It has been said that a revolution begins with one angry man. In the case of seat-based billing (SBB), two gentlemen are at the lead of an uprising to redefine the decades-old cost-per-page (CPP) billing platform for managed print services. And these men are not alone.
In layman’s terms, SBB uses a monthly flat fee per seat for printing rights under a managed print service contract rather than calculating a cost per page. The “seat” incorporates consumables, parts, support and software, with the opportunity to layer in other services. The seat platform enables customers to enjoy a fixed budget (sans overage hassles and page count validations) with cost savings through workflow improvements, while the MPS providers can provide a more comprehensive offering while avoiding the price commoditization inherent with CPP in an age of declining page volume.
Two of the “founding fathers” of the SBB movement (and there are others) include West McDonald, vice president of business development for Print Audit, and Luke Goldberg, executive vice president, sales and marketing for Clover Imaging Group (CIG). In May, the pair provided a state of the SBB presentation during the Executive Connection Summit in Scottsdale, AZ, which acted as a follow-up to SBB’s coming-out party at ECS 2016 only 15 months earlier.
“SBB is happening,” McDonald exclaimed, pointing to research that indicated 8 percent of customers under MPS contracts self-reported that they were paying under SBB already. He also noted that for first-time MPS customers, 11 percent were paying on a seat basis as opposed to CPP.
Print Audit, in tandem with CIG released an online resource, The Essential Guide to Seat Based Billing and Managed Print, which explores the essential considerations for considering a SBB program. McDonald said the guide has reaped more than 700 unique dealer downloads, with total downloads numbering in the thousands.
“Someone’s paying attention,” McDonald noted.
As an illustration, McDonald pointed to the many disruptive technologies that marked the 10-year period between 2006 and 2016, including the displacement of offerings such as the Blackberry (by iPhones and Androids), video rental stores (Netflix) and MySpace (Facebook). “[Yet] in 2016, we still see [CPP billing],” he said. “It’s funny that we’re seeing all this disruption in the world, yet we work in the one industry that will never change, that isn’t as susceptible to changing market conditions and changing buyer habits. But now we have SBB contracts.”
In 2016, Print Audit created a 29-dealer partner panel called the SBB Council to help take on (and work through) the complexities of SBB. That helped pave the foundation for SBBcertified.com, an accreditation certification program for MPS providers to validate an understanding of the SBB model to customers and prospects.
SBB is a work in progress that is clearly moving forward. It’s also not ideal for every vertical market, especially those like K-12 (education), which has seasonal variability and spikes of usage, with virtually no usage during the summer months.
“We are not saying SBB replaces CPP,” Goldberg said. “We’re saying it’s another vehicle to deliver the service of print. It has a lot of viability in businesses that are used to being billed this way, for services like security, IT services. For those guys, it may be more palatable and make a lot more sense. Another benefit is the ability to layer services, whether that service is rules-based printing, or security or workflow, BPO, etc. You can’t layer services with a page; it’s static. These are a lot of reasons were bullish on this and lot of reasons we decided to take the plunge and offer our dealers this type of a turnkey, no-risk solution.”
McDonald and Goldberg are spreading the word of SBB through the SBB Road Shows, a partnership that includes Print Audit, CIG, GreatAmerica Financial Services, Supplies Network, and Office Document Consulting, in tandem with the Business Technology Association (BTA). The five-hour presentations debuted June 6 in Kansas City, MO, with shows slated for Aug. 15 in Las Vegas and Sept. 12 in Philadelphia. The shows promise a comprehensive grounding in the art of SBB.
The ECS presentation included a Q&A with an SBB adopter, Greg Brisco, a regional manager from Dove Print Solutions of Florence, SC. Ironically, what initially prompted Dove Print Solutions to go down the SBB path was the loss of a key account to another dealer that provided a seat-based offering.
“For me, I take that personally, like a slap in the face,” Brisco remarked. “That validated it, made it real that there are dealers out there proposing seat-based offerings. It’s not going to be for every customer or every single situation, but I’d rather arm myself with the ability to provide the software. I’d rather have it and not need it rather than need it and not have it.”
By collecting all of the customers’ user data through a detailed assessment that incorporates trailing performance, Dove Print Solutions can build a seat price specific to the user. “Once I figure out how much it’s going to cost me to manage that customer, I can figure out where can I have the cuts; can I reduce the volume, can I reallocate some of those pages to a more cost effective device?” Brisco noted. “Once you go through the assessment and get that data, it allows you to structure it how you need to.”
Added McDonald: “When we find workflow savings, under a seat program, we’re not giving them all back to the customer. We’re keeping some of that. When we construct a seat-based deal, you can see reductions in revenue of 15-20 percent, but upticks in the total gross profit in the account, anywhere from 6-9 percent. We’re not, as dealers, giving it all back.”
Brisco said the ideal candidate for SBB is one that can take advantage of multiple services in instances where the customer is being billed not only for managed print but other offerings that entail different billing methods. “You have some you’re billing for seat, billing for page, some you’re billing transactional—to make that process easier for you and the customer, that would be ideal. If you would look to acquire them as a customer, whether as cost per click or transactional, nothing changes for seat-based billing. You can have 10 employees or 10,000 employees. There’s no bad situation with SBB.”
Print Audit and CIG partnered to bring the market’s first wholesale SBB (Seat Based Billing) or CPS (Cost Per Seat) program for managed print to the industry. As an addition to CIG’s Axess Managed Print Services suite, the program enables managed print providers to deliver cost savings through business process optimization) for customers while improving and protecting total dealer profits.