Selling printers by the page - "Click Charge Program" shows total cost of ownership
- 05 February, 1997 14:20
Now that total cost of ownership means more to some users than the ticket price of a printer, Dataproducts sales manager Allan Toner explained to Australian Reseller News how his company has gone beyond the leasing or rental solution and provided a "Click Charge Program". Click charge is simply a charge per print, similar to the photocopier charge per copy system.
There is no capital outlay to purchase the printer. The customer instead pays a monthly fee which includes all costs associated with the operation of the printer. The end-user must buy his/her own paper, as this is not supplied as part of the agreement. There is a fixed charge per month for the rental component of the printer and a cost per page (or per page impression in the case of duplexing) for the consumables and maintenance.
Each month the end-user's printer page count meter is read by Dataproducts. The number of registered printed pages since the last reading is then used to determine the consumables and maintenance "charge per page" rate as agreed at the time of sale.
The cost per page is based on Dataproducts' estimated figure for the toner coverage of the page output and this charge is fixed for the term of the rental. According to Toner, "the cost per page is pretty much the same rate for all users. However, we may look at a different rate for a customer with significant graphics output."
While the actual cost per page may vary from the estimate, leaving room for either Dataproducts or the end-user to benefit when the actual coverage or toner cost increases or decreases, Toner claims that "the rate is usually seen as very competitive by the customer and is not usually disputed".
According to Toner (person, not black powdery stuff), the consumer is paying somewhere between wholesale and retail price for consumables from Dataproducts. "The price is very competitive. The user is definitely not looking at paying more for toner; probably less."
The total monthly charge is not realised unless the printer is fully operational, and to ensure this Dataproducts will deliver consumables to the site as they are required. In this way Dataproducts is also able to monitor the consumption of consumables.
Similar to the office photocopier, the printer is not placed on the company balance sheet and the full rental cost is tax deductible as incurred.
Balancing the equation
What are the advantages to the reseller? Toner claims that a more balanced approach to overall cost and less emphasis on the "sticker price" is a more positive sales point for resellers dealing with high-end printers.
In order to conduct the sale, the reseller would place a purchase order on the supplier and then "on-sell" the printer to the appointed finance company at the reseller's sale price. The finance company then enters into a rental agreement with the end-user for the agreed monthly rental charge.
The reseller receives full payment for the printer from the finance company and in turn pays for the goods delivered.
On the downside, all consumables other than paper are supplied by Dataproducts, so the reseller has little or no opportunity for further profit from the sale.