The Mysterious Case of a Cancelled Managed Print Services Agreement
January 23rd, 2023 by Kevin Box
Function4 has a large client in the hotel and gaming industry located in Louisiana. This client recently hired a new Director of Information Technology, who came in wanting to do what most new Directors want to do - improve efficiencies and cut costs. The new Director began looking at all their current service agreements, including the long-term agreement they had with Function4 to service their printer fleet. After reviewing their agreement, the Director decided to cancel the agreement and reached out to Function4 to exercise their 30-day out. This of course didn't make a great deal of sense to Function4's Management team, so, they requested the customer allow Function4's MPS Specialist to conduct a thorough Cost Benefit Analysis to give the new Director the facts on which direction is the most beneficial to the organization.
In this article, we will explore the findings from this Cost Benefit Analysis and show why having a leading Managed Print Servicers provider, manage your printer fleet may be the best route from a cost saving standpoint, instead of having the IT staff perform this task internally.
Your first glance at costs may need a second glance at the alternative - The Director's first glance at their Managed Print Services Agreement with Function4 showed a cost of $2,360 per month for Function4 to manage their printer fleet which included toner, parts, and labor. However, the Director immediately jumped to the conclusion that this monthly cost was too high without digging deep into the alternative, which would be for his IT Staff to takeover servicing the printers and for its purchasing department to begin ordering all its toner through online retail outlets.
What the Cost Benefit Analysis revealed - The customer had a Data Collection Agent connected to its network that fed device meters back to Function4 for billing. The data collected from this agent can also be used to determine environmental impact, for example, or the Average Monthly Volume for each printer which can be used to develop analytics surrounding fleet performance. Our MPS Specialist synthesized this data for each device to determine what each printer would cost if toner was purchased at retail pricing. The results were stunning - Their cost for retail toner alone was estimated to be at approximately $3,280 per month based on current volumes, which is an increase of nearly 40 percent above their full-service agreement with Function4. This amount is even higher once you factor in non-toner consumables such as drums, maintenance kits, and the labor costs associated with shifting the service work to their IT Staff.
Why is this the case? - The reason for this is simple; retail toner outlets such as Staples, Office Depot, and CDW-G, the three leading outlets, charge a price that is regulated by HP. HP controls the market for its OEM toners and will not allow its online retail partners to deviate from this price. You can check this by taking any toner SKU/Model and searching the price at the above-mentioned retailer's website and compare it to the price at HP.com/toner. Rarely will you see a price difference.
In contrast, HP's Partner Dealers such as Function4, get huge price breaks due to our substantial purchasing power which allows us to cover your printer fleet for parts, service, labor, and toner and do so at a high discount off what you would pay for retail toner alone.
When does it not make sense to have a Manage Print Services Partner? - The breakeven point where it doesn't make much sense to have a partner manage your printer fleet is when you have low volumes across the board. Typically, the threshold is approximately 650 monthly images per device, which is an extremely low volume relative to enterprise level printing. However, as volumes increase above the 650 threshold, the more savings you will have by outsourcing to a service partner.
If you have any questions concerning this article or would like to have one of Function4's Managed Print Services Specialist conduct a Cost Benefit Analysis on your printer fleet, reach out to me directly and I will connect you with a member of our team. I can be reached at kbox@function-4.com.
Posted in: Managed Print Services