Remember Crazy Eddie whose prices were insane? If you’re from the East Coast you may, if not this video is the perfect introduction. Either way, this video blast from the past is a hoot.

And that brings us to the final installment of this three part series on the greatest threats to the office technology industry where we dig deeper into threat #3, insane MPS pricing.

: Andrew Ritschel

As Andrew Ritschel, president of Electronic Office Systems (EOS) in Fairfield, New Jersey tells us, “the Third greatest danger for our industry right now is the unbridled stupidity going on by certain vendors quoting way too low MPS rates and actually paying their customer for every print that they are making.”

Dealers and manufacturers possess what Ritschel calls “MPS fever” and are buying printer MIFs without fully understanding what their costs are to service those MIFs.

“A lot of people are haphazardly quoting below their costs and in essence paying their end user customers for every print they’re making,” he contends. “I see that over and over again. We know what the cost is on HP generic products and what it costs to do a service call, and the expected length of a service call, yet we see people selling MPS clicks considerably below what it costs them. It’s okay as long as you’re not buying MIFs and losing money or breaking even. And when they break even or lose money, they’re not only hurting themselves, they’re hurting their competition, they’re hurting our industry, and they’re hurting the end user customer.”

Ritschel continues to sound the alarm.

“Where they talked about cost per copy death 15 -20 years ago, there’s suppliers promoting MPS death right now. People will throw out a figure –1 cent, 1.3 cents, 1.5 cents without having any clue of the base of printers. In a base of printers we’re seeing 80-85 percent of the marketplace is HP printers. Are these HP 1000 Series printers, 2000 Series, 3000 Series, 4000 Series, 5000 Series, 8000 Series, or 9000 Series? If they’re guessing wrong on how many of each series are out there and if they’re data collection agent is not picking up the customer’s PC-connected printers and they’re quoting rock-bottom pricing, they might be making a tiny bit of money by not collecting the meters manually, but in reality they’re losing huge amounts.”

Whether its dealers or manufacturer direct branches doing this, Ritschel says they need to leave enough room for inaccuracies. “They’re not doing their due diligence in finding out the population of the equipment and the true cost of operating and taking care of the equipment and pricing accordingly. It’s just quoting based on hearsay or what we’ve seen other people do.”

One of the reasons for the insane pricing is cluelessness.

“These poor dealers that don’t know what they’re doing think they can follow a Flo-Tech model, but they don’t remanufacture the cartridges, they do not look for 50-100 printers or more at a clip, and can really get themselves in trouble if they’re quoting 1 cent, 1.2 cents, 1.3 cents for output especially if the printer fleet is HP 1000, 2000, or 3000 Series printers.”

He leaves the 4000 Series and higher printers out of this equation since that’s where the cost per output starts to drop. And we’re not even touching on color here even though Ritschel describes that as a “tremendous danger.”

One of the reasons that this is a threat is the land grab going on for MPS engagements.

“Everybody is getting pushed by their manufacturers and a lot of people are jumping in late and if they’re not sophisticated, it’s better they don’t jump in at all and make serious pricing errors because it hurts everyone involved,” states Ritschel.

He sees some awareness setting in.

“People are starting to realize it because they’re seeing others doing MPS and losing their shirts. But there are still a lot of people that need to take a chill and really study it, and the proper way of doing it is to do surveys, walkarounds, and spreadsheets of the equipment population. They need to do an initial data collection and over a period of time do another data collection, then walk around and see what machines are missing and not getting picked up.”

Then he says they need to find out the supplies costs while explaining to the customer how many clicks are being done on each of those machines, the cost of the cartridge for that machine, what it’s going to cost for the labor to fix it, the amount of calls per year, maybe one to one and a half calls per year per unit and price it out properly.

Until that’s done, MPS pricing insanity will continue to reign unabated.