As an attorney, the vast majority of business and church executives I talk to dread their copier lease expiring as they must deal with leasing new ones. Recently, we helped a church with a multiple copier transaction and those sentiments were reiterated numerous times. The church picked their vendor of choice after three vendors did an analysis of the church’s situation and gave proposals. The church wanted to insure they had a fair deal that fit into their budget, in addition to insuring the terms and conditions did not favor the vendor or leasing company. Simply put, they did not want to be taken advantage of.
In most cases, the cards are stacked against the customer for a number of reasons. The primary reason is experience. Many times, the copier salespeople have completed hundreds, if not thousands of copier lease transactions and the customer has completed a handful over their career. It is important to understand the areas of concern and to negotiate out the problematic clauses. Additionally, the copier industry is under tremendous pressure to increase profit margins as copier units and pages are down. This creates an environment where customers often leave money on the table. The copier industry has a saying: “There is margin in the mystery.” Understanding how the copier business runs will minimize or eliminate the mystery and get you a better price.
After being in the copier industry for over 25 years and a licensed attorney in the state of Washington since 1986, I have helped numerous customers achieve a better price while minimizing exposure and cost erosion over time. Some areas for you to focus on when leasing copiers:
- Annual increases in service and supply costs. In the copier industry these are known as “escalators” and they are present in the vast majority of template contracts/leases used by copier companies. Copier vendors are seasoned at explaining these clauses (when you bring it up) in a way that allows the clause to remain in the contract. Vendors have a tough time convincing someone with industry experience that this is anything other than a built-in profit center.
- Interim Rent. Most lease companies work on billing cycles. Depending upon when you take delivery of your copier(s) as it relates to the billing cycle could cause you to be charged interim rent. It might not sound bad but what this really means is you could pay for almost a full extra month and are not given a better lease rate, i.e. Interim rent plus 36 months of lease payments for a 36 month lease rate.
- True up clauses. These clauses allow the vendor to charge you if you use more toner than is called for by the manufacturer’s specifications. Depending on your page fill, this can be a lot of additional cost. Your initial cost savings projections may erode over time with this clause.
- Evergreen clauses. These clauses extend the life of the contract unless proper notice is given. In the past, the Evergreen clauses renewed for the same length as the initial term. Today, most are 30-90 days but customers need to understand how proper notice is given and minimize the Evergreen term.
- Minimum volume commitment. The cell phone “minute” packages, which most of us are familiar with, are structured very much like the copier “minimum page” packages in that they bundle “minutes” or pages in a monthly base commitment. If you do not hit the minimum usage, in essence you have overpaid. Compounding things, many times the “family” plan is not used so individual copiers may run under their minimum while other copiers run over their minimum. This creates “overages” to be paid while the total fleet of copiers when the volume is aggregated would have no overages. The key here is to negotiate the same price per page with no minimum commitment as you would get with a minimum commitment.
In summary, experience is the key to getting a better price and minimizing or eliminating exposure areas. We have built a business partnership model to help customers achieve these goals using a contingency fee structure: if there are no savings, there are no fees. Our average savings is 19%. Additionally, the return on investment of all fees is immediate. Recently, a church in Florida took advantage of our services saving 21% and their case study can be found on the reference page of our website. For more information, visit us at Xippa.net.