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Managed Print Services Models Part II: Actual Volumes or Allowance + Overages?
In Part I of this series, Managed Print Services Models Part I: Lease vs Buy?, we looked at the key business considerations when making the lease vs. buy decision for acquiring copiers/printers. The other decision point within an MPS program is determining the service/maintenance agreement structure.
Actual Volumes vs. Allowance + Overages
For the ease of budgeting, or to simplify the maintenance component of an MPS program, an allotment/threshold of print volumes may be included in the monthly lease cost or as a defined monthly service cost in the MPS agreement (we’ll call this the allowance). These copy allowances typically include a defined volume of B&W (black and white) and color prints with a defined overage rate for volumes that exceed that allowance in a given time period (typically monthly). While most clients I have worked with opt for billing based on actual volumes, consider these areas when working with the MPS supplier to define the maintenance structure:
Transparency of pricing and usage: First and foremost, if you do decide to move forward with an allowance + overage structure, you need to understand the basis for the service amount in order to evaluate how competitive the pricing is. For monochrome devices, the calculation is pretty straightforward: take the dollar amount divided by number of pages/allotment to get to the cost per copy (CPC). For color devices, it is key to have the detail behind the allowance for both color and B&W pages and the dollar amount associated with each defined allowance. This provides the visibility needed to review the CPC for both B&W and color within the service cost. Along the same lines, if the monthly service cost is bundled with the lease cost, ensure that the components are defined separately (see Part I re: lease rate transparency) to evaluate pricing for each component. Also, even if monthly usage is bundled with lease costs and your organization is not regularly being charged overage rates, it is still important to get usage reporting around print volumes on a monthly basis. Without this level of detail, it will be very difficult to determine optimization opportunities, ensure the device is rightsized for the area, and evaluate changes to the allowance cost model in the future.
Future of print controls: When defining your MPS program structure, it is crucial to have a collaborative discussion with your IT team (or others who may have oversight into print services/decisions) about the overall strategy for print within the organization. The easiest way to reduce print costs is to actually reduce the volumes being printed! There are multiple options for reducing volumes (e.g., print audits, e-fax) or driving volumes to lower cost print types (e.g., default setting to B&W, two-sided printing). If you are looking to make a concentrated effort to reduce overall print volumes, it does not make sense to be locked in an allowance that you may not be fully using when print volumes start declining. If you do align with your MPS supplier to move forward with an allowance + overage maintenance structure, ensure that the contract is very transparent on costs and look to add language that allows the agreement to be revised/amended if significant changes occur related to print volumes.
Inventory management and optimization: When working with an MPS supplier, there should be clear expectations defined in terms of fleet management and proactive recommendations to optimize your printing environment. Many suppliers provide a customer-facing portal to review information about devices in the fleet, location, print volumes, end meter readings, etc. to provide visibility into the complete fleet. Given that the supplier is likely to be the closest to your data in terms of print volumes, age of devices, etc., push them to provide cost-savings and optimization opportunities during quarterly business reviews or as needed based on changes to your fleet. I bring this service expectation in to reiterate the point that the pricing structure matters when looking at optimization opportunities: you want to drive volumes to your lowest CPC, but also ensure your organization maximizes any allowance-based pricing in place.
Ultimately, the specific goals and priorities of the organization will help to shape the right MPS program structure for your printing needs. As you evaluate these different models, ensure you are consulting others to define your organization’s future goals when it comes to printing before locking into any longer term agreement and drive the MPS supplier for transparency in purchase, lease, and service rates to effectively negotiate these components.