant majority? If so, or if you are already on the sidelines waiting for your next opportunity, what options will you explore in 2012? One option that might be worth a closer look for is self-employment in the Managed Print Services industry.
Step away from the current unhappiness and hang a shingle on your door. Within 30 days, you will be in a position to secure clients and grow your own business. Five years ago, the option of leaving ‘the man’ and becoming an instant competitor didn’t exist in our industry. However, things have changed.
A quick FAQ on self employment in MPS:
Q1. My customers will need a service team
A. Yes and there are many independent organizations that have coverage across the USA and Canada, and are fully certified on HP, Lexmark, etc. In addition, many come with triage support that far exceeds your current/previous company’s capabilities.
Q2. My customers will need supplies
A. Agreed and the options here are varied and also cover North America and provide access to both OEM and aftermarket supplies. Also available is the ability to leverage an Automated Toner Replenishment System that truly works to the level you have been promising your customers.
Q3. I don’t want to manage Call Dispatch and Customer Support
A3. There are outsourcing options that provide a fully trained call center with deep knowledge of printers and MFPs. In most cases, these call centers are dedicated to print and have more training on the devices than your previous history. It’s likely the ‘noise’ you hear from your new customers will be significantly less than your past experience.
Q4. I need to bill & collect with my end customer
A4. Absolutely, and there are some terrific leasing companies that will tailor a solution to your needs, including the option to have the leasing company provide all of the billing and collecting.
Q5. I don’t have the experience on how to accurately price out a Cost Per Impression (CPI) solution for my customers.
A5. In an effort to remove your pricing risk, you can purchase your CPI solution the exact same way that you sell it. This way, you can have total certainty of your margins before you sign your customer to an MPS contract.
Do you see where I’m going with this? Within 30 days, you have the ability to access partners that can support all of these key requirements, often at a level much higher than your current/previous company. So, why aren’t more people doing it? I think it’s FUD…Fear, Uncertainty, Doubt.
Fear: Can I really sell without a parachute?
Uncertainty: Can I afford the time it will take to build a business from scratch?
Doubt: Is it really that easy to set up the business and begin selling within 30-45 days?
Well, only you can answer the question about your selling skills and capabilities. If you have a proven track record of selling, and understand MPS, you may be in a good position. Let’s take a look at some assumptive data and be honest with yourself and your capabilities to forecast if your results would be higher or lower:
Year 1 Assumptions:
1. you sell six new customers…one every two months with revenue beginning in month 2.
2. Each customer has a monthly page volume of 100,000 mono pages and 15,000 color pages.
3. Your selling price is $0.015/page on mono and $0.10/page on color. This generates an average monthly revenue of $3,000/customer.
4. Your cost price is $0.01/page on mono and $0.07/page on color. Represents an average monthly cost of $2,050/customer (and a margin of approx 32%).
5. Your hardware revenue is $300,000 and your margin is 20%.
Based on the above forecast, you would realize:
1. $60,000 of hardware margin
2. Gross Margin on each customer of $950/month. Therefore, in the first year, the margin generated from each customer is:
Customer 1: $10,450 ($950/mth * 11mths of revenue)
Customer 2: $8,550 ($950/mth * 9mths of revenue)
Customer 3: $6,650 ($950/mth * 7mths of revenue)
Customer 4: $4,750 ($950/mth * 5mths of revenue)
Customer 5: $2,850 ($950/mth * 3mths of revenue)
Customer 6: $950 ($950/mth * 1mth of revenue)
Total Gross Margin in Year 1 from your MPS contracts is $34,200
Based on the above assumptions, this generates total margins for your business of $94,200. While it may seem like a lot of effort to make $94,200 (and it is), you have set yourself up for an excellent Year 2 if you continue to perform at the same level. Take a look:
Year 2 Assumptions are the same as Year 1:
1. You sell 6 more customers, bringing your total to 12.
2. Each customer prints 100,000 mono and 15,000 color pages per month.
3. Your selling price is $0.015/page mono and $0.10/age color.
4. Your cost is $0.01/page mono and $0.07/page color (32% margin).
5. Your hardware revenue is $300,000 and your margin is 20%.
Your net result is another $60,000 in hardware margin plus:
Customer 7: $10,450 ($950/mth * 11mths of revenue)
Customer 8: $8,550 ($950/mth * 9mths of revenue)
Customer 9: $6,650 ($950/mth * 7mths of revenue)
Customer 10: $4,750 ($950/mth * 5mths of revenue)
Customer 11: $2,850 ($950/mth * 3mths of revenue)
Customer 12: $950 ($950/mth * 1mth of revenue)
Customer 1-6: $68,400 ($950/mth * 12mths * 6customer)
Total Gross Margin in Year 2 from your MPS contracts is $102,600
Your annual margin/income is $162,600 in your second year. If you repeat the process again in the third year, your income reaches $231,000…and $299,400 if you repeat it in Year 4. By this point, you have 24 customers and a reoccurring MPS margin over $230,000 per year. It’s called the ‘Get Rich Slowly” model for a reason as the first year is challenging, but make it through and you’re on your way to a very successful income.
Now, this isn't for everyone and there will be some costs and time requirements to successfully launch your business. However, there are people that specialize in all facets of MPS, whether it’s service, supplies, call center, website design, leasing, billing and collecting, or customer support.
The barriers to entry into MPS have essentially been removed for everyone. This is why non-traditional companies have joined MPS, ranging from MSPs to DMRs (think CDW). Many of these companies will become significant competitors in the managed print space without building any MPS infrastructure.
If you have the MPS knowledge, the desire to maximize your earnings, and the commitment to work extremely hard for those first twenty-four months, the best-of-breed program you develop will compete favorably with any of your competitors selling MPS.
If you’re interested in learning more about the possibilities around launching your own MPS business, you should attend the upcoming “No Rules” MPS Workshop in Las Vegas on January 16th, sponsored by the Managed Print Services Association (MPSA). It’s free for MPSA members and only $149 for non-members (note: that’s the same price as a membership to join the MPSA). Many of the top reps across the country, as well as leading MPS thought leaders, will be there…registration closes at the end of this week. Contact Joe Barganier (email@example.com) to sign up.
Happy Holidays & all the best in 2012, wherever your shingle may hang.