Stop me if you’ve heard this before — our product is becoming commoditized. We need to find a new way to sell; a way to package our goods and services to create value and differentiate ourselves from the competition.
You didn’t stop me, but I’ll assume that’s because this is a blog and not because none of that sounded familiar. If you’ve been in the office imaging industry for any length of time you’ve heard it, particularly those of us who have spent many of those years in the supplies business. “Commoditization” became a familiar refrain in that business more than a decade ago when sellers began to compete on price and the need for differentiation became crucial. Cost-per-page and print management models were seen as a disruptive force as providers began to bundle together services, hardware and supplies. Managed print solutions injected new blood into the industry.
And yet here we are again with a commoditized product — only now it’s MPS that is becoming a business driven on price. With a successful program so often defined by pages under contract or machines in field, providers frequently seek to lower costs to compete. Another inherent problem with the MPS model is the fact that reduced printing is often cited as a benefit of MPS — and volume decreases aren’t good for the typical MPS program provider. Reducing print not only removes top line revenue but bottom line profits as well. There must be a better way.
The SBB Model
And of course, there is a better way — seat-based billing (SBB), also known as cost-per-seat or per-user billing. What is it? In the IT world, it is defined this way:
“The per-user pricing model is similar to the per-device model, with the difference being that the flat fee is billed per end user per month, and covers support for all devices used by each end user. …” (SearchITChannel)
The fact that the SBB model has been used in the IT field for years is all the more reason for implementing it in the imaging field — there has been a convergence between MPS and managed IT services for some time. Many providers offer both, and IT managers are accustomed to buying on a per-user basis, so why not make things simple and, at the same time, more appealing?
PrintAudit, one of the pioneers in the field of SBB for the imaging channel, has modified the definition for the office imaging world:
“Seat Based Billing (SBB) for managed print is a flat fee that is billed per end user per month, and covers support for all print-enabled devices used by each end user. This may entail supporting locally connected printers, desktop printers, multifunction devices, scanners, fax machines, and all related consumables, service, parts and software.”
SBB makes a good deal of sense for everyone involved. From a customer perspective, it allows them the peace of mind of a fixed budget, as well as unified billing when purchasing from dealers offering multiple products, such as managed IT, document management, or any number of other services.
From a dealer perspective, SBB offers profit protection from the commoditized world of cost-per-page pricing as well as access to new revenue streams — the aforementioned managed IT and document management products, for instance. It also creates a recurring revenue stream; rather than a one-time software sale, software and hardware can be layered onto a recurring seat-based offering. And the margins on software solutions are high — potentially as high as 99 percent — so even when customer savings increase, adding solutions revenue for print governance software more than mitigates the difference.
And print governance software is an important element of SBB — critical, even, when it comes to preventing potential abuses of the system. You will, of course, have done an assessment before implementing the program, but once the program is in place you will need to keep an eye out for changes in behavior that can come with the “all-you-can-eat” mentality. Print governance software monitors total volumes, color usage and other variables that can drive up costs when not kept in check and can help modify the print behavior. It is essential, however, that you have language in your contract that addresses these eventualities.
That leads me to one more caveat about SBB — don’t attempt it alone. A trusted partner can help with the many steps and possible tripping points along the way to make the transition as smooth as possible. By using established software and products, your partner can assist you with assessments, contracts, products and more.
All this is the mere tip of the iceberg when it comes to SBB. Millions of connected and monitored devices equal big data, providing information that goes far beyond individual users and costs. That information can be used in a myriad of ways — predictive analytics for fielding service calls, or an understanding of user behavior in various environments to create new selling opportunities. The possibilities are endless. It’s a brave new world out there for those bold enough to enter it — are you ready for the next step?