by: Ken Stewart, Director, MPS Advisory Services
In February of this year, Print Audit launched its Premier program. The program is designed to provide subscription-based access to Print Audit’s entire suite of software. Just ten months into the program launch, Print Audit says that all lights are green.
For those that are unfamiliar with the Calgary, Canada based firm, Print Audit is an independent software provider focusing on print management and monitoring software suites Print Audit 6 and Facilities Manager, respectively. The Premier program breaks with the traditional software business model by offering a set number of licenses for a monthly subscription fee as opposed to complicated, volume-based per seat pricing and annual maintenance agreements.
I sat down for a quick-hitting interview with Paul Giorgi, Premier Customer Success Manager at Print Audit.
KS: “What key performance indicators (KPI) are Print Audit watching to tell if Premier is successful?”
PG: “It’s very simple; we wanted to see if we could sign up more than 50 dealers in 12 months. We have surpassed that mark already.”
KS: “Was the program created to convert existing providers, or recruiting new providers?”
PG: “It was really focused on both. Device monitoring is a sunk cost for most dealers, so many dealers see Premier as a great program to give them a little something extra. In other words, it creates a competitive differentiator, allowing them to compete on value or price as they see fit.”
KS: “What’s in it for these providers? Why would I sign up for this program if I was a dealer or reseller?”
PG: “The math is pretty compelling. Dealers break even at 5 percent of their allotment. At 12-13 percent of their allotment, dealers are making two or three times their investment.”
Earlier this year, Print Audit’s announcement caused a stir in the imaging industry with its radical departure from what I’ve always referred to as the ‘unholy trinity’ of software sales, annual maintenance and professional services.
You see, software companies who follow a more traditional model will make the lion share of their money by selling software licenses in some per unit arrangement (usually per computer or per user). Software companies will then look to tack on an annual maintenance agreement for bug fixes and general help desk support. This generally ranges from 18 – 25 percent of suggested retail price. This one-two punch generates a tidy profit for most software companies.
Many software firms entice channel partners slinging the dream of selling pricey professional services to shore up flagging profits in other lines of business. While I certainly believe partners can make some money in charging hefty professional services fees, there are a few gaps many dealers find out only too late.
The traditional model is heavily dependent on project-based sales. In my experience, this creates a very bumpy ride, making forecasting extremely difficult.
Most importantly, this ‘unholy’ business model is extremely labor-intensive. In other words, you have to keep adding high-octane (and highly paid) engineers to keep pace with your high-octane (and highly paid) sales team. You really don’t ever get to the economies of scale you can with a managed services program. In other words, what I want is a software program structured much like an MPS program might be.
This is the simple beauty of what Print Audit has done. They have broken with tradition and have provided a conduit to gain incredible economies of scale in your software sales program. It’s not money-for-free, and providers who subscribe to this type of program have a healthy awareness of the complexities of software sales, in general.
My take is that this is the new billing model that most customers would prefer. It simplifies the number of product SKUs I have to deal with and aligns me with my software provider to a single go-to-market strategy. It removes roadblocks to my sales efforts because I can now package this into every deal at a price point and profit margin I can live with – not some arbitrary markup that can sink a competitive deal.
At the end of the day, companies need to take notice of this little Canadian software company for doing something noticeable – getting in line with its channel partners by making things simpler and more profitable. While many of the software companies I’ve spoken with over the last few months haven’t quite made up their mind about what this little shift in business models might signal, dealers and resellers seem to be paying attention.