When businesses consider investing in Managed Print Services (MPS), one of the first questions they ask is how to measure the return on investment (ROI). While MPS offers clear operational and environmental advantages, its financial benefits are just as significant. Understanding how to quantify these benefits is key to making an informed decision.
Calculating ROI on MPS involves more than comparing the cost of a service contract against current printing expenses. It requires a full view of the direct and indirect savings that result from improved efficiency, reduced waste, and enhanced productivity.
This article explains how to calculate ROI on Managed Print Services, outlining the key cost factors, savings opportunities, and performance indicators that demonstrate measurable value over time.
What ROI Means in Managed Print Services
Return on investment is a financial metric used to assess the profitability of an investment relative to its cost. In the context of Managed Print Services, ROI measures how much money a business saves or gains by outsourcing print management compared to continuing with in-house or unmanaged printing.
A positive ROI means that the savings and efficiency gains achieved through MPS exceed the cost of the service itself. This calculation provides an objective way to evaluate whether MPS is delivering the financial and operational improvements promised at the outset.
Understanding the True Cost of Printing
Before calculating ROI, it is essential to understand what printing currently costs. Many businesses underestimate their total printing expenditure because these costs are often spread across different budgets.
Direct costs include paper, toner, printer purchases, and maintenance. Indirect costs include energy consumption, IT support time, and employee productivity losses due to printer downtime or inefficiency.
Unmanaged print environments often contain redundant devices, inconsistent supply orders, and excessive waste. These factors inflate total costs, even if individual expenses appear small. Establishing a complete baseline of all print-related spending is the first step toward an accurate ROI calculation.
Collecting Baseline Data
Gathering accurate baseline data involves assessing the entire print environment. This includes identifying the number and type of devices in use, total monthly page volumes, maintenance records, toner usage, and energy consumption.
Businesses should also record indirect costs, such as the time spent by IT teams supporting printers or the cost of paper waste and reprints. Some MPS providers conduct a detailed print audit at the start of a contract to capture this data precisely.
Once the baseline is established, it becomes possible to compare pre- and post-MPS performance in measurable financial terms.
Identifying Savings from Managed Print Services
The savings achieved through MPS typically fall into several categories. Cost reductions occur through optimised device use, lower supply consumption, and reduced maintenance requirements. Operational efficiencies result from automated processes, improved uptime, and reduced staff involvement in print-related tasks.
Energy-efficient devices and responsible printing policies lower power and paper usage, further reducing expenditure. By consolidating printers and managing supplies centrally, businesses eliminate redundant costs associated with ad hoc purchasing and reactive maintenance.
Together, these improvements contribute to a measurable financial benefit that can be tracked throughout the service contract.
Calculating ROI
The formula for calculating ROI on Managed Print Services is straightforward:
ROI (%) = [(Annual Savings – Annual MPS Cost) ÷ Annual MPS Cost] × 100
For example, if a business spends £50,000 annually on unmanaged printing and an MPS contract reduces that to £35,000, the annual savings are £15,000. If the cost of the MPS contract is £10,000, the ROI is:
ROI = [(£15,000 – £10,000) ÷ £10,000] × 100 = 50%
This calculation demonstrates that the business gains a 50 per cent return on its investment through reduced costs and improved efficiency.
Factoring in Indirect Benefits
Beyond measurable cost savings, Managed Print Services deliver additional benefits that, while less tangible, still contribute to overall ROI. These include reduced downtime, improved data security, and greater employee productivity.
For instance, faster issue resolution and proactive maintenance reduce disruption, while automation frees staff from administrative tasks. Enhanced security lowers the risk of costly data breaches or compliance violations.
Although it may be difficult to assign exact financial values to these factors, they play a significant role in improving business performance and should be included in ROI discussions.
Analysing the Payback Period
The payback period indicates how long it takes for savings from MPS to cover the initial investment. Most businesses begin to see positive returns within the first year, particularly if their previous printing practices were inefficient.
Calculating the payback period helps decision-makers understand when the investment becomes self-sustaining. For example, if an MPS contract costs £10,000 per year and generates £15,000 in annual savings, the payback period is less than 12 months.
After this point, the organisation continues to benefit from ongoing cost reductions and efficiency gains.
Evaluating Long-Term Financial Impact
ROI should not be assessed solely in the first year of implementation. The financial benefits of MPS often increase over time as optimisation continues and equipment efficiency improves.
Replacing outdated devices with modern, energy-efficient models further reduces operating costs, while continuous monitoring identifies new areas for improvement. Predictable monthly costs also enhance budget control and eliminate the surprise expenses common in unmanaged environments.
Tracking ROI annually provides a clearer view of how MPS contributes to sustained savings and operational stability.
Measuring Operational Efficiency
A complete ROI assessment includes productivity and workflow improvements as well as direct cost savings. MPS reduces the administrative time spent ordering supplies, resolving printer issues, and managing multiple vendors.
By freeing up IT staff and office personnel to focus on core responsibilities, the organisation gains measurable value from improved efficiency. Quantifying this time saving in financial terms strengthens the overall ROI calculation and demonstrates the broader impact of managed printing.
Monitoring and Reviewing ROI Over Time
An effective MPS partnership includes regular performance reviews and reporting. These reports provide visibility into usage patterns, cost trends, and sustainability metrics. By comparing these reports with the original baseline, businesses can track ongoing ROI and identify further optimisation opportunities.
Adjustments can be made as print volumes change or as new technologies are introduced. This continuous improvement approach ensures that ROI remains positive and that the service continues to align with business goals.
Frequently Asked Questions (FAQs)
Why is it important to calculate ROI on MPS?
It helps businesses understand the financial value of Managed Print Services and supports informed decision-making about future investment.
What information is needed to calculate ROI?
Accurate data on current print volumes, costs, maintenance, supplies, and energy usage is required to establish a baseline.
Do all MPS contracts deliver positive ROI?
Most do, particularly where previous print environments were inefficient or lacked control. However, ROI depends on usage and service scope.
How soon can businesses expect a return on investment?
Typically within 6 to 12 months, depending on print volumes, contract structure, and the level of existing inefficiencies.
Does ROI include environmental or security benefits?
Yes. While difficult to quantify precisely, these factors contribute to overall value and long-term cost avoidance.
Conclusion
Calculating ROI on Managed Print Services allows businesses to measure the tangible and intangible value of a managed approach to printing. By considering both direct cost savings and broader operational improvements, organisations gain a full understanding of how MPS supports financial efficiency and business growth.
A clear ROI analysis provides the evidence needed to justify investment and track ongoing performance. With accurate data, regular reviews, and a structured partnership, MPS delivers not just immediate savings but long-term value that continues to grow over time.