Understanding the True Costs of Operation of your Printer, Copier or Multifunction Device
Do you really know what your actual office printing costs really are?
No worries, the segment below, will help you find out exactly what your costs really are, and even better, they will arm you with the tools you need to make safer office technology investment choices moving forward.
When evaluating the acquisition of any Office Equipment such as a Copier, Printer or Multifunction Device it is important to review and analyze ALL of the following variables:
1. Purchase vs. Lease
– When determining whether you should buy or lease a Copier, Printer or Multifunction Device, many factors need to be considered. Below are some of the pros and cons of buying and leasing a Copier, Printer or Multifunction Device. Please note that it is always important for you to check with your Accounting Professional to help determine which option is best suited for you:
Pros of Leasing a Copier, Printer or Multifunction Device:
- Leasing a Copier, Printer or Multifunction Device provides flexibility in upgrading to newer equipment at a later date, prior to the maturity of the contract. Most leases are structured so that the entire lease payment is an immediate deductible business expense, thereby reducing the overall net cost of your lease. Additionally, a lease is generally easier to obtain than a business loan. Lease payments may also be lower than they would be for a loan, as you’re only paying for part of the asset’s life.
- If your business is short on cash or if you want to conserve your cash flow, your best option might be to lease. You can also lease to get “more Copier, Printer or Multifunction Device” than you could afford if you were purchasing. On a lease you only pay for the term you select. In most cases the leasing company takes the unit back after the lease expires. Last, but surely not least, most leases include Equipment, Maintenance and other services in a single price.
Cons of Leasing a Copier, Printer or Multifunction Device:
- A lease payment includes an interest component that a cash purchase would not include. Furthermore, keeping track of all the equipment over the term of a lease can be difficult – leasing requires strong asset management skills, especially if the unit is ever moved from one location to another. Be careful for Lease Agreements that may include automatic term renewals, when no selection has been made prior to expiration. Some automatic renewals can extend for a year.
Pros of Buying a Copier, Printer or Multifunction Device:
- If you have the cash to buy a Copier, Printer or Multifunction Device, you could save considerable money over the entire life cycle of the asset. Ownership and tax breaks make buying appealing; as you may be able to expense the entire cost of the Copier, Printer or Multifunction Device buy in one year.
Cons of Buying a Copier, Printer or Multifunction Device:
- The initial cash outlay for a Copier, Printer or Multifunction Device is often cost prohibitive for a small business owner. Technology evolves fast in this segment, so when buying a Copier, Printer or Multifunction Device, you run the risk of obsolescence. As a result the re-sale value of your Copier, Printer or Multifunction Device will be limited.
2. Technical Specifications
– Speeds and Feeds are important, but they even more important understand the Optimum Monthly Volume Range for the new device. Do not be fooled by the equipment’s published Duty Cycle as this could be a very misleading figure when considering your monthly volume. Other important specifications to compare would be, Printing Speed, Automatic Two-Sided Printing, Paper Capacity, Media Sizes, Media Weights, Print Resolution, Finishing Options (In-Line Stapling, 3 Hole Punching, etc…), Scanning Options & Fax Options
3. Contract Length Term
– Most financing companies will allow financing for the following terms: 63 / 60 / 48 / 39 / 36 / 24 / 12 Months. Contract Length Terms are a matter of customer preference, however it is important to understand that longer terms will provide you with a lower monthly cost but with a longer commitment time as well.
4. Purchase Option at End
– FMV (Fair Market Value) or $1 – Your Accountant will be the ideal person to guide you on which PO to choose. Some basic questions to ask yourself in an effort to identify which option is best, would be: Do I want an Operating Lease or Capital Lease? Do I want to own the asset at some point, or do I prefer to always upgrade to the latest in technology? Do I want the lower lease payment available with a balloon at the end?
5. Maintenance Plan Options
– A maintenance plan or warranty for your device is a MUST. It is typical for all Office Technology devices regardless of their manufacturer to require service at least once every couple of months. Therefore, you do not want to run the risk of not having maintenance coverage or warranty as parts and labor can get really expensive, really fast.
