Konica Onerate Program

[monstercopier]

Hi Konica Peeps,

How is Konica offering this Onerate program? Kyocera has come out with it too.

I did some calculations on my customers copiers and the numbers just don't make any sense. Can't do a new copier and unlimited prints at the pricing I have seen.
t

Is anyone out there able to combat this program?

Thanks
K

[SalesServiceGuy]

... the best I can figure the One Rate program is essentially a prepaid copy block program with some strict escalators built-in after year one. There is definitely some risk to the service provider if they underestimate the print volumes.

All of these One Rate plans gives the service provider the option, on the plan’s anniversary date, to revisit the actual prints made and without penalty increase the cost of the One Rate plan to reflect the actuals. The customer is locked into a binding lease and the service provider can increase the cost at will.

Many dealers still prefer a separate rental and cpc program based upon actual meter reads and not the estimated usage found in the One Rate program.

The sales pitch of the One Rate program is that the customer only receives one invoice monthly for usage.

I have never had a customer complain about a quarterly lease invoice from the leasing company usually paid via pre-authorized withdrawals from the customers checking account and a quarterly cpc invoice from the service provider.

The customer is also signing a binding lease document where the monthly recurring cost is higher than than a separate lease and cpc agreement.

If the customer does not print the estimated volumes built into the One Rate program they either make the prints or lose the extra $ spent each month.

To shake up the One Rate sales pitch offer the customer some free meter clicks in advance or provide other free services because these programs are usually sponsored by the manufacturer and are inflexible to local market conditions.

In other words, if the One Rate provider is offering apples, serve the customer oranges.

[monstercopier]

Its crazy I am looking at a copy of KM lease. C360i Onerate at $400/month. There are no conditions written. I read everything inked on that agreement. No overages, no changes annually.
60 month lease.



Monthly Average


Machine
Black
Color


C360i
6000
3000


C360i
4000
6000


C360i
4500
4500







C360i
8000
7500


C360i
6300
6500


C360i
4000
2800


All with 4 drawers and fax




... the best I can figure the One Rate program is essentially a prepaid copy block program with some strict escalators built-in after year one. There is definitely some risk to the service provider if they underestimate the print volumes.

All of these One Rate plans gives the service provider the option, on the plan’s anniversary date, to revisit the actual prints made and without penalty increase the cost of the one rate plan to reflect the actuals. The customer is locked into a binding lease and the service provider can increase the cost at will.

Many dealers still prefer a separate rental and cpc program based upon actual meter reads and not the estimated usage found in the One Rate program.

The sales pitch of the One Rate program is that the customer only receives one invoice monthly for usage.

I have never had a customer complain about a quarterly lease invoice from the leasing company usually paid via pre-authorized withdrawals from the customers checking account and a quarterly cpc invoice from the service provider.

The customer is also signing a binding lease document where the monthly recurring cost is higher than than a separate lease and cpc agreement.

If the customer does not print the actual volumes built into the One Rate program they either make the prints or lose the extra $ spent each month.

[SalesServiceGuy]

Its crazy I am looking at a copy of KM lease. C360i Onerate at $400/month. There are no conditions written. I read everything inked on that agreement. No overages, no changes annually.
60 month lease.



Monthly Average


Machine
Black
Color


C360i
6000
3000


C360i
4000
6000


C360i
4500
4500







C360i
8000
7500


C360i
6300
6500


C360i
4000
2800


All with 4 drawers and fax

... without even thinking about it too much, $400.00 month for a 35 cpm color copier is at least X2 the going rate for a standard 60 month lease.

I would sell that exact configuration for $8,000.00 with a $1,500.00 net profit, CMYK toner/developer and freight included for $153.00 on a 60 month lease. CPC $0.010 Black and $0.070 colour with a 10k black and 5k colour free prints.

This gives me $247.00 per month difference in meter clicks.

6,000 black and 3,000 colour per month approx = $270.00 so I have to bring my color rate down to $0.0650 to match.

