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Entering Printer Service: the Do's the Dont's and the Statistics

9 May, 2005 By: Steve Geishirt imageSource

Entering Printer Service: the Do's the Dont's and the Statistics

As a parts provider to the printer industry, one of the
toughest nuts to crack has always been the copier dealership. In no way do I
mean to be offensive. Getting dealers such as yourself interested in printers
is really no problem. Getting dealers to seriously take on printer service is, however.

That’s not to say there isn’t money to be made servicing
printers. In fact, my company has worked with a number of copier dealers that
have become profitable in the printer service space and have ordered hundreds
of thousands of dollars in parts from us.

But there are still plenty of you out there that are under
the belief that printer service is not worth the time due to the lack of
profits. Over the next several issues, I will make the case for providing
printer service, how to get started and how to become profitable in this side
of the business.

The Numbers Don’t Lie

Let’s take a look at what the numbers tell us. We came across
some rather interesting information from the 2004 Business Technology
Association Service Productivity Report (www.bta.org).

The report provided some interesting information on printer
service versus copier service. First, it is important to point out the numbers
stated in the report are median numbers due to the fact that sporadically
appearing high or low numbers would skew the results of the report.

Taking a look at the report, some of the data surprised us.
For instance, the average hourly billing rate for all companies—sub $1million
to $10 million-plus—showed copiers being billed at a median rate of $99 per
hour. Printers had a billing rate of $96 per hour—not much of a difference.

A look at the average call time—broken down based on the core
product areas of companies—found businesses that focused on copier repair took
63 minutes on average to service a unit, while printers only took 40
minutes—one-third less time.

Normally, you can charge a minimum of one hour per call,
which translates directly into profit for the extra 20 minutes that your
service technician is not working on the unit. Not only that, but they can
spend that extra 20 minutes servicing other machines. The printer technician
can make an extra 4.4 service calls daily—12 calls per day for printers versus
7.6 calls per day for copiers— based on an eight hour work day.

Statistics on the number of units per technician were also
interesting. On a cross business comparison, sub $1 million to more than $1
million in revenue, the service base or number of units per technician broke
down to:

170 copiers per copier technician

  • 15 printers per printer technician

    I can hear the “I told you so” comments now. However, when
    the report is broken down into companies by core competency, the results are
    entirely different:

    172 copiers per copier technician

  • 545 printers per printer technician

    That is a dramatic difference! So, in other words, companies
    that defined their core competency as copiers had technicians servicing 172 copiers
    each while companies that focused on printers had technicians servicing 545
    printers each.

    Let’s move on to take a look at service revenue per unit in
    the field each month based on core competencies:

    $61 for copiers for companies with copiers as their core

  • $46 for printers for companies with printers
    as their core competency

    Here again, it appears printers bring in considerably less,
    but walk into any business and you will see the number of printers to copiers
    is much higher—meaning more printers equals more potential. Let’s take a look
    at the next numbers as they help explain this better. The report compared 500
    units on Time & Materials (T&M) for both printers and copiers broken
    down by core competencies. The following are the results:

    Copiers had lower T&M labor income, but a higher
    margin—66 percent. Printer service grossed a greater amount of T&M labor
    income with a slightly less margin of 54 percent. I would like to ask you,
    which of these companies would you rather be? Truly, the best answer here
    should be both. Why not make 66 percent margin on copier service and 54 percent
    margin on printer service?

    The Four Faces of Dealer Printer Service

    I contacted some dealers that have successfully entered the
    printer service and others that haven’t quite found success as of yet. The
    results helped develop a picture of these many different dealers and why some
    were thriving while others weren’t. 

    Through these multiple conversations, I found there were
    four categories of dealers servicing printers:

    Dealers who welcome all broken down

  • Dealers that follow the “HP

  • Dealers that follow the lead of OEMs

  • Dealers that are forced into printer
    service by the

    Not all of these four faces of dealer printer service
    provide solid reasons why servicing printers should be a consideration at your
    dealership, two of them have serious pitfalls, but they provide examples of
    which route you may want to take. Let’s just say these are the “dos and don’ts” when deciding to enter printer service.

    1. Dealers Who
    Welcome All

    These are the dealers who sell OEM-brand printers, but will
    service any printer a customer buys—no matter where it was purchased. They
    service printers because they are simply making a good profit at it.

    These dealers are winning on both the printer and copier
    front. By servicing printers, it gave them a foot in the door to businesses
    they had trouble getting into as just a copier dealer. Now they are able to
    come to businesses as a printer service company and gain access to bids on
    equipment they would not have gotten a shot at before.

    Many of these companies also took the next step to become
    OEM-authorized so they could provide warranty work. Most digital
    copiers carry a 90-day warranty, while most printers have a one year warranty. Companies that are not authorized have to wait a
    year before they can perform the post warranty work on a printer,
    which can be problematic. If the customer asked for warranty work they could
    not provide, some partnered with businesses that were authorized.

    2. Dealers that
    Follow the “HP Way”

    This group consists of dealers who service and sell HP
    printers and MFPs as replacements to copiers. They are companies, however, that
    primarily sell printer products—standalone or MFPs.

    This group reported profits upwards of more than 60 percent.
    Their point of customer contact is the IT manager, not purchasing. Service
    companies in this category present their products and service as a solution to
    the IT people. These dealers have found that IT people are very open-minded to
    HP, which equates to a sale.

    Another interesting note, these dealers, half jokingly, told
    me they didn’t want copier dealers to know what they were doing. They are
    making insane money, they are price competitive and often win bids when going
    head-to-head against copier dealers. They wanted to keep their business model
    to themselves. I can’t say that I blame them with 60 percent margin on printers
    and MFPs.

    3. Dealers
    Following the OEM

    This group struggled with servicing customers’ printers, but
    followed the lead/push of the dealer OEM. The dealer OEM provides the printers
    and the system to service them, but there was a catch.

    Dealers found the consumables, supply items, and parts were
    expensive coming from the dealer OEM, so it reduced their margin. They could
    increase the price of repairs and consumables, but then risked pricing
    themselves out of the market. Again, they looked at printers and said there’s
    little money to be made servicing them. Many of them did service other brands
    of printers when they had to, but struggled with this.

    4. Dealers that
    were Forced

    These dealers only service printers because their customers
    requested they service their printers, the dealer OEM pushed them into
    servicing printers, the competition is doing it, or toner cartridge
    remanufactures are competing with them and selling MFPs in place of copiers.

    Part of the problem is that these dealers still view
    printers as either going away or needing to go away. These dealers tend to look
    down at printers because they believe they’re not worth fixing and too cheap.
    The problem is they struggle against their competition that do take printers

    These dealers tried to eliminate printers from their customers’
    offices, but indicated that printers would begin to repopulate in the office
    over time. The down side of this is the replacement printers were often cheap
    inkjets. The customer now has printers that, for the most part, can’t be
    repaired, again supporting the idea that there is no money to be made in
    printer service. 

    There is money to be made, however. It’s just a matter of
    getting into printer service the correct way. Next month’s issue will provide
    the “how to” you need to know to enter printer service.

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