Donna Oricchio, the CFO of Coordinated, has told me this more than once and believe me when I tell you she is wise.
Consumers are driven to “get the best deal.” We look for discounts, coupons, sales – always looking to pay the least for products and services – but have you ever thought about the cost?
Here in Copier World we see discounting as a general practice and sometimes things get discounted heavily. When this happens there is a general feeling from the customer that they “won”. They sign the contract and think, “I got the best price I could possibly get. I paid less for this equipment and service than everyone else.”
The reality is that when this happens there is a cost to that same consumer. Nothing is free.
As a vendor, if I take a deal that has been drastically discounted my reality becomes one of two things:
Is there any way I can still make money?
How can I at least not lose money? How does that get done? That is the cost to the consumer. Below are some “Best Practices” that dealers that focus on discounts will employ to squeeze profit out of deals that are seemingly losers.
You think you won?
Nothing is free.
Use Non-OEM Consumables (OEM is original equipment manufacturer – Kyocera, Xerox, etc.).
Discount supplies and consumables are available for almost any device on the market. One way to reduce cost is to reduce quality by using these items. This has a huge impact on color devices if quality is important at all. Color copiers from the various manufacturers are often designed with toner developed specifically by the manufacturers. Output quality will suffer, affecting customer-facing branded documents and hurting your brand.
Use Non-OEM Repair Parts.
Another option is to use non-OEM replacement parts. These parts are far less expensive but also of lesser quality as the parts provided by the OEM.
Turn Off PM (Preventive Maintenance) Counters.
All of the equipment in our industry has a PM Cycle. Rated yields for vital components to be changed before they fail with a planned service call at a time when the equipment isn’t needed. Turn off the counter, get a few thousand extra pages, and run it till it drops, which likely won’t happen at the most opportune time. Not the best thing for the consumer, but it helps compensate for that discount.
Run Parts Until the End.
Another way to cut corners is to leave parts that are showing wear in a machine until they cause a problem. Service programs are designed to be as proactive as possible with the idea that uptime and productivity trumps price. What this means is when a technician is fixing an issue and sees something that will be a problem in the future they fix it to avoid the customer experiencing an additional call. When corners are cut, price trumps uptime and those parts will remain until a failure occurs.
Outside of providing the specific ways a vendor may cut corners to make up for deep discounts I likely have not told you anything you don’t already know. Just beware. Getting a great deal is great; just make sure that whatever you give up makes it a good deal both long and short term.
And remember Donna’s words of wisdom: Nothing is free!