We met up with an oil company and they had 4 copiers leased. 2 copier leases ended in the summer of 2015 and 2 copiers leases ended in the summer of 2017. The client was looking to swap all the copiers with new devices. It is always challenging in a situation like this. Today’s blog, I will go into what makes this complex. Helping you understand how a copier lease really works.
If I lease a copier to a client, then there are some things that happen. 1) We choose which copier makes sense for their application. 2) We get a timeframe for the lease nailed down. 3) We get a lease price to the customer. 4) The customer signs the paperwork, which allows us to order the copier 5) The customer signs a document that says they got the copier 6) We get paid by the bank the full price of the copier (like if the customer paid us in cash or a check) – So, once a copier is leased, there is generally a bank on the backside who paid for the whole copier lease up front and who is motivated to get all their payments from the client.
A client may realize they have grown or shrunk in their operation size, this is generally where the issues come in. Let’s say the client had 5,000 color prints a month when they leased the copier, then decided to go paperless and doesn’t need a copier now. They call their copier company to see about getting rid of this copier in year 2. The copier company would not have ordered the copier had the client not signed the lease. The client thinks they can just turn it in and all will be good.
Here is why that won’t work for most copier leasing companies
- When calling to take away the copier, you are telling the copier company, you want to end the business relationship. Maybe their cost was 5 cents per color sheet and they are charging 7 cents a sheet. That 2 cents times 5000 on the lease is $100 a month in profit. They use this money to pay their staff and the phones, etc. Just giving that away when there are still 3 years left on a lease is basically giving away $4000. That is hard for most businesses to swallow. It gets even more complicated as they have quotas with the copier manufacturer to be able to continue representing their products.
- Most companies call with the wrong vibe – rather than, “hey, is there something we can do?” – The more common call is “hey, you are ripping us off, what are you going to do about it? I am going to tell everyone you are a slimeball” – Hard to want to help someone out with that energy.
- The copier company doesn’t get copiers for free. In fact, most of us run on rather tight margins these days. If a copier cost you $9000, it cost us $8000 or so. We pay our sales rep $500 and there is very little left for the company. To ask a company who only made $500 on a sale to lost $4000 later, just doesn’t add up to most of the copier guys I know.
What Can You Do?
- The best advice is to avoid signing up for that plan that includes 5000 color prints in it. If you need to cancel it all, that $350 a month will be a huge source of conflict. You should be able to get about the same copy charge even if you don’t include any copies in your contract.
- Don’t lease a big machine if you plan on going paperless soon. You could get a desktop model so you are only out $1000 or $2000 rather than $8000 – $10000.
- Understand what a lease is. Understand why you would want to lease a copier in the first place.
If you want to discuss a copier lease for your organization, please give us a call today!
What happened to the oil company? Well, we are talking about doing a lease buyout, but that will be difficult because there are still 3 years left on 2 of the copiers. They may pay a premium to do that. We would recommend riding out the first lease to a closer date and then doing a lease exchange – the normal rule of thumb is when there are 6 months or less remaining on the current copier lease. We always try and educate our clients what is in their best interest, but believe it or not, often people don’t take our advice and just do what ever they wanted and pay extra to have it their way. That makes sense when convenience or another factor matters more than costs do.
Give us a call and we’ll shoot straight and explain what is going on with your copier lease.