All six copiers combined equals 32,800 Black and 30,800 color. That is a lot of color clicks that the One Rate vendor is betting the customer will never print.

I would bring my cpc rate down to $0.00890 Black and $0.0550 Color with no escalators for 60 months.

You should change it up and offer a 66 month lease on new equipment.

A good way to attack national vendors offering the One Rate program is to focus on Professional service fees. I charge $95.00 per hour and will install print drivers for free if performed remotely. National vendors are usually over $165.00 per hour and mercilessly charge for everything including scan to email stops working.

On the documents provided to you buy your customer you may not be seeing any terms and conditions but when it comes time for the customer to sign the service agreement contract a far different document appears for signature. The OneRate seller is hoping the buyer does not carefully review this document after having invested so much time and energy so select a final vendor.

[emujo2]

"National vendors are usually over $165.00 per hour and mercilessly charge for everything including scan to email stops working." I take offense at this..in fact we charge 175/hr and even this is not enough to keep them from believing that the tech is their IT support..When I have to send a tech 100 miles, into a prison, to assist with a scan to email issue that for 10/month could have been resolved with a phone call (and tech winds up calling IT guy to re enter the login password) you can bet I'm making it hurt


But, on the subject of one rate..This is a risk, no doubt..I listen to my sales rep say " you can make unlimited copies, service anytime, as much supplies as you want" I just cringe..1st thing any smart buyer is going to do is shift every print job over to this device, no worries about excessive color, and bitch at me when I question why I'm sending 15 bottles of C360I toners every month to make 2 cents yet spend 2 dollars. It's all about making the sales reps life better..F*** the poor service guy who is seeing a C558 running like a C6100.

Even when I thought we might make out a little during the shutdown, a large % of one rate users just called and whined enough to get them to credit for months of non use.

[kingpd@businessprints.net]

I've been a numbers guy most of my life and I have a few suggestions as to why these programs exist and even why they can be profitable, at least to the manufacturer, if not you.

Reasons in no particular order:

1)Simplicity and psychology. Trying to get everyone on the same plan makes it so much easier administratively. Think about restaurants. Which is more profitable, a restaurant with 100 items on the menu, or a restaurant with 5 menu items that are fresh, simple, and consistent. People are also getting used to the idea of everything in life having an "unlimited" option even though they never really are unlimited. Think phone plans that are not unlimited.

2)The manufacturer doesn't care, doesn't need the independent dealer, and can charge less than you. Let's face it, the cost to the manufacturer to make a wax based powder stored in a plastic container is practically zero. Even if they build a hundred million dollar toner manufacturing facility, the cost per unit of toner is incredibly small. Since they charge you a fixed rate for said toner with a markup, your cost is much higher and they've just shifted the burden and risk to you the dealer. (also every time there's another middleman more money in terms of shipping and storage costs gets added to the items). Ideally, the manufacturer would share a per print amount with the dealer and bear the burden of the consumables costs if they are going to use this kind of pricing model.

3)As others have pointed out, the cost of the "unlimited" plan may actually be higher to the customer, but the sound of "unlimited" taps into their greed. I'd wager there definitely are contractual ways to increase costs down the road even in an "unlimited" fixed rate plan.

4)Mitigated risk via a diversified portfolio. This right here I feel is the pinnacle of how these programs can be profitable. You as an independent dealer, even if larger, say hundreds or machines under contract at any given time are still small cakes. The manufacturer probably has tens to hundreds of thousands, if not more machines around the globe at any given time. Let's go back to food as an example. Let's say you and some friends and family go to an all you can eat buffet. There might even be expensive items like seafood, prime rib, etc., on the buffet. You do the math and wonder how on earth can these guys make any money. Well, simple. They get to spread the costs and profitability over hundreds, thousands even of customers. Just because you and I are value shopping buffet eating pigs, and go straight for the prime rib...many other people fill up on the starches, carbs, breads, potatoes, etc. and eat a small amount of the protein. In essence, more profitable customers are subsidizing the losing customers, but on the whole there's more profitable customers than losing customers. Same thing with credit cards, perks, rewards. How can a credit card company that maybe gets 1% to 2% be able to give 3/4/5% unlimited back on certain categories. Simple, they hope you will put non-category spend on the cards but the customers that are trapped in debt at 20%-30% interest rates are paying for you to get bonus multipliers. I personally, would never EVER offer an unlimited plan to a commercial printer. Their quality standards are higher, as everything needs to be perfect, their coverage is high...and they will be the customer that puts everything onto said machine. Most office customers won't do that...a few may. So weed them out and don't renew their contracts.

