On the face of it, now seems like an odd time for IT providers to get into the print business. Companies large and small are digitizing more and more of their documents, so copiers, printers, and MFPs are slowly but surely going the way of the fax machine. Indeed, Gartner expects aggregate global shipments of all three device types to decline at a 1.8 percent compound annual rate through 2020.
Paradoxically, though, figures like those are among the biggest reasons why VARs and MSPs should enter the print market. Channel pros, it turns out, aren’t the only people aware of such predictions.
“You have office equipment or print guys who are panicking a little because print volumes are changing,” observes Mike McCurdy, president of Integrated Technologies Inc., a print specialist in Twin Falls, Idaho, that now delivers a wide range of technology services as well. Businesses like his have customers like yours squarely in their sights, and their one-stop-shopping sales pitch is meeting with a receptive audience.
Until the much-anticipated paperless future finally arrives, moreover, there’s real money to be made in print. Most providers collect 40 percent margins on hardware and 50 percent on service and supplies.
Adding print to your current service roster won’t be quick, cheap, or easy, but make no mistake: You need to do it anyway. Here’s a game plan for getting started.
Step 1: Define Your Goals
Is your move into print an offensive play aimed at landing new clients and collecting more revenue? Or is it a defensive play primarily intended to keep print-first providers away from your accounts? The answers to questions like those will influence your decisions about how deep you get into print services and how many you offer.
“You’ve got to make the investment to understand what you’re doing and why you’re doing it,” says Robert Betzel, CEO and partner at Infinity Network Solutions Inc., a Macon, Ga.-based MSP and managed print provider. In his case, the motivating factor wasn’t competitive pressure or attractive margins but overhead reduction. Helping clients summon outside specialists to address their printer issues was becoming a time-consuming drain on his bottom line.
“We were finding that our cost to manage that ticket as a vendor management event was expensive,” he says. Knowing from the get-go that all he wanted to do was equip his team to resolve printer problems more affordably led him to pursue simple, low-cost print service options, rather than more expansive ones requiring bigger investments of time and money.
Step 2: Build, Buy, or Partner?
Print is like any other kind of new service. To get started you must either develop expertise in-house, purchase a company that already has expertise, or forge an alliance with such a firm. Buying or partnering with a print specialist is the quickest way to go.
“On day one, you’re good to go,” says John Eckstrom, president and CEO of Carolina Business Equipment Inc., a print, copier, and IT services provider in Columbia, S.C. On the other hand, he continues, finding a print provider that shares your approach to customer service, employee compensation, and other cultural matters isn’t easy, and acquiring or partnering with a company that’s a poor match for yours can be disastrous.
Building a practice from scratch frees you from such concerns, but can be a lengthy, labor-intensive, and therefore costly process. Eckstrom chose that path just the same when adding technology services to his existing office equipment business.
“I wanted to be sure of the culture we’ll be operating by,” he says. “It would have been nice to have [an immediate] customer base, but we took the longer road.”
Step 3: Printers, Copiers, or Both?
The lines separating copiers and printers have blurred. Most copiers print these days and most printers copy. There are still differences between them, though, which should play into what product categories you choose to support.
For starters, copier makers tend to impose sales quotas on their partners, and grant them territorial exclusivity in return. Printer manufacturers, by contrast, are usually willing to work with anyone, anywhere, interested in promoting their products. Printers have fewer moving parts than most copiers too, so they’re both more reliable and easier to fix when something goes wrong.
“You’re generally changing entire assemblies rather than the smaller parts, so service is much quicker and much more user-friendly,” says Jeff Bendix, president of Bendix Imaging Inc., a managed print and IT services provider in Watertown, S.D.
For that and other reasons, Eckstrom advises office equipment newcomers to focus exclusively on printers at first, and consider adding copiers only after their feet are wet. “It will be a lot more enjoyable,” he says.
Channel pros who sell printers should plan to sell managed print services as well, especially if they already offer managed IT services and know how to support customers proactively. Most business owners appreciate knowing that someone is keeping their print fleet supplied and continuously operational; most MSPs appreciate the extra monthly recurring revenue a managed print offering brings in.
Step 4: Pick Your Distributors
Generally speaking, only large-volume resellers have direct relationships with big printer and copier makers. Everyone else partners most closely with distributors.
Choosing distis with a deep selection of products from a wide array of manufacturers will reduce the number of relationships you need to juggle. Look as well for firms that let you pick and choose among those manufacturers as needed. Some distributors force resellers to specialize in a specific print vendor. “If the customer doesn’t want that, you don’t get the customer,” Bendix notes.
