Your guide to survival when you meet a copier sales rep…
Copier. Printer. One is almost falling asleep already. Next to insurance there’s hardly anything as boring to have to be concerned about.
But you depend on the machines. And it can cost you a great deal over many years ahead if you sign a lease contract with your eyes closed.
PrintWise has more than 20 years experience of servicing printers and copiers for thousands of large and small customers.
Over the years, we have experienced so many lease contracts that we feel able to produce our own guide of points you should be aware of.
Are we objective? No, possibly not. Our guide is a generalisation. And in some cases probably we are on the borderline of objectivity. And at the same time lease contracts are individual documents where the respective companies can negotiate about conditions which their neighbour doesn’t have.
The length of your lease period
A typical lease contract runs for 60 months, 20 quarters or in simple terms 5 years. 5 years is a long time. Very long.
Bearing in mind that the lease contract contains several fixed monthly costs (lease charge, minimum number of prints, service charge, etc.), it is extremely important to examine the following simple question at least once:
What will be my needs in just 3 years from now? Will your need increase – or will it grow less?
Maybe you are expanding to more locations – which means more machines but a smaller need per machine. If so, it would be silly to have one giant machine in one place. And with a long contract period.
Residual value: will you have to pay for residual value when the machine’s lease period runs out?
When the lease terminates you must/can choose to take over your leased copier. But there are pitfalls here, too.
You may be obliged to take over the machine at a very high scrap value – the value stipulated for the machine when the period runs out.
In practice, it should be kr. 1000 – 2000 + moms as a 5-year-old copier isn’t worth much.
The usual way to reduce the lease charge (which is the figure which all customers compare) is to demand an end charge of perhaps 10-20% of the machine’s price when the contract runs out. Not many think about checking this before signing the contract. Because it’s not logical.
When the lease contract runs out you will normally be contacted by the copier sales rep, who will recommend that you lease a new machine “because the old one is much too expensive to run and service”.
If the sales rep has forgotten you, then the leasing company will contact you to tell you that you can take over the machine really cheaply. This is because the leasing company is anxious not to take the old copier back when the lease period runs out. Then they don’t have to collect it and take it to the recycling centre.
Does your copier sales rep tell you to sign a new contract?
Basically, there are several parties involved when you take delivery of a new printer/copier. The producer/distributor, the copier company (an independent sales firm), the “service provider” (the servicing company, which can be the same concern as the copier company) and the leasing company.
You’ll meet the copier sales rep, who’ll listen to your needs and negotiate a contract with you. When you have signed it he will sell on the whole contract to a leasing company so that he can get up-front his commission for the 5-year period during which the contract runs.
Now the copier sales rep is out of the picture. Probably, he has nothing whatever to do with the people who service the machine. That job is delegated.
Should you be contacted by the sales rep again – for instance after 3 years – because he has found a service company which can do the job more cheaply, then of course you will be touched that he is still thinking about you.
Then you should consider whether the sales rep hopes to get you into a new contract. Such contracts will typically run a further 5 years.
Since you have already paid for perhaps half of the machine after 5 years, it is logical that the sales rep can do it more cheaply. But you can just say no to a new lease contract, even if the sales rep tells you that they have changed supplier. Instead, contact the leasing company for clarification. Your contract is with them.
If you end up signing a new contract, do check that the end-date is the same as in the original contract – and that the other conditions as a minimum are the same or better than those in the old contract.
You are tied to a fixed number of prints, but you don’t use them all
The reason for selling the contract on to a leasing company is that the copier sales rep and the sales company can get their payment up-front and get on with making the next sale. They don’t have to think about liquidity because they do not have millions of kroner tied up in machines, to be repaid month by month.
On the other hand, this means that the copier sales rep has to produce a complete account of your case. The lease- and service-costs are fixed monthly costs, but the amount of printing you do isn’t. One month you may print 10000 pages, the next month nothing – and so on.
