{"id":39361,"date":"2020-04-02T11:10:43","date_gmt":"2020-04-02T18:10:43","guid":{"rendered":"https:\/\/www.enxmag.com\/twii\/?p=39361"},"modified":"2020-04-03T07:28:41","modified_gmt":"2020-04-03T14:28:41","slug":"are-seat-based-and-device-based-billing-models-the-future-for-dealers","status":"publish","type":"post","link":"https:\/\/www.enxmag.com\/twii\/feature-articles\/2020\/04\/are-seat-based-and-device-based-billing-models-the-future-for-dealers\/","title":{"rendered":"Are Seat-Based and Device-Based Billing Models the Future for Dealers?"},"content":{"rendered":"\n
\"\"<\/figure><\/div>\n\n\n\n

As we delve into our state of the industry subject of\nselling everything as a service (XaaS) and the elements it entails, we will\nbegin with a look at the question of device- or seat-based billing in an\nindustry that has long relied on meter readings to provide precise billing on\ncustomer usage.<\/p>\n\n\n\n

The argument in favor of a device- or seat-based billing\nmethod is that it fully delivers on the promise of a subscription-type,\nflat-rate fee that provides cost certainty to the client. You pay x-amount per\nmonth regardless of usage, based upon a formula devised by the dealer that\ntakes into account historical data, peaks and valleys, and pegs a figure much\nin the same vein as budget billing that a utility company would employ. It\ncomes, however, with a host of caveats that opponents argue could impact either\nthe dealer or the end-user customer in a negative fashion. <\/p>\n\n\n\n

\"\"
Kelly Moran, The Gordon Flesch Co.<\/figcaption><\/figure><\/div>\n\n\n\n

Kelly Moran, vice president of sales and marketing for The\nGordon Flesch Company (GFC) in Madison, Wisconsin, notes that the concept\naround seat-based billing has been kicked around at MPS conferences and dealer\nevents for four years. Moran adds that GFC has had many internal conversations\non the subject, but he feels it hasn\u2019t gained much traction.<\/p>\n\n\n\n

\u201cWhatever cost structure you\u2019re going to build does still,\nto some extent, rely upon on volume to determine how you set the expense for\nthat user that\u2019s based upon per seat, as in per user,\u201d he said. \u201cSometimes, if\nthe volume assumptions are off when you establish pricing, I think you\u2019ll see\nit can be unnecessarily high or low. <\/p>\n\n\n\n

\u201cHowever, we have built something that\u2019s a little bit in the\nmiddle \u2013 per device, per month-based regardless of what the volume is. But we\ntypically only put those fixed per-month pricing models on low-end A4s where we\nknow that they\u2019re not going to be doing as much, maybe 200 images a month. So\nthe risk of going 15-20% more than that doesn\u2019t move the needle.\u201d<\/p>\n\n\n\n

Moran adds that in many cases, the low-end printers weren\u2019t\non a monthly program but were instead part of the time and materials, labor,\nbreak\/fix model with supplies ordered as needed. \u201cPutting them on a monthly\nprogram as a value, or trying to do it on a meter reading is tough, because if\nthey\u2019re only doing a few images per month, it becomes a pain,\u201d he said. \u201cWe\u2019re\ntrying to find solutions to this, and I get why people are looking to\nseat-based. But it can\u2019t be devoid of any knowledge of volume.\u201d<\/p>\n\n\n\n

\"\"
Chip Miceli, Pulse Technology<\/figcaption><\/figure><\/div>\n\n\n\n

Some dealers are wary of the impact it could have on dealers who don\u2019t know their clients\u2019 volume as extensively as needed. Chip Miceli, CEO of Pulse Technology in Carol Stream, Illinois, cautions fellow dealers to stick with incumbent clients with a substantial track history if they plan on leveraging a seat-based model.<\/p>\n\n\n\n

