It may well be time to roll out that old cliché about storm clouds appearing on the horizon. A February survey of economists across the nation pegged the likelihood of a 2008 recession at 49 percent, a 9 percent jump from a survey the previous month, according to The Wall Street Journal, which conducted the studies. Adding to the concerns was the economists’ belief that should a recession hit, there was a one in three chance it would be worse than the 2001 and 1991 downturns.

Fortunately, even if these economic threats materialize, solution providers don’t have to hide in the basement and wait out the storm. By stepping up to an advisory role, they can use their expertise to help customers save money and reduce expenses in their printing and imaging environment. At the same time, solution providers will find new ways to boost the sales and profits of hardware, software and services. The key is to sell the four “R’s” — right-sizing, refreshing, replenishing and reducing.

Done right, this strategy could lessen the pain of even a prolonged slump in the overall economy.

Right-Sizing Pays
Because the printing fleets at most companies still include large numbers of personal printers, scanners and fax machines, consumables and power costs are excessive and difficult to manage. What’s more, “wrong sized” printing and imaging infrastructures are costing U.S. businesses millions of dollars a year in unnecessary costs due to breakdowns, workflow inefficiencies, poorly utilized resources and expensive repairs.

By simply consolidating standalone devices into efficient multifunction products (MFPs) solution providers can save their clients money. MFPs pack a printer, copier, scanner and fax machine in one network-capable unit. Larger models designed for workgroups typically include sophisticated paper-handling and document-finishing features. Some industry estimates place the average right-sizing savings at 30 percent.

Best of all for solution providers, footprint consolidation creates justifications for end users to buy new equipment even in a slowing economy. The payoff for solution providers is especially attractive, since MFPs attract higher hardware margins than standalone devices and create an opportunity for lucrative add-ons, such as workflow software and services contracts that can generate profits in the 15 percent to 30 percent range or higher.

Tech Refresh Offers Additional Opportunity
The efficiency message doesn’t end with a discussion about just cutting down on the number of devices. Solution providers should also show customers the unnecessary costs of relying on outdated and nonnetworked printing and imaging devices. As a group, these obsolete units will crimp efficiency by running more slowly than newer devices, and they drain budgets with more frequent and higher-priced repairs and increased downtime.

Networked devices offer the additional savings of remote management, either by a customer’s IT staff or solution providers, which can significantly reduce help desk calls, improve availability and bring efficiencies to document workflow and business processes.

Replenishing: A Long-Term Benefit
Rather than fighting what promises to be an increasingly destructive price war with discount sellers trying to stay afloat in recessionary times, solution providers should play to their strengths — technical expertise and the ability to sell cost-per-page and bundled services contracts.

Despite the profit potential of these arrangements, printing OEMs say only a small percentage — approximately 20 percent — of printers and MFPs include add-on contracts. That means solution providers are ignoring a large chunk of high-profit revenues and the additional benefit of locking in a revenue stream for supplies and services over three to five years, which is good insurance against a recessionary cycle.

However, solution providers shouldn’t downplay the challenges of selling cost-per-page and services contracts. Some customers will balk at the idea because of negative experiences with traditional photocopier leasing plans that proved expensive and inflexible.

The antidote is education. Solution providers should promote the lower capital costs associated with printer and MFP cost-per-page models. Customers pay for only the resources they use, which according to vendor estimates can cut costs by up to 30 percent, compared to maintaining the equipment in-house. The typically shorter leasing terms available for printing contracts will compare favorably to copier contracts.

Solution providers looking to transition to cost-per-page and leasing models can take advantage of a growing number of incentive programs available from printing and imaging vendors. For example, Hewlett-Packard’s Solutions Value Incentive Partner Elite program (SVIP Elite), part of the PartnerOne program, offers hardware rebates and training in a variety of solutions disciplines, including consultative selling, MFP technology and best practices for managing networked printing and imaging environments.

Xerox’s PagePack program offers resources to help solution providers sell flexible and affordable monthly service and supplies per-page contracts. The program lets businesses more accurately predict their monthly printing and copying costs and eliminates the cost of stocking supplies.

Reduce Outside Costs
Commercial print shops are expensive. According to one printer OEM, small and medium businesses in the U.S. spend almost $30 billion a year for printing brochures, fliers, pamphlets and other marketing communications materials.

This rising cost gives solution providers a ready opportunity to sell the value of in-house color to budget-conscious customers. In turn, sales of high-margin color printers and MFPs — along with consumables and support services — can redirect the flow of cash from print shops to VARs.

Solution providers should key-in on three areas as they promote the business sense of in-house color to their customers.

First, customers will gain tighter control over costs. Print shops often require print runs larger than the quantity a customer requires for a given project. Industry estimates place overrun waste from commercial minimums at 15 percent to 20 percent of the job cost. With in-house color, customers print only what they need.
 
Second, today’s color printing technology makes printers and MFPs more economical and easier to use than ever. Over the past year, a number of leading OEMs set new price points for low-cost hardware and consumables, easing the upfront investment end users will have to make for in-house color and making return on investment calculations easier to compute.

Third, and perhaps most compelling of all, is that cost comparisons between in-house strategies and outsourced printing show the advantages of keeping jobs close at hand. A handy resource is HP’s color print cost calculator, which can quickly display comparisons between in-house projects and those sent to outside printers.