We can start with the basics. And then we can go from there into some of how to save money and other things like that.
How to Acquire a Copier
So the first thing is a corporate lease is a way to acquire a copier. You can also purchase a copier. Lastly, you can also rent a copier, or you can lease a copier.
And then on top of the leasing plan, you’ll have a supply and service plan, which will take care of the following:
- and more.
So what we’re talking about here is the getting of the physical equipment into your office.
So getting, let’s say, for example, this Xerox CAD 30, and you want it in your office. This lease is a way to get that in there without putting $6,000 or $7,000 down, plus having a monthly payment of $130 to $150 a month.
How to Calculate Your Copier Lease Rate
The first thing to know is there are tables. When we’re making a copier sale, we’re looking at a table kind of like this:
A Fair Market Value lease means that at the end of the contract, the copier gets returned to a warehouse, and then you’ll be responsible for the shipment of the copier to that warehouse. You’ll complete your lease at the end of the term.
We also have a $1 Purchase option, which means at the end of the lease, you pay a dollar, and the copier now belongs to you.
You have different rates basically because, on the Fair Market Value lease, they’re giving the copier back, and there’ll be a value to that. The $1 Purchase Option lease lets you keep the copier, which is gets factored into the numbers on the table.
What you end up doing is you will take the amount that you’re financing. So let’s say it’s $7,000, and you are going to do a five-year lease. You would be in the $3k to $10k band right here. And so you multiply by 0.0195, And you would end up with about $136.50 on a fair market value lease.
On a dollar out lease, you would do the same thing. You go to the 60-month term, and you see “0.0208.” So you would go $7,000 x 0.0208, and that’s $145.60. So about $9 per month difference. And then $9 x 60 is $540, which is about what it costs to ship it back at the end, anyway.
So, I would tend to do the $1 Purchase Option because then I have an option to run it further afterward. If it’s still running great, I could sell it on Craigslist or use it as a backup.
Other people want to have the payment as low as possible. And they’re going to depend on the copier company to take care of that shipping fee, which will get rolled into the next lease, at the end of the contract.
So that’s two different ways to do a copier lease. And as you can see, there’s these different stairsteps. And so between $1 and $3,000 has a different lease rate factor than between $3,000 and $10,000.
So technically speaking, if we go $2,999 x 0.0235, and that would be $70.47. But if you go $3,000, so you just raise it $1, then that’s $58.50, so it’s $11.50 a month and almost $700 total. So that $1 difference in price makes a $700 total payment difference.
We try to focus on how we make sure that you’re in the right part of the stairsteps so that you can get the best rates possible.
Technically, it may mean adding a hundred dollars to your cost to ensure that your price goes down based on the lease rate factor.
And the next you’d want to know is usually on any of these leases, towards the end of the lease, they have a clause that will do an automatic renewal. And so it’s always good to mark that into your calendar system that will let you know 60 or 90 days before the end of the lease.
You don’t want to automatically renew the year-long copier lease because you’ve already paid for the copier, and now you’re just basically giving the bank extra money.
So it’s pretty much always a bad deal to renew. If you do it a month or two, it’s not the end of the world. If you start doing it for a year, that’s just wasted $1,400 – $1,500.
So I like to have a reminder put into the calendar that lets me know on month 56 that we’re coming to the end of that lease. Ensure that you give the appropriate notifications because there’ll be a clause that says that if you don’t renew within a specific timeframe, you’ll have to keep it for maybe another three to twelve months depending on how it’s written.
Automatic Escalation Fees
One of the other things I try to look for within a lease is automatic escalations.
What an automatic escalation is, is it’s going to take the number like where we had here, $60 a month for that $3,000 copier, and it’s going to say, every year we have the right to raise the lease rate a particular percentage The standard percentage is somewhere around 10%.
So the $60 a month will go to $66, and then it’ll go $72, then $78, then $84. So by the time we hit $84 a month when the rep comes back around, it’s easier to say, “Hey, we can get you into another copier for just $60 a month, basically where you were though at the beginning.”
If you didn’t have that escalator, it would be harder to roll the next copier in because that escalation makes your lease payment higher each year. So I always would avoid escalation fees.
It’s easy for most copier companies to take that out of their contracts. We’d always recommend that when you lease a copier that you make sure you don’t have an escalation fee.
And be sure to mark down when the lease is supposed to expire.
The next thing I would pay attention to is the idea of coverage limitations. That’s on the supplies and service agreement.
So, each copier is rated to do a certain number of pages per toner cartridge.