5)Nothing says this has to be an ongoing program for all eternity. It could very well be a test and at some point more exceptions and limits get put into the contracts or the program goes away.

6)Added sales. The manufacturer would have to spend a lot to get into other lines of business with a new customer. If they can get their foot in the door for one thing, it may lead to more sales, referrals, etc.

Personally, if I was in the market to get a machine I'd want the unlimited one, even though it could hurt the dealer. But if I liked the dealer and want them to stay around I'd have no problem even buying my toners at a greatly reduced contractual rate with a very small click charge to cover the other parts because I understand that for the relationship to work they need to make a little money and I need to save a little money.


I'd love to hear anyone else's thoughts on the matter.

[SalesServiceGuy]

"National vendors are usually over $165.00 per hour and mercilessly charge for everything including scan to email stops working." I take offense at this..in fact we charge 175/hr and even this is not enough to keep them from believing that the tech is their IT support..When I have to send a tech 100 miles, into a prison, to assist with a scan to email issue that for 10/month could have been resolved with a phone call (and tech winds up calling IT guy to re enter the login password) you can bet I'm making it hurt


But, on the subject of one rate..This is a risk, no doubt..I listen to my sales rep say " you can make unlimited copies, service anytime, as much supplies as you want" I just cringe..1st thing any smart buyer is going to do is shift every print job over to this device, no worries about excessive color, and bitch at me when I question why I'm sending 15 bottles of C360I toners every month to make 2 cents yet spend 2 dollars. It's all about making the sales reps life better..F*** the poor service guy who is seeing a C558 running like a C6100.

Even when I thought we might make out a little during the shutdown, a large % of one rate users just called and whined enough to get them to credit for months of non use.

I am trying to understand this line.

"Even when I thought we might make out a little during the shutdown, a large % of one rate users just called and whined enough to get them to credit for months of non use."

We will use the $400.00 per month One Rate program example used earlier in this thread. I can certainly understand during the worst of COVID, SMB and large businesses with multiple copiers might ask themselves, why am I paying $400.00 a month per copier and no one is in the office and no one is printing? My revenues are way down and my expenses are way up!

Of course, no one foresaw the negative impact on printing that an unexpected event like COVID had on the global economy including the marketing gurus who dreamed up the One Rate program.

I think some customers will be very reluctant to re-sign a copier lease that includes another five years of One Rate and I suspect independent dealers with several years of data will decline to offer this program going forward when service contracts expire.

The OEMs with direct sales branches may continue to offer One Rate but an OEM like Konica Minolta just lost a ton of money during COVID the last two years on their entire business operation. I know that individual KM branches and territories are now responsible to show profitability.

[SalesServiceGuy]

One Rate is an awesome program for Direct Reps to talk about. Unlimited clicks will get anyone's attention these days, especially those clients that are tired of getting billed for overages.

Here's what's good for sales person to chat about:



Unlimited clicks. Yup unlimited, make as many as you want
Never ever get a bill for overages clicks. Which means you have a predictable expense
Never have a bill for toner
Never feel that you've been robbed because you did not meet your minimum quarterly or annual meter volumes


Here's what's not so good for the sales person to chat about:



If a client use of supplies rises above the typical use pattern (determined by KMBS) the client would need to pay for improper or excess use
Parts replacement could be new or refurbished
KM may increase the payment at the end of the first year and every successive 12 month period by a maximum of up to 10%