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MPS Billing Models: Cost Per Seat

Posted by Jenna Guy on Sep 12, 2017 9:00:00 AM
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MPS Billing Models: Cost Per Seat

As part of our blog series on billing models for managed print services (MPS), we’re looking at the benefits and risks associated with three popular approaches: transactional, cost per page (CPP) and cost per page. The focus of this blog post will be cost per seat, the proverbial new kid on the block in the managed print space.  

What is cost per seat?
Also known as per-user or seat-based billing, cost per seat is a billing model in which a flat fee is billed per user per month. In the managed services channel, the cost per user includes support for a variety of devices, including desktops, laptops, phones, network and IT equipment. The scope of cost per seat is a bit smaller in the managed print space as MPS providers typically only support printers and multi-function print devices (MFPs). Depending on your business, you can include additional managed services in your per-seat price. The types of solutions you offer and how you determine your price per seat are key considerations if you’re interested in a cost per seat approach to managed print.

A popular argument for cost per seat billing is the user-based approach. Many managed service providers (MSPs) and value-added resellers (VARs) already use a seat-based billing model and their customers are used to being billed in this way. This may make managed print easier to implement in the managed services space where MPS is a relatively new offering, but it’s important to understand what constitutes a ‘seat’ in the managed print space may be different than the IT channel.

Seats ultimately refer to users, but how you calculate the cost per person from a managed print perspective still depends largely on print volume. When it comes to calculating the price of your managed print solution, you still need to know how many pages a person is printing to set a price that, at the very least, covers your costs. By this logic, cost per seat is in many ways a more granular CPP model and taking a cost per seat approach to managed print means you’re essentially using the cost per page per person as the key billing metric.

Rules-Based Printing
One of the benefits most often associated with cost per seat billing is rules-based printing, which involves setting permissions at the user level. With rules-based printing, you can establish print policies to control colour and application-based printing as well as mandating duplex printing and setting up a secure print queue.

  • Cost per seat billing and rules-based printing are often used interchangeably, but can you have one without the other? When discussing billing models, it’s important to distinguish between the features of the billing model and the features of the MPS solutions itself. For the most part, you can have rules-based printing without a cost per seat billing model and vice versa. Rules-based printing is a feature of managed print solutions with user management.

    The reason cost per seat billing and rules-based printing are usually discussed in relation to one another is that MPS providers with cost per seat billing often rely on user management. They use print data, such as how many pages the average person prints, to calculate a per seat cost, and determining this number is easier with user management. Virtually all managed print solutions measure print volumes on an organizational level – depending on how granular you need to be with your MPS contracts, you can calculate the average per seat cost by using print volume information gathered during your initial assessment of an end user’s print environment.
  • Is user management necessary for rules-based printing? The short answer is no, but it depends largely on your customer’s print environment and their reasons for implementing a managed print solution. If your customer’s need individual print policies and they used shared printers, then user management is necessary to set permissions on a per-person basis. If your customer’s have a device for every employee or they have collective guidelines for print, you can set some of the most popular printing rules on the device itself, such as mono and duplex printing, without having to introduce a new tool.

Managing Risk
Cost per seat is the newest approach to MPS billing and there are some inherent risks that come with being early to market with a new idea or solution. The most immediate concern to be aware of is your target customer base. If your ideal customers aren’t familiar with cost per seat, you might have to do some extra work to communicate the value of your solution. Many dealers in the print and imaging industry are familiar with cost per copy and understand the math used to determine the price of the solution. As a result, they know what they are getting for the price.

How you calculate your cost per seat may not be as straightforward, so you may need to break down that cost structure for them. We looked at the commoditization of managed print in our previous post and identified some of the core problems. The solutions available on the market are similar in terms of features and functionality, which makes demonstrating the value or competitive advantages of your product difficult. The surest way to compound this problem is to obfuscate the value of your solution with complex math. Ensure you are walking your customers through how your pricing works so they understand what they are getting per seat.

As we mentioned above, cost per seat requires a thorough understanding of your end user’s print practices. If you don’t do your due diligence, your solution may end up being costly for end users with low print volumes and multiple users. Alternatively, you may end up footing the bill for customers with few users but high print volumes. Finding the right balance between users and page volumes will help you mitigate these risks in the long-term, but short-term increases and decreases will depend on how consistent your customers’ print practices are.

Transactional billing and CPP have been around much longer in the MPS market than cost per seat, but cost per seat comes with its own set of benefits and drawbacks. As with everything price and cost-related, whether cost per seat is a feasible billing model for you depends entirely on your managed print program. Stay tuned for our last blog posts in the MPS Billing Models series where we’ll provide an in-depth look at transactional billing. For an overview of all three models, download our free Managed Print Playbook. The playbook provides an introduction, a list of pros and cons as well as examples of each model.  

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Topics: MPS, Billing