If you plan to offer managed print services, make sure the distributors you partner with have MPS programs. The best such offerings make price-setting simpler by charging the same per-page fees most managed print providers collect from their customers. “You know exactly what your margins are going to be,” Bendix observes.
Step 5: Pick Your Manufacturers
Even if your primary day-to-day vendor relationships will be with distributors, you still need to decide which printer makers to represent. Experienced print resellers offer a few tips on what look for when making your selections:
- Reliability: Sending technicians on-site to fix broken printers is expensive, so choose manufacturers with dependable products. The Buyers Lab unit of Fairfield, N.J.-based Keypoint Intelligence publishes product reviews that can be helpful in assessing whose devices tend to require the fewest repairs.
- Breadth: Different customers have different needs, and their print partner must be equipped to meet as many of them as possible. Look for manufacturers with a solid product lineup in leading paper formats like A3, A4, and A5.
- Resources: Big, name-brand printer makers usually offer more support and training resources than lesser-known companies.
How many manufacturers you should work with is a somewhat more complex calculation. A bigger number means more options for your clients. A smaller number means fewer products for your technicians to master. “Try to be very selective, because then you can be selective in how you do your technical training,” Betzel suggests.
Step 6: Staff Up
Lightening your training requirements is likely to sound pretty good, too, once you start totaling up all the costs involved in launching a print practice. “They’ll bleed cash to get this thing started,” says Eckstrom of IT companies entering print. “They’re going to uncover that just by putting together a simple budget.”
People are likely to be one of that budget’s biggest line items. According to Greg Quirk, president of Omaha, Neb.-based JQ Office Equipment, most printer and copier dealers promise to resolve support issues in four hours or less. “And you can’t remote in,” he notes. “It takes feet on the street.”
Don’t expect the technicians on your payroll now to do that work either. Most IT specialists have little interest in repairing printers. “If you’re a high-end Cisco shop, you’re very unlikely to have technicians who are going to want to go out and fix toner or fuser issues,” Betzel observes. Force them to perform such tasks anyway and they’ll probably serve you two weeks’ notice in a hurry.
Step 7: Stock Up
Personnel isn’t the only extra cost print newcomers must shoulder. Meeting those four-hour SLAs typically means keeping plenty of replacement parts, toner, and other “consumables” on hand as well. “If you have very modest success and get a few hundred devices under license, you could have thousands or tens of thousands of dollars tied up in inventory,” Bendix says.
Some distributors can lighten that load—and ease your staffing requirements as well—by delivering on-site supplies and support on your behalf. Indeed, Bendix has a friend who runs one of the biggest managed print businesses in the country on that basis. “They don’t ship a single thing, they don’t install a thing, [and] they don’t fix a single device,” he says. “It’s all outsourced with his distributor partners.”
The catch, of course, is that the more your partners do for you, the more of the revenue they keep. “Whatever you can do yourself, great, do it, because you’ll make more money that way,” Bendix says.
Step 8: Buy Tools
Don’t put your wallet away just yet. You’ll probably also need to invest in software from companies like Kingston, Ontario-based PrintFleet Inc. and Calgary, Alberta-based Print Audit that can automatically locate all of a customer’s printers and import usage data from them.
“Your standard RMM tools aren’t going to work to collect the data necessary from the printing devices,” Bendix says. They’re unlikely to integrate with your new print management solution either, he adds. Worse yet, the PSA solution you’re currently using may not be equipped to invoice managed print services. “Not all systems have that capability,” Bendix says.
Step 9: Set Your Prices
Be forewarned: Unless you’re paying your distributor by the page, setting prices for print services could be challenging until you have enough experience to gauge costs accurately. That’s a big potential problem too, because despite the generous margins print services pay, pricing can be more competitive than most channel pros are used to.
“There usually has to be a compelling event to make someone switch IT providers,” notes Bob Evans, a principal at managed print and network service provider Function4, of Sugar Land, Texas. “In the print world, save people some money and they’ll often switch.”
That’s one of several reasons Bendix counsels print novices against making a company with dozens of devices their first customer. “Find one that has five or 10,” he says. If they’re a patient, existing client likely to tolerate a few early stumbles, so much the better. From there, you can move up to more and bigger accounts, gradually collect expense metrics, and set your rates accordingly. Starting small and building slowly has the added benefit of keeping your parts and supply costs down initially while providing a basis for anticipating how much inventory you’ll need to stock later when your practice is running at full steam, Bendix notes.
Ultimately, however, the only approach to the print business you really need to avoid is not approaching it at all. Print services may have a questionable long-term future, but ignoring the opportunity they present—or the competitive threat posed by the companies that deliver them already—would be a big and potentially dangerous mistake.