How tight is it out there.

[fixthecopier]

I do not know if this is a look at how tight it is out there for business, but here is a sample. Those who have delt with the Ricoh and the Konica brands, would know that the Konica would be a higher end brand cost wise. You can make your own statement about quality, we sell both and the Konica is a higher end product. We just recently lost one of our biggest contracts, 650 Konica machines to another dealer bidding Ricoh. To keep the contract we went to Japan and got special pricing on Bizhub 360's and 601's. We were going to place them cheaper than another dealer could have got them for, and then we bid the service at projected cost, no profit to be made. My boss was taking a big risk that he would not loose his ass down the road. The Ricoh bid came in one third less than ours on a five year contract.
You may ask why we did not bid the Ricoh? We really do not think that they would hold up in the rough enviroment. We are pretty sure the other company gave it away because they are for sale and are trying to pump up the size of the company.
The other company lost thier contract to do the Ricoh warrenty work for this area to us last year, so quality of work is not an issue.
Another sign of the times, since I do not have to make a living on a sales comission, my boss will let me move printers at our cost just to move them. Is any one else having to give it away?

[Cipher]

Comission based selling has pretty much gone the way of the dinosaur (at least for us).
The money to be made is on the service contract, price per copy and the quality of service provided.

We have been know to put machines in below cost if we can strike a good enough long term service agreement.

[irtek]

I may be dense but I just do not see the reasoning behind this. Why would you want to sell 650 machines at cost and put them under service contract at cost. I thought businesses were supposed to make a profit.

[fixthecopier]

I may be dense but I just do not see the reasoning behind this. Why would you want to sell 650 machines at cost and put them under service contract at cost. I thought businesses were supposed to make a profit.


The main reason for this is to keep the other guy out. The area is the second largest military base on the planet. Right now there are three brands on the base that has 5 different contracts. We still have our oldest contract, 325 machines, and make a profit on it. Copiers are the only thing that have a contract, so the field is wide open to repair everything else and we get a ton of that business. The command of the army is moving here, and they already use Konica where they are at now, and our goal is that they use them here.
We did not want to give it away , but the government kept throwing the contract out and telling the vendors they had to go lower. They said it was legal the way they do business.
As I stated above, I think we dodged a bullet. I have done this job out here for 10 years and I know that the soliders will beat the shit out of those Ricoh's.
As for selling printers at cost, that helps the company make its sales quota with the factory. I hope this helps you to see our side.

[Cipher]

I may be dense but I just do not see the reasoning behind this. Why would you want to sell 650 machines at cost and put them under service contract at cost. I thought businesses were supposed to make a profit.

Who said we are doing service contracts at cost? (now that would be foolish).

No I'm simply saying one off machine sales is not the bigger picture. ;)

[Kopyrtek]

So it was an actual Ricoh dealer and not RBS,which is a totally different thing all together.We lost a account to RBS and i still cant see how in the world they can make a profit off this deal.I priced mine as low as i thought i could and still wasnt in the ballpark.I did contact Ricoh and they did help with some discounts and still RBS left me in the dust.Cant seem to fathom how they figure they makde money with me sending them over $100 a machine and now they are getting $65 a machine with some as low as $10 as additional machines.Just blows my mind!!
Gotta love BIG BROTHER!!

[Cipher]

It greatly depends how far you are willing to go to keep a customer or get your foot in the door at a new customer.
We have certainly have lost a few here and there because we couldn't or were just unwilling to match a competitor or bend to the customers budget and demands.

At the end of day it's has to be worth while profit wise for us or there is just no point really.
But now and then it can be worth taking a initial hit on the sale of machines to try and make something happen.

For example.

We supplied some 'free of charge' printers to one of our larger customers to try at their leisure with the intension to show them we do small printers that are just as good if not better than all the HPs they have.
We didn't hear anything for months... then out of the blue they phoned up wanting a meeting with us about replacing most of their HPs.
They now have shed load of our printers as well as our MFDs and we are making good money, result!

[fixthecopier]

It was a Ricoh dealer working with RBS. Konica does that thing where they keep a deal in house and cut the throat of their local dealer. They have not done it to us yet, but who knows. I do not know how RBS does it, but in the past with Minolta, the machines are owned by corporate and the dealer gets paid for service. Dealer also got credit for the machines as sales... in the past. This new contract is strictly pay per click. All of our other contracts had minimum amounts each month they paid for weather they made the copies or not. We made out good when a unit would deploy for a year at a time leaving behind 3 or 4 copiers we were getting $100 to $225 a month for. Now when that happens, the new contractor just will not make a dime on some machines. We also had large machines that were oversized for the monthly ammount they did. We were getting paid $385 a month for 20,000 copies on a 65ppm machine and they were doing half that ammount, $225 for 10,000 copies on a 35ppm machine and they are doing half that. I had one unit that was paying the fee for a machine to do 4000 copies a month, and then paying $900 in overages. I tried for years to get them to request a bigger box , but it fell on deaf ears. That is why when they beat the machine to death, I would replace it. I felt they had paid for it. That was then and now it is much tighter. Our other Army contract was redone a little over a year and a half ago and it was tighter than the one before it. The machines still are based on minimum ammounts, but we had to drop the overage charges. I have one machine that is a bizhub 600 that they pay for 20,000 a month and they do 5000 a day. We have to eat it. It still balances. I have plenty of 4000 a month machines that did not do 20,000 the fisrt year.

[Cipher]

A large well known brand did something similar to us and came in and took over from their local dealer to cut us out of the loop on a large government contract renewal.
We basically were forced to withdraw from the tender process as we couldn't match the crazy pricing they came up with.

The people on the ground wanted to stay with us, but had no say in the matter as it was a top level call.

I have no doubt we shall have the last laugh though.
The large company in question has a pretty poor track record in this area for after sales care and the lack of prompt and quality servicing.
We have converted so many of their customers over the years.