The money is in the toner, silly

“That business is like gold if you can handle it, but you have to be up to the challenge,” he said. “If you take over management of the customer’s legacy print environment you might be taking over ownership of printer brands you have never dealt with before. Then you have to have the management tools and somebody has to do the meter reads and work out the accounts and invoices.

To some degree it is a critical mass issue where you have to have the processes in place and you need a base of machines to make it worthwhile, explained Harman. Then you have to get the pricing right. If you are charging per page, you have to come up with a cost per copy. The industry average is five percent print coverage, but that’s pretty light printing. If your price per copy is too low you could lose your shirt.

All the same, Harman points to big brand companies such as Bunnings and IAG (NRMA), both of which have recently announced they are outsourcing their entire printer requirements to a third party.

There is certainly a trend and companies such as HP with its Smart Print services are working on ways to make it possible for smaller resellers to participate in this sort of market without the risk.

Lexmark, for example is in the process of introducing a new program dubbed Total Care Managed Print Services. It’s designed to help the Lexmark channel sell print solutions while helping Lexmark control the flow of genuine toner cartridges into end-user organisations.

Tim Champion, sales and marketing manager, Lexmark ANZ SMB division told CRN the Total Care solution came out of an analysis of what resellers have been doing compared to how Lexmark would like them to think about selling printers, namely, consumables. But the new Lexmark partner program puts the profit in the resellers’ hands up front, there’s no annuity — just a big fat margin cheque when they first sign up the customers.

It’s a different approach which basically bundles the device, plus service and support with enough toner for three years of operations all into one deal. Champion said it’s a way for resellers to “access lucrative new revenue streams that they haven’t been able to access in the past because the IT resellers have found the barriers to entry (into managed print services) are too high”.

“We set about trying to break those barriers down and are trying to introduce IT resellers to these revenues streams as painlessly as possible. So, with Total Care Managed Print Service for SMBs the service is sold by a reseller, the device comes from a regular Lexmark distributor and is installed by the reseller, but bundled in with the sale is a three-year supply of toner which is all managed by Lexmark,” he explained.

The customer pays a “very competitive” price on a set monthly fee and has a fixed amount of toner they are permitted to use over the three-year period.

Lexmark takes care of the rest. It facilitates the finance and handles all the phone support, break fix and toner fulfilment.

The customer get access to a MyLexmark web portal where they can log on to view what consumables they have left and access features such as asset management reports. The reseller makes its margin on the device sale plus the three-year supply of toner up front when the deal is first done.

“The whole idea is to give the reseller a chance to taste the idea of managed print service, and if they like it they could get involved,” said Champion.

With consumables such a critical part of the printer ecosystem, resellers must access this revenue to make it worth carrying the SKU. Printer vendors are beginning to realise that. So just like your mum did, they are putting a little gravy on your vegetables to make them easier to swallow.


By Adam Gosling

hardware in is money silly the toner