Seat Based Billing is here to stay. How do I know? It’s because it’s all our customers and prospects want to talk about. It has become the number one topic my sales guys end up talking about, so we go with the flow and use it to open doors, and boy oh boy, does it ever do that. The reason? There are two like it or not facts that are affecting every single office equipment dealer in North America:
- Volumes per employee are in decline.
- Margins on CPP are becoming tighter and tighter.
If your revenue is tied to the page, then are you going to continue to try to win the race to the bottom, or are you going to have a plan B?
To highlight how ridiculous it is getting, a month ago I spoke to a guy who was bidding on a deal at .005, which I thought was bad enough. Then last week I spoke to another dealer who was pricing at .003!!! WHAT?! Who can make any money at either of those prices, especially when there is less printing taking place.
To be clear, I’m not suggesting that the paperless office is imminent, but will it eventually come to pass? It’s inevitable, but there is obviously life in the old fella yet. What is clear, is that document production is not dropping in lock step with volumes. Quite the opposite in fact. Document production continues to explode. It’s just that those documents are not being printed. The vast majority of them are being stored in a document management system. That’s why sales of DM/ECM are seeing exponential growth.
Sorry to say, that isn’t the end of the doom and gloom either. Don’t forget, there’s all sorts of software out there like ours at Print Audit, with rules based printing, secure release and follow me print, whose main purpose is to specifically target print volumes and excessive color usage for reduction. This is exactly what end users want. Curiously, selling these technologies has never been a particularly popular strategy with office equipment dealers. I can’t think why! Ahem.
The beauty of SBB is that it flips all of these negatives into positives. Let me explain. Think of SBB like an open buffet. Your customer pays one monthly fee per user and they get to eat as much printing as they like. Now if your butt clenches at that thought, here’s where you need to shift your mindset. Under SBB, everything that was creating revenue for you previously is now a cost. With a fixed cost per user, every page a user prints cuts into your margin. Consequently, everything you can do to reduce the kind of printing they are doing and the volume they are printing increases your profit margin. A natural question at this point is, “how can I buy the software I need to control the printing without having to increase the price per seat to a point where it is simply too expensive?” Well, bear with me, I’ll address that a little later.
You see, SBB addresses the fundamental conflict of interest that CPP represents. Under a Cost Per Page program, the more the customer prints the more money you make! Of course, no one talks openly about this uncomfortable fact, or if they do, quite rightly, it is couched in terms of having the best interests of the customer in mind. The customer doesn’t make a big deal out of it because everyone is billing the same way. But think of the positioning advantage you can exploit with this one statement:
“Mr Customer, all our competitors want you to print as much as possible so they can bill you more. We’re the only ones who want to truly partner with you to implement strategies to print less because it is in both our best interests to do so.”
However, in order to deliver upon this positioning you need to do a proper assessment of their users volumes and printing habits during the pre-sales process. In broad terms this is how they will work out:
- Let’s say that based on their existing CPP rate and volumes, you do some simple math to determine that they are spending about $30/month/user.
- Let’s also say that the margin on that is 20%, in which case your cost per seat is $24.
- With your assessment, you will see how much you can bring that cost down by putting in a rules based print, and secure release software. Let’s say you can bring that cost down to $18/month/user.
- Obviously you are not going to give them all the savings. Without you they would continue to spend 100% and any savings garnered deserve to be shared as payment for your solutions expertise and help. So, in this example, you quote them $27/month/user.
- Great news for everybody! They have saved $3/seat/month and you’ve taken your gross profit from $6 to $9/seat/month!
- Not only that, but as time goes by, you will be looking for further savings that you can share.
Are there risks? Of course there are! Every day you get out of bed and put your feet on the ground there are risks. But by using the tools and methodologies developed over the last 4 years by Print Audit, by using the right software and contractual language to address them, the risks are mitigated and the opportunity outstanding.
The last point I’d like to make about the positioning you can use with SBB is in it’s ‘un-comparability’. What I mean by that is, if your competitor submits their quote at .009, and you come in at $27/seat/month with guaranteed savings, not only can they accurately budget how much they will be spending on print with your quote, they will not be able to shop your price around. As a wise man said (actually, more shrewd than wise), where there’s mystery, there’s margin.
Are you convinced that Seat Based Billing is the way of the future but aren’t sure where to start? Print Audit and our ecosystem of SBB Certified partners are here for you. I don’t want to turn this into a commercial, but if you want more information, go here. If you’re really serious about improving your business model, register for the SBB Roadshow at www.sbbroadshow.com and join us on September 12th in Philadelphia for a full day of learning and best practices transfer. It could be the single best thing you do to improve your business this year.