Kevin Hoverman has seen the MPS (managed print services) market evolve rapidly over the past 11 years since he started selling it. Three years ago, Hoverman was hired by office supply company ImpactOffice Products (ImpactOffice) to save its shrinking toner revenue. Not only has Hoverman been able to stop the hemorrhaging, but he’s also positioning the company for future growth. During my recent interview with Hoverman, he shared with me one of the pitfalls he sees some MPS companies fall into:
“One of the temptations when selling MPS is to try to compete against the industry giants [e.g., Canon, HP, Xerox] by using cheaper brands to boost profit margins. I’ve learned from experience that this should be avoided for three reasons:
1. The agents used by MPS software to keep track of toner levels are less accurate with off-brand equipment, which means that you can end up replacing toner too soon, thereby negating any perceived savings.
2. There are often other problems that come with using off-brand equipment, such as poor quality copies/prints and other maintenance issues.
3. Another benefit of partnering more closely with big office equipment companies is that you can receive significant discounts on their product training and support, which in and of itself is a great value.”
A better way to drive MPS profitability, according to Hoverman, is to stop trying to compete with the popular manufacturers and, instead, find a way to work with them. “When you partner more closely with companies such as Xerox, HP, and Canon, you can OEM their consumables and earn discounts by meeting certain volume thresholds,” he says. “In fact, less than three years into our MPS practice, we do enough volume with our vendor partners that we can charge rates for our OEM toner products that are competitive with other MPS competitors’ generic equipment offerings. Being able to present customers with name-brand equipment that’s been around for years and has a demonstrated track value makes the buying decision a no-brainer for us and our customers.”
Hoverman shares tons of other useful tips for VARs and MSPs interested in selling managed print services, which you can read in my latest feature story on Business Solutions' website, titled "The Critical Diversify Or Die Move Into MPS."