Heidelberg UK used last week’s Press4Value Open House at its London base to launch a new Impression Charge scheme, which sounds a lot like a click charge, for two of its offset presses.
The presses in question are the brand new SRA1 CS92 and the compact B2 CX75, both interesting presses in their own right, with last week’s event being their first public outing in the UK. Heidelberg has lost some ground in the markets for both of these presses – to Ryobi in the case of the CS92, and Komori for the CX75 – so this initiative is a way for Heidelberg to offer the presses at a lower price, without sacrificing any profit margin.
Managing director Gerard Heanue explains how it works: “The customers can buy the press at a lower price and will take out a five year contract for our consumables, servicing and training.” Heidelberg will carry out an audit for anyone interested in this and tailor a specific quote but customers should be able to knock up to 30 percent off the cost of these presses. Heidelberg will take on the liability of the press, which should make it easier for printers to sort out the financing. Heanue says: “We have spoken to two finance houses and they are quite happy with it.”
The Impression Charge will be a fixed cost per sheet to cover the consumables and servicing and will be payable monthly. Heanue says that it’s likely to be a minimum of £1 million per month, pointing out: “We expect most printers to do more than £12m a year with a CX75 or CS92.” But he also stresses Heidelberg’s willingness to be flexible, averaging out bad months and leaving existing plate deals with other suppliers in place.
At the end of the five years the customer will own the press and be free to make other arrangements regarding the consumables. Heanue says: “We would hope that most customers would then be switching out for something more productive, especially if we have pushed up their productivity because this is an industrialised market.” He adds: “We find that customers in the UK are changing their presses more often because they are sweating the assets more.”
It was a slightly surreal briefing, listening to Heidelberg making the same arguments that Xerox and other digital players have been pushing for decades now. Personally, I’ve never yet come across a printer that likes the idea of click charges, which were initially introduced to cover the very high leasing costs for early office copier devices. But Heanue says that some customers are keen on the idea, saying that they’ve got used to the click charge concept since Heidelberg has also been selling digital presses.
However, Heanue ruled out bringing Heidelberg’s subscription charging model to the UK. This is an initiative introduced elsewhere by Heidelberg, mainly to help sell more consumables. Heanue claims that Heidelberg UK has been extremely successful in its approach, with 12 percent market share in consumables as against an average 5 percent in other regions, so there would be nothing to gain from subscription sales in the UK. Heanue explains: “We have been bundling our consumables with a service contract.” The result is that Heidelberg UK has grown its service revenue by around 20 percent in a market that has generally been declining. Almost 100 percent of Heidelberg’s B1 customers have taken out a service contract along with 70-80 percent of those with B2 presses.
However, Heanue also says that the actual equipment sales are going down as customers replace two machines with one new one, noting: “So we are not benefiting from increasing print production because we are in a battle with the other press vendors to the lowest price.”
In a way, the subscription model and it’s UK cousin, the Impression Charge are a logical step for Heidelberg, which has transformed itself in recent years from being primarily a manufacturer of heavy metal presses into a much more nimble company, developing digital presses, as well as having a healthy industrial ventures arm and even contract manufacturing a 3D printer. Still, it will be interesting to see if offset press customers are willing to take this step with Heidelberg…