By Craig Faczan
Many VARs neglect imaging supplies in their product portfolios, and for good reason: There is very little margin on printers and OEM cartridges. With high-quality aftermarket products, however, you can develop a good source of recurring profits.
According to market research firm InfoTrends, OEMs own 73 percent of the market in monochrome cartridges and 93 percent in color cartridges—statistics that are lost on many solution providers. Generally speaking, competing with aftermarket cartridges is a losing battle: The market is small, price-driven, and saturated with competition. Why compete with thousands of companies fighting for a small percentage of the business when you can strategically convert customers from high-priced OEM cartridges and reap the rewards?
In the life of a typical laser printer, 80 to 90 percent of its total cost of ownership (TCO) is from cartridges. A high-end network laser printer that outputs a million pages may cost $1,000. Over its life, the printer will probably use about $8,000 in cartridges and require about $1,000 worth of service. To compete with local providers, the Internet, and even the OEMs, you likely would need to sell at 10 percent margins to reap about $1,000 of profit over the life of the printer. Clearly, that is not a compelling business model. continue reading...
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