\u201cI don\u2019t want to see smaller dealers going into this with\ntheir eyes closed, thinking that\u2019s the only way to go to be successful,\u201d he\nsaid. \u201cBut we\u2019re getting more and more involved in it. We\u2019ll do what the\ncustomer wants. The accounts we have on seat-based billing are because we went\nup against (dealer directs) and had to play the game to keep the customer, so\nthat\u2019s what we did. So far, we\u2019ve only made one mistake. I know some of the\nindependent dealers are selling it; I\u2019ve seen the contracts. More companies are\ndoing it than we realize.\u201d<\/p>\n\n\n\n

\"\"
West McDonald, West McDonald Co.<\/figcaption><\/figure><\/div>\n\n\n\n

There\u2019s no doubt that the seat-based billing method still has a long way to go before reaching mainstream acceptance. West McDonald, founder, West McDonald Co. and SBB\u2019s biggest evangelist, knows he has his work cut out for him.<\/p>\n\n\n\n

\u201cI\u2019m going to spend time working with dealers to help build\nthese programs,\u201d he said. \u201cThe idea\u2019s been floated out there but no one\u2019s\nreally been there to build a program. NEXERA is there to help them with the\nprofitability part of it, but what about sales, what about marketing, what\nabout business modeling? That excites me; now I\u2019m going to have some time to\nhelp dealers do that. They need help and they need guidance.\u201d<\/p>\n\n\n\n

\"\"
Kim Louden, GreatAmerica<\/figcaption><\/figure><\/div>\n\n\n\n

Some have taken an agnostic approach, believing that there\nis value in embracing either the seat-based model or the device-based billing\nmethod. Kim Louden, vice president of sales, Office Equipment Group for\nGreatAmerica Financial Services, believes the topic is somewhat similar to the\nearly days of managed print services, where there was no uniformity in what\nconstituted MPS.<\/p>\n\n\n\n

\u201cAn unlimited printing model is almost better in an imaging-only environment, where I see seat-based being a better fit if they\u2019re also in the IT space,\u201d she said. \u201cIn an IT environment, typically those are sold per users as licenses, so the contract may be set up as a user-based environment. Now you want to go in imaging, so you want to set that up so your denominator \u2013 the thing that you\u2019re dividing by \u2013 is the same. It\u2019s the numbers of users in that environment. <\/p>\n\n\n\n

\u201cIf another employee comes in, the CFO knows he has to get\nanother license for Microsoft or for document management. Then they\u2019ll pay\nanother $30 a month for imaging. So I know that it\u2019s going to cost me $110\ndollars more to hire an employee with my office equipment dealer because\nthey\u2019re providing everything on a user- or seat-based basis cost. Flat rate is\nthe starting base, with seat-based being for that more robust, sophisticated\ndealer that wants to wrap everything together.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