Always find out exactly what your maintenance plan covers. A complete maintenance plan should always include, all parts and labor, service on site, and should support you from 8:00AM to 5:00PM Monday thru Friday.
Watch out for contracts that allow price escalations on your maintenance plan, as some could increase anywhere from 10 to 20% every year.
6. Service & Support
– Probably one of the most important aspects of your investment should understand the service and support you will receive and how that relates to your expectations. A few great questions to help you determine if you will get the service and support you need would be: How many trained Technicians support my product in my geographical area? At what point is the Technician expected to arrive after the service call has been placed? Where is the parts warehouse located? What % of the parts does the Technician carry with them on their van? What are the average years of experience for Technicians? Is Service performed on the same days the call is placed? If not, when? What options do you have, if the unit continues to break without resolution?
Is Service performed by the Manufacturer? Are all parts genuine manufacturer parts? Be careful with Service Providers who use replacement parts instead of OEM to cut costs.
7. What is the Cost per Print and or the Cartridge Yield? (When Supplies are purchased separately)
– Did you know that all cartridge yields are stated on 5-7% coverage? Chances are, your average office documents have at least 20% coverage. This is the most neglected and misinformed area when making a decision. In a lot of cases, businesses will incorrectly base their decisions on the cost of the ink or toner cartridge. This could end up being a very costly mistake. The true exercise should be done based on the Cost per Print. For example, if the Ink Cartridge costs $79.00 and its stated yield is 2,000 prints, the average cost per print, will actually be around $0.049 (almost a nickel!) as the cartridge is more than likely to yield about 1,600 prints instead of the stated 2,000.
Therefore when finding out the actual supply costs for a Printer, Copier or Multifunction Device perform the following formula:
Cost of Toner / (Stated Yield X 80%) + Cost of Drums / (Stated Yield X 80%) = Average Cost per Print (Multiply your ACP times your Monthly Volume and you’ll get a more accurate figure of what it will cost you)
For example: If an MFP has the following components, the formula would look as follows:
|Yellow Toner||$49.00||Stated Yield –||900|
|Magenta Toner||$49.00||Stated Yield –||900|
|Black Toner||$49.00||Stated Yield –||1,200|
|Cyan Toner||$49.00||Stated Yield –||900|
|Drums||$29.00||Stated Yield –||10,000|
|Maintenance Kit||$149.00||Stated Yield –||50,000|
(49.00 / 720) + (49.00 / 720) + (49.00 / 960) + (49.00 / 720) + (29.00 / 8,000) + (129.00 /40,000) = $0.26 (Over a quarter for each color print). Therefore if your volume is 3,000 prints per month at $0.26, you would be spending $780 on supplies alone!
8. Are Supplies Included or Not?
– 9 times out 10, you will save money by having supplies included. By having them included you no longer have to worry about how many prints are included in the cartridge. You would only save money on buying supplies separately if your document applications have very low toner coverage, and this is rare.
9. Hidden Fees
– Always, read the fine print. Throughout my 19+ year career in this industry, I have seen many customers get burned with contracts and fees that unfortunately nobody bothered to explain or point out at the time of the sale. Such “hidden” fees can include but are not limited to:
- Invoice Fees
- Processing Fees
- Late Fees
- Delivery/Setup Fees
- Sales Tax
- Documentation Fee
- Property Tax
10. Terms & Conditions
– Did I mention to read the fine print? There are many items to review, but be especially on the lookout for the T&Cs that cover the following areas:
- Fixed Pricing on the Lease, Maintenance & Cost Per Prints for the Entire Term
- If Supplies are Included, do they include staples?
- Is there a Satisfaction Guarantee?
- Are Analyst Services and Training included?
- Are Security Deposits Required?
- Are there Auto Renewals at the end of the contract? If so, what is the automatic renew term? Be careful, I have seen auto renewals for an entire year.
We are a different kind of company, as we truly care about You, Your Business, and Your Bottom Line! Perhaps this is one of the reasons why we are able to build customer relationships for the long term.
Contact us to request a complete print assesment of your office today before you make any long term commitments. Our experienced consultants can help you make a decision based up your custom business needs and objectives. Our commitment to you is to deliver fact based results so you can be comfortable and completely satisfied with your decision on your organizations next office system.
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