Hardware Prices See First Increase in Years
By George Mikolay, Senior Product Editor, A3/Copier
MFPs, June 4, 2012
For the first time in many years, document imaging
device manufacturers have increased prices. In the past two to three months,
the US branches of Canon, Konica Minolta, Ricoh, Toshiba and Sharp have all
increased prices on the majority of their hardware by approximately 5 percent
on average. The only U.S.-based branches that have not increased prices are
KYOCERA Document Solutions America and Xerox, and neither plans to have an
increase in prices, at least in the near-term future.
So why the increase? The chief factor is the weak U.S.
dollar relative to the Japanese yen. Because the U.S.-based branches of the
hardware manufacturers buy product from their respective Japan-based parent
companies, the conversion rate results in higher prices.
The dealers we spoke with, to whom the manufacturers’
higher prices have been passed along, said that in addition to the weak dollar,
manufacturers cited additional economic conditions and investments in research
and development to maintain high quality products. Another factor could be the
ultra-competitive market which has resulted in discounting for years. Still,
prices will remain market driven, and dealers we spoke with feel they’re highly
unlikely to be able to pass the higher costs on to their customers, thus
impacting their bottom line. Some dealers are also seeing a trend in which it
is becoming increasingly difficult to partake in some vendors’ discount pricing
programs. As one dealer put it, his margins are also being squeezed by the
certifications and documentation now required to partake in one vendor’s
discount pricing program for major accounts.
Some vendors are working to offset price increases with
more lucrative dealer programs. Sharp, for example, has increased the amount of
money dealers get back on its payback credit card program, doubling the prior
amount in some cases. In addition, Sharp has increased the amount dealers get
back when they trade in older machines, by as much as $200 to $500 per
trade-in. Consequently, while a dealer may not be able to increase pricing to
offset their higher costs, the lost revenue can be made up for on the back-end
with its payback credit card and equipment trade-in programs.
To offset the tighter margins on hardware, dealers
need to expand their services offerings and work to become less reliant on
strictly hardware revenue. Managed print services comes to mind. Another dealer
we spoke with noted that Sharp is now offering electronic white boards to help
expand dealer business beyond just copier/printer hardware. Still another
dealer, already involved in managed print services, recently expanded into
managed network services in order to manage customers’ computers, laptops and