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CPC rates vs Machine Cost with Customers

Jason HJason HMaven VIP

So I was thinking after securing an order this morning about CPC rates vs Cost of Machine in dealing with clients. I have a current customer who decided to shop us but it turned out she didn't like the color on any other device except our Samsung. Looked at Ricoh, Canon and Konica from us, Toshiba and probably the rest of them. I posted about losing this deal a while back due to the Samsung/HP merger. I kept on her and changed her mind, put a demo in for a 40ppm color, and then wrote the order today.

What was interesting to me was that she was more caught up in me charging her .01 per page and everyone else charging .008 for overages and .07 for color, rather than the fact that the MFP had about $5,000.00 worth of profit in it. She never once complained about the lease payment. Only the overage costs. She has no clue what I am charging her for service only the fact that the overage costs were high in her mind. So the service rates are still high and matched to her volume but the overage is where she wanted it, but she never has any overages with b/w or color so I guess everyone will be happy in the end.

 

"If any of my competitors were drowning, I'd stick a hose in their mouth and turn on the water." - Ray Kroc

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Art PostArt PostAdmin VIP

Wow, agreed the way some people think about overages in screwy.  When I'm presented with .008 to my .0125, that means the difference per copy is .00425 per month. The client is averaging 5,000 pages per month. That means my service costs $21.25 more dollars per month, or less that $1.00 per day. Let me ask you, have I not proved that our service is worth the difference?  We fall back to the value points. What blows my mind is when the difference is only .002 and the client is only doing 3K per month.

I just remembered that your point was that she does not incur overages.  As my Father In Law has stated, what do you expect from a pig buy a grunt.

F fisherMaven VIP

We put a very small monthly minimum on our service contracts.  Typically $15 worth of B/W and $15 worth of color.  You'd be amazed how hung up some customers get on the minimum.  Trying to explain that the minimum is only in play if they barely used their machine is like banging your head against a wall.

On the flip side some customers get so hung up on overages that they'd feel happier if you overcharged them and gave them a fixed monthly bill.  Just so they never see an OVERAGE on the bill.  You can't win. 

Art PostArt PostAdmin VIP

There was a recent thread on linkedin with a dealership offering zero overages and unlimited clicks.  Many jumped in stated how could that dealership do this.

I believe most customers are tired of minimums and tired of overages.  A company that can sell unlimited and no overages has a leg up.  

Device billing is probably how it's done, since that person stated it was not SBB (seat based billing).  Knowing the volume up front and having a history can make device billing attractive to many companies

J JACKELSAElite P4P'er
From a small town in South Africa and a technician  .The cpc defines the type of company you are dealing with as a costumer or company shopping for a copier any sales person or copier company that has a lower cpc is normally going to be the worse pick .
 
A low cpc quote is not a good thing and these companies will often escalate the cost per page and service contract ,they will have a bigger sales team then technical and this loss they are running at the undercutting of cpc to win deals is compounded over a 3 or 5 year period as untrained technicians under pressure with no boot stock are generally just visiting to stop the 4 hour response time . 
 
If a car manufacture   quotes you 35 to 40 miles per gallon  and a dealer quotes  you 65 to 70 on the same car  
would you  buy from dealer or manufacture.
 
If a service department  has a sales team that wins deals on cpc the department is seen as a burden running at a loss no money is spent on training or parts and often toner. 
 
Do this little test phone all the different salesman who are quoting you ask them were they are and to please walk into there spares department and to take a pic of a drum and toner for the product they are offering you.
 
 Low cpc types once they have that signed debit order will take the loss back some how and it will cost you double of what your highest cpc quote was. 
 
So as a buyer work out the cpc its all online and if you just do toner price divided by yield and your prospector is below that 
you are not dealing with a service driven company and  service  will be poor . This seems to be the trend and slowly everyone is converting to this way of doing copiers win deal now pay for loss later all at the clients cost.
 
The clients that get taken that tell me these stories sort of thought the loss in the dropping of cpc 
was not going to fall on them 
 
J JACKELSAElite P4P'er
The only way a set monthly rate can work is if the the amount of toner given is controlled .
 
So no meter readings no bill that goes up and down if client says they do between 2 and 3 thousand pages a month at 5 percent coverage . 
 
You can give them the devise and toner need per year to cover the estimated clicks  but if they use all the toner in 6 months then what . 
 
I like the idea and this puts page coverage back in costumers hands and possibly buying  toner comes back into the picture
and change is needed because  at the current way copier company s are doing it most people and companies will start buy from Walmart,.  

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