As we delve into our state of the industry subject of selling everything as a service (XaaS) and the elements it entails, we will begin with a look at the question of device- or seat-based billing in an industry that has long relied on meter readings to provide precise billing on customer usage. The argument in favor of a device- or seat-based billing method is that it fully delivers on the promise of a subscription-type, flat-rate fee that provides cost certainty to the client. You pay x-amount per month regardless of usage, based upon a formula devised by the dealer that takes into account historical data, peaks and valleys, and pegs a figure much in the same vein as budget billing that a utility company would employ. It comes, however, with a host of caveats that opponents argue could impact either the dealer or the end-user customer in a negative fashion. Kelly Moran, vice president of sales and marketing for The Gordon Flesch Company (GFC) in Madison, Wisconsin, notes that the concept around seat-based billing has been kicked around at MPS conferences and dealer events for four years. Moran adds that GFC has had many internal conversations on the subject, but he feels it hasn\u2019t gained much traction. \u201cWhatever cost structure you\u2019re going to build does still, to some extent, rely upon on volume to determine how you set the expense for that user that\u2019s based upon per seat, as in per user,\u201d he said. \u201cSometimes, if the volume assumptions are off when you establish pricing, I think you\u2019ll see it can be unnecessarily high or low. \u201cHowever, we have built something that\u2019s a little bit in the middle \u2013 per device, per month-based regardless of what the volume is. But we typically only put those fixed per-month pricing models on low-end A4s where we know that they\u2019re not going to be doing as much, maybe 200 images a month. So the risk of going 15-20% more than that doesn\u2019t move the needle.\u201d Moran adds that in many cases, the low-end printers weren\u2019t on a monthly program but were instead part of the time and materials, labor, break\/fix model with supplies ordered as needed. \u201cPutting them on a monthly program as a value, or trying to do it on a meter reading is tough, because if they\u2019re only doing a few images per month, it becomes a pain,\u201d he said. \u201cWe\u2019re trying to find solutions to this, and I get why people are looking to seat-based. But it can\u2019t be devoid of any knowledge of volume.\u201d Some dealers are wary of the impact it could have on dealers who don\u2019t know their clients\u2019 volume as extensively as needed. Chip Miceli, CEO of Pulse Technology in Carol Stream, Illinois, cautions fellow dealers to stick with incumbent clients with a substantial track history if they plan on leveraging a seat-based model. \u201cI don\u2019t want to see smaller dealers going into this with their eyes closed, thinking that\u2019s the only way to go to be successful,\u201d he said. \u201cBut we\u2019re getting more and more involved in it. We\u2019ll do what the customer wants. The accounts we have on seat-based billing are because we went up against (dealer directs) and had to play the game to keep the customer, so that\u2019s what we did. So far, we\u2019ve only made one mistake. I know some of the independent dealers are selling it; I\u2019ve seen the contracts. More companies are doing it than we realize.\u201d There\u2019s no doubt that the seat-based billing method still has a long way to go before reaching mainstream acceptance. West McDonald, founder, West McDonald Co. and SBB\u2019s biggest evangelist, knows he has his work cut out for him. \u201cI\u2019m going to spend time working with dealers to help build these programs,\u201d he said. \u201cThe idea\u2019s been floated out there but no one\u2019s really been there to build a program. NEXERA is there to help them with the profitability part of it, but what about sales, what about marketing, what about business modeling? That excites me; now I\u2019m going to have some time to help dealers do that. They need help and they need guidance.\u201d Some have taken an agnostic approach, believing that there is value in embracing either the seat-based model or the device-based billing method. Kim Louden, vice president of sales, Office Equipment Group for GreatAmerica Financial Services, believes the topic is somewhat similar to the early days of managed print services, where there was no uniformity in what constituted MPS. \u201cAn unlimited printing model is almost better in an imaging-only environment, where I see seat-based being a better fit if they\u2019re also in the IT space,\u201d she said. \u201cIn an IT environment, typically those are sold per users as licenses, so the contract may be set up as a user-based environment. Now you want to go in imaging, so you want to set that up so your denominator \u2013 the thing that you\u2019re dividing by \u2013 is the same. It\u2019s the numbers of users in that environment. \u201cIf another employee comes in, the CFO knows he has to get another license for Microsoft or for document management. Then they\u2019ll pay another $30 a month for imaging. So I know that it\u2019s going to cost me $110 dollars more to hire an employee with my office equipment dealer because they\u2019re providing everything on a user- or seat-based basis cost. Flat rate is the starting base, with seat-based being for that more robust, sophisticated dealer that wants to wrap everything together.\u201d<\/p>\n","protected":false},"author":166,"featured_media":39362,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1650,82,87,1638],"tags":[2023,197,3521,3810],"_links":{"self":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/39361"}],"collection":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/166"}],"replies":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=39361"}],"version-history":[{"count":3,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/39361\/revisions"}],"predecessor-version":[{"id":39384,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/39361\/revisions\/39384"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media\/39362"}],"wp:attachment":[{"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=39361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=39361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=39361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}