Over the last decade, managed print pricing and the ecosystems and agreements that govern it have changed quite a bit. Adoption at the enterprise level is past the 33 percent mark and is estimated to grow to 50+ percent by 2020, which is more than double compared to 10 years ago.
That growth has translated into a healthy revenue spike for vendors. The industry is closing in on $50B in global revenue, with many analysts predicting it will hit $90B+ by 2025. It’s also brought about significant consolidation. Today, there are just a half-dozen or so viable enterprise managed print suppliers in the market.
However, even as many firms standardize on cost-per-click (CPC) models on efficient multi-function devices (MFDs), NPI finds that managed print pricing remains anything but simple. There are a variety of variables that affect pricing depending on the degree of ‘managed’ service in place. As a result, pricing in many of the agreements NPI reviews may appear to be fair market at first glance, but ultimately contains elements that obscure other costs and push pricing well above fair market value.
Further exacerbating the issue is the fact that some vendors have turned toward overselling customers on hardware as a way to offset competitive usage pricing (although this is not as common among the larger suppliers). In these cases, the overspend happens on the hardware rather than the managed print services as vendors look to lock in a long-term, predictable revenue stream, shifting the problem of overspending from point A to point B. And we also see some instances where pricing is above fair market value across both elements.
Tips on How to Bring Transparency to Managed Print Pricing
While this remains a complicated area, NPI has helped clients reduce the overall cost of their managed print investments by focusing on a few key areas:
Make sure the vendor is on board with simplification. NPI sees this as an important factor in managed print agreements and for the most part it’s standard fare with larger vendors. Examples of simplification include reducing the number of model types in the fleet and offering customers decreasing costs over time as efficiencies take hold.
Review lifecycle expectations, particularly if purchasing assets outright.NPI sees instances where vendors shorten industry standard lifecycles on common multi-function devices by significant amounts of money.
Benchmark CPC figures from all angles.In global arrangements, make sure regional differences are minimal and clearly understood. This includes checking to make sure the balance of color versus mono pages isn’t too far out of industry norms.
As managed print services start to encompass more elements (including cloud-based services, security and digital documentation), pricing associated with typical print spends will continue to evolve. It’s crucial to keep an eye on these emerging elements too – they are fertile ground for inconsistent pricing that is out of line with fair market value.