A conversation with Print Audit’s West McDonald on whether or not the SBB trend picked up any steam in 2017 and what’s in store for 2018.
One of the trends to watch for in 2018 we write about in our soon to be published December/January issue is Seat-Based Billing (SBB). It’s the second consecutive year we identified this as a trend. If this keeps up (identifying SBB as a trend year after year), it may bring back memories of the mid-to-late 1990’s when industry pundits were predicting year in and year out how the upcoming year was going to be "the year of color."
Eventually it happened, but not as quickly as the pundits predicted.
Towards the end of last year, I caught up with West McDonald, SBB guru and VP of business development at Print Audit, to get an honest assessment of the past year in SBB and discuss what’s next for MPS.
McDonald reports that on the Premier Member side of Print Audit’s house, the company gained five new Premier Members (Dealers who sign up with Print Audit and receive its products for “one low monthly price.”) as a result of its SBB efforts above and beyond the many new Premier Members they added last year. Four of those came from the SBB road shows that took place last year and a fifth was swayed by Print Audit blog posts on SBB and SBB coverage in the industry press.
“But what really got me excited was that it was finally the year where [SBB] was actually happening,” exclaimed McDonald, who cites as evidence the SBB deals closed by Premier Members during the past year with a little help from their friends at Print Audit.
McDonald reports those dealers were signing much larger contracts with customers than they initially expected. Described by McDonald as “not quite enterprise,” the companies gravitating towards SBB contracts were in the 500-1,500 seat range. He also reported that one Premier Member replaced an OEM in an account because the OEM was unwilling to deviate from the traditional cost per page billing model.
“That’s exciting to see—stuff that’s never been done before instead of just going to shows and speaking and working with members to close deals,” said McDonald.
Print Audit along with Clover Imaging Group sponsored four SBB road shows in 2017 in conjunction with the BTA regional events. The road shows averaged 9-12 dealers per show, somewhat off the 20-30 dealers that McDonald was expecting. Even though attendance fell short of expectations, McDonald still saw a silver lining.
“We learned that the dealers there weren’t there to kick the tires, but to actually learn how to do it.”
Print Audit also offers SBB certification, but it isn’t necessary to be a Print Audit customer to get certified. One only needs to take the training.
“There’s a lot of dealers who aren’t working with us that are now certified and closing their own SBB contracts,” observed McDonald
A lesson learned while preparing for the SBB road shows was that dealers wanted the option of billing in bands not just by seats. Here’s how that works, according to McDonald.
Say an assessment is done on 100 users. It is then determined that the SBB price/month for the 100 users is $2,400. The contract covers 96-104 users for a flat fee of $2,400 per month. If the user count drops or rises slightly every month, the price remains the same. Additional billing bands, i.e., 105-114 could be added to the contract so it doesn’t result in negotiating a new contract every time the number grows.
“You build a quote by seats but deliver the contract in bands,” explained McDonald. “Predictable billing and the number of seats changes every month so how do we make sure it’s predictable?”
Every dealer that participated in the road show was already offering MPS and all were seeing a decline in pages, which McDonald believes is declining faster than anyone expected.
“2017 was the year they started to feel the pain. Not until existing CPP contracts suffer will they start looking for alternatives [like SBB].”
A new round of road shows is planned for next year, including one on April 17 at the Palmer House in Chicago in conjunction with INTEC’s Ignite 2018 and TriMega’s Purchasing Association’s 22nd annual One-On-One meeting.
Here Comes DBB
Another trend McDonald sees emerging around MPS billing models is device-based billing (DBB).
“At first, I fought the idea because if you are billing by the device, you’re limiting yourself to the kinds of things you can layer on to it,” he noted. “As I thought more about it, there’s a group of managed print providers who aren’t going to do anything beyond managed print. They’re not going to do Managed IT, they’re not going to diversify into telephony or security, so for them device-based billing could make sense.”
DBB is still based on users and McDonald reports that HP is starting to do it, but basing it on the number of users per device.
“Whatever you call it, you can’t get away from the metric of users instead of pages,” emphasized McDonald who added that Print Audit will be adding certain elements to its training schedule next year that include SBB and DBB.
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