Looking Under the Hood: Printersdirect1 Jun, 2012 imageSource
“Friends don’t let friends buy new printers” is the motto of Christian Pepper, Company Vice President and Co-Owner of Printersdirect. With growing interest and adoption of remanufactured printers into dealers’ business models, imageSource magazine (IS) sat down with Printersdirect’s (PD) Mr. Pepper, to learn more about how remanufactured printers fit into the big picture.
IS: Can you give us an overview of how Printersdirect got
started and its current position in the industry today?
PD: The leadership of Printersdirect, Steve Francis and I, have been in the industry since we left university. We were at Lexmark in the mid-90s and cut our teeth in terms of what a printer manufacturer did. Lexmark was a great manufacturer that really supported its partners, so we try to emulate that with our company. In 1996, we started learning about asset recovery, the aftermarket and how to refurbish equipment. After about four years at Lexmark, we joined Printersdirect, which was a customer of Lexmark’s that purchased used printers. At the time, Printersdirect couldn’t figure out how to turn a profit. We set about turning that around, and we did. Until 2007, we grew Printersdirect in the U.K. before concentrating on our U.S. company, which we started in 2004. Two main things came out of our days at Lexmark and Printersdirect U.K. First, we foresaw that print was going to become a commodity and that print technology would top out at a point where the features—print speed, paper handling, dots per inch, etc.—were advanced well beyond what people actually needed. At this stage, the print industry would simply become about price. Second, we learned how to remanufacture a device and how to do it well. We now have 16 years experience remanufacturing printers and are able to produce consistent, quality printers.
IS: What is the MPS Ready® brand and why should printing hardware be “MPS Ready”?
PD: The MPS Ready® brand is not just about the quality standard that we use to remanufacture our printers; it’s also about the facets of how we choose a printer model in the first place. We only remanufacture models that have the lowest total cost of ownership in their class. Each model we choose is a popular model—the customers already know what it is and they are receptive to it. This also means plenty of core models are available so we can ensure consistency of supply. Because these models are already 2-3 years old, they have a track record in terms of their reliability: we select devices that are proven to not break down often and have infrequent maintenance schedules. We also want to make sure there is high availability of remanufactured parts and toner for our machines. The consumables are critical, because 70% of the total cost of ownership of a printer is consumables—we’re looking for machines with high-yield, high-quality remanufactured toners that are widely available in the market. When you purchase a remanufactured machine, you not only get 50% off the sticker price of a comparable new machine, but you have remanufactured toner available that is generally 50% off the price of the equivalent OEM toner. Throw in the fact that these are all very reliable machines, and you are going to see a huge boost in margins. If you buy new hardware, you also need to buy OEM toner and are taking a risk on the reliability of the machine—these are factors that have contributed to dealers not realizing the profits they expected from MPS.
IS: How does an MPS Ready® printer differ from those most dealers repair in house?
PD: Some dealers get used machines from their fleets or from an asset recovery company and then have their field techs work on refurbishing them. The difference between those machines and an MPS Ready® machine is quality and consistency. If a dealer has technicians sitting around refurbishing machines, well, that’s fine if you’ve got some free time and you’re getting productivity out of your techs—but if you have that much spare capacity with your technicians, you’ve got a bigger problem than you think. Some dealers think our hardware is expensive, because when they refurbish a machine in house, they don’t consider all the relevant costs. For instance, they’ll take into consideration the price of the printer they bought, but not the failure rate; if they purchased 10 and only produce seven remans, they don’t consider the cost to scrap the rest. Also, the cost of having their technicians remanufacture machines is more than having a production line worker. Without the experience of remanufacturing devices on a large scale, the quality and consistency won’t be there.
IS: What is the right mix of printer placement: remanufactured vs. new OEM hardware?
PD: Maybe I am bias, but in 80% of a company’s printing—monochrome and simple color—I can’t see any reason for using a new printer. There is very little complexity in printing these days. Word, Excel and PowerPoint are really simple documents now. And now that we have technology like video conferencing and webinars, we use that for flashy high-level business communications. Printing has been relegated to sending invoices around and document storage. I can’t think of an example where a new printer would be a better proposition than a remanufactured one. But then I’ve done this for 16 years, so I can’t think past that.
IS: How does a dealer overcome a client objection about remanufactured hardware in their office?
PD: This is MPS 101. The company chose you to run their printing environment because they accepted that they couldn’t do it themselves. They knew you were a specialist that could help them make sense of print and help make it cheaper. The number one reason people engage in managed print is to make it cheaper. The diplomatic way to put it is, I’ve been managing your environment for however long using remanufactured toner in a lot of cases—were you happy with the quality? If yes, then why wouldn’t you be happy with the quality of a remanufactured printer? If they are worried that it will break down more, whose problem is that? Under MPS, it’s the dealer’s problem, not the end user’s. The objection handling is the cost factor. Using reman hardware is going to help them reduce their cost per page. If they are concerned about potential downtime, our defect rate is no worse than an OEM printer, and in most cases it’s miles better because of how we’ve selected models that don’t tend to break down. By purchasing a new model, you’re taking a risk not knowing how reliable it will be.
IS: If you could make one suggestion to a dealer about what they should start or stop doing in MPS, what would it be?
PD: Stop repairing machines as a policy. The business owners should be talking to their service managers, because in MPS, the service division hasn’t really changed. It’s still operating in the old mindset, which is when a printer breaks down you go out and repair it. MPS as a business model has changed everything, but we’re still reacting to breakdowns the way we always used to. Dealers need to develop a policy for each model that’s out there in terms of what they do with it, either proactively or reactively if the machine breaks down, because that’s where the profit is. If they look at their fleets, they’re going to know that there are some models that are really profitable and others that are not profitable or that they’re losing money on. They need to stop accepting that and start doing something about it. That’s where we come in and where we can help them.