Such changes in your needs cannot be reflected in a contract which must be sold on to a leasing company at a fixed cost. Therefore, you will be tied to a fixed number of pages every month. So apart from being tied for maybe 5 years for the machine, then at the same time you will be tied for maybe 5000-10000 colour pages per month. And that is fixed, no matter whether you print them or not.
If you are in the situation where you would like to reduce your minimum print volume, then you have a big problem. We can’t express it in any other way. The sales rep has already sold your contract to the leasing company and got a fixed payment up-front. So that is a rather locked situation.
We have seen examples where the sales rep has agreed to reduce the print volume, but the price has been increased accordingly, so that the overall result is “no change”.
This means that if you tie yourself for 5000 pages today and you want 2500 pages in future, then the price per page will be exactly doubled.
And if you need to print more than 2500, then you must pay for the extra pages as they would no longer be included in the contract.
The monthly charge rises because the machine has become old
Your copier is no longer new. You may have had it for 3-4 years. Then the copier sales rep will call you to explain that it has become more expensive to provide servicing and that the running costs have increased.
His explanation will end with the information that if you don’t change the machine now you’ll face an extra charge every month. And who wants that?
So of course you will have a new machine – it is only a little dearer than the old one, but then it is brand new. Here you once again have to be alert.
It will end in a new lease contract for 5 more years. And it is very likely that you will carry the residual charge from the old contract into the new one. This is a vicious cycle with you as the loser.
And what happens to the old machine, for which you have been paying for years? We can’t be certain.
But we have to tell you that we most often experience that it will go to another customer and can be seen running there.
Indexed charge regulation: Your price rises by 3% per year
Is this reasonable? No.
When a lease contract is made the conditions are fixed from the start.
This means that the charge for items such as toner are locked in kroner for the next 5 years. The copier sales rep and the producer will fix this charge from case to case.
Therefore you may well wonder why your contract should have an automatic indexed increase of 3% every year. Over 5 years, this amounts to a double-digit percentage price-rise.
Coverage percentage: why must I pay extra?
Customers who print many pictures use more toner. And toner costs money.
There is a standard called ISO19798 describing how much toner is used for a particular page. All producers in the world use this standard of approx. 5%. And that is correct for normal use.
But – some lease contracts only include 3-5% toner for your prints. And that is too little! So when you use the machine normally with the 5%, then you will get an unexpected extra charge every month.
So do always check that the coverage percentage is the official 5%.
Your needs change – so you want a different copier
If you want a bigger machine then you will experience an extremely obliging copier sales rep. A bigger machine is also a dearer machine.
If you want a smaller machine, then bear in mind that the sales rep has already got his payment (see under points 3 & 4).
In other words, he has to pay for the machine himself if he takes it back. This is not likely to happen.
In plain language, you have a problem if your machine is too big and you don’t want to continue paying for it. Because you will.
If the sales rep agrees to make a new contract for a smaller machine with you, after all, then you must be extremely careful to check that the new contract is not at the same price level as the old contract.
Because then you might as well keep the old (big) machine.
You don’t need the machine any longer, and would like to return it
Here you may as well give up before you start! It is quite simply very unlikely that this will happen.
Unless you pay the leasing company the residual debt. But why should you, since you might as well keep the machine for the rest of the contract period?
Don’t even bother to phone the leasing company or the copier sales rep.
You’ll recognise the same problems in leasing cars and other machines.
Do you trust the company you are about to make a 5-year contract with?
Trust your instincts in deciding whether it’s a good idea.
Do you have 100% trust in the company you will spend the next 5 years with? Have there been problems with things which have been forgotten or overlooked, or any mistakes in drawing up the offer, or any peculiarities in your contract?
Can you actually completely analyse your sitution all through the next 5 years? Also, check how old is the company you’re dealing with
Of course there are new companies which are perfectly reliable, but several copier companies have gone bankrupt a couple of times during the last 5 years.
It pays to google the name of the manager, the company, etc., and to examine the results with a critical eye.
Remember, that if the copier company goes bust you face the risk that your machines will not be serviced or that you will not receive any toners, etc., as it is the company itself who is the service provider for the machines.
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