MPS And Profit

There are a number of factors that impact start-up cost for MPS clients. In the traditional "copier" world, prior to putting machines under contract we would inspect them, perform service to bring it up to spec and bill the client. In MPS, we just put them under contract, so the start up cost can be virtually nothing or cost an arm and a leg depending on the condition of the machines that are being placed under an MPS Agreement. Another factor is how much toner the client has on hand prior to the start of the agreement. If they have inventory on their shelves, we make note of exactly what that inventory looks like so that we can leave them w/ the same inventory should they elect to end their MPS engagement at the end of the initial term. If they don't have much in the way of existing inventory, the cost to supply toner up front before any pages have been run under the contract can be astronomical.

That being said, the typical ROI in our engagements has been 90-180 days, although there have been some (particularly healthcare accounts w/ heavy page coverage from copying X-rays) that can take much longer to become profitable. I think we're all learning (sometimes the hard way) that in order for an MPS engagement to make sense for the provider, the provider must do much more than gather page volumes and place a fleet under a CPP agreement. The provider must understand the printing behaviors and key documents within an organization to account for the client's unique requirements.

quote:

Originally posted by txeagle24:
If they have inventory on their shelves, we make note of exactly what that inventory looks like so that we can leave them w/ the same inventory should they elect to end their MPS engagement at the end of the initial term.

Wow that's very charitable of you.

This makes me wonder about the profitability of MPS as a whole.

If your not replacing the fleet, how does a company profit from MPS ?

quote:

Originally posted by yeti:
This makes me wonder about the profitability of MPS as a whole.

If your not replacing the fleet, how does a company profit from MPS ?

Agreed, its hard not to see MPS as just another factor driving consolidation in the industry. Especially of you consider Auxilio knocked out a number of very profitable agreements.

what is the typical profit margin of a standard $16m/year copier dealership?

The target profit margin in the "Johnson Model" was 14%. I'm not sure what the targets are post-recession.

quote:

Originally posted by JasonR:

quote:

Originally posted by txeagle24:
If they have inventory on their shelves, we make note of exactly what that inventory looks like so that we can leave them w/ the same inventory should they elect to end their MPS engagement at the end of the initial term.

Wow that's very charitable of you.

It's really more of a way to overcome the question that comes up when a customer realizes that have a bunch of toner on their shelves and uses that as an excuse to delay a decision.

quote:

Originally posted by yeti:
This makes me wonder about the profitability of MPS as a whole.

If your not replacing the fleet, how does a company profit from MPS ?

I've looked at it up-side-down and backwards. Done the expensive training seminars and all the rest. I just don't see it!!!!

With the Purchasing Frenzy this month
Equitrac Picked up by Nuance
NewField IT Picked up by Xerox
Printelligent Picekd up by HP

major corporations are seeing the value in MPS business software applications