So if you think of it like each toner cartridges is like a gallon of milk. Each page comes out and expecting that you’re going to get so many cups of milk out of each gallon because a cup holds so much fluid, and you can multiply that out and determine how many cups of milk you’re going to get. They use the same kind of logic for pages.
So you have a toner cartridge, which has a bunch of toner in it. And each page that you print is going to utilize a certain amount of that toner. And it’s based on a recovery trait, and usually, that’s 5% per color. So the color is 20% because there’s four colors, cyan, magenta, yellow, and black. The black and whites 5% coverage is a typical industry average because it’s only black. There’s no cyan, magenta, or yellow to take into account.
What happens on some leases or some service plans is that if you exceed 5% or above 20% color coverage, then there can be a multiplier added to compensate for the toner usage. So if it turns out that you’re averaging 30% or 40% coverage, instead of 20%, your color rate can rise by 1.5 to 2 times. Check to see if there’s a penalty if you exceed a particular percentage within your coverage.
And so that’s something else that we look at and try to make sure that, you know, if you’re going to lease a copier that you’re paying attention to your coverage, or getting ideally a lease contract that does not have a penalty on color coverage.
What to Look For in Overage Charges
You also want to see what your overages are. Overages technically should be lower in price, not higher, if you exceed the base.
What will happen on a base is that you’ll get a certain number of prints.
So we can use an example of 10,000 prints. Let’s say they’re all black and white just to make it simple. And they’re a penny apiece, so it’s a hundred dollars a month, and you get 10,000 prints. And then once you exceed 10,000, you get billed per print for any that you do over 10,000. So if you do 11,000 prints, then the last thousand would be charged at the overage rate.
Often, I’ve seen that people will make the overage rate higher than the base rate, which doesn’t make sense because most of the service should be contained in the first part. And the overage should be cheaper because the service is already included in the base. And because the copier company is going to want to make sure that their service department is whole. So they’re going to make sure that the service is in there, no matter what. And then, once you exceed that base, the service part has been handled, more or less.
Of course, the more prints to do, you will have more service calls. So there is more service expectation. So you would expect more service calls, but the cost is going to be lower because you don’t tend to find a one for one ratio there. And so if you’re at a penny per page for 10,000, we would expect that once you exceed 10,000, it should be nine-tenths of a penny or something like that. It shouldn’t be 1.2 cents after you hit the 10,000.
Keeping an eye on your base rate, then comparing it to the overage and making sure the overage is lower than your base is a good idea.
How Does a Zero Base Contract Save You Money?
I’ve noticed that a lot of customers are concerned about having zero base. Zero base would be ideal if I were buying a copier because then you’re just paying for what you’re using. You’re not paying for 10,000 prints and then only doing 5,000, and therefore your effective cost per print doubles. So I would always personally get a zero base contract unless I got a massive discount for the inclusions.
So if I went from $0.015 down to $0.01 and I was pretty sure that I was going to use 10,000 and it saved me half a penny per page, then, of course, that makes sense because I prefer to keep the $50 per month. If I wasn’t sure if I was going to do 10,000, there’s no way I would sign up for 10,000 pages because it’s like, they’ll do 3,000 in 1 month or 7,000. And in those months, I’m going to lose 7,000 pages that I purchased.
So I would always say whatever you think your minimum month is that you should do roughly 80% of that rather than signing up for your average because your average is going to fluctuate.
You’ll have some months that are higher than your average and some lower months. So, I would take my lowest month, and then multiply that by 80%. And I would use that as my base.
This way, I knew whatever I was doing, for example, if there’s a pandemic, like what we’re going through currently, and nobody’s working at the office, I’m not stuck paying for 10,000 pages a month while everybody’s gone.
So the idea is to pay for what you use, don’t pay for what you’re not using. And so that’s an essential thing also within your service contract.
Why Higher Copier Speed Isn’t Always Faster
One of the things that we see from some people is if they are looking at different products, what they’ll end up doing is getting, for example, a Xerox Altalink C8070 for $219 a month and 70 pages per minute because of speed.
And so one thing to be aware of is that sometimes these high-speed copiers, like the C8070, go 70 pages a minute when it’s fully warmed up, but it may take longer to warm up.
So, people will take a fast one because they want to go fast like this instead of a slower one. After all, they’re thinking 70 pages per minute is twice as fast as 35.
The one thing to be aware of is that many of these copiers producing 70 pages per minute, anything over 50, can often take longer to warm up. And then if it’s a small job, you’d go faster by having the smaller, more compact copier.
So it’s not always that the higher rated speed is the faster copier. One thing you need to look at is the warmup time because if you don’t factor in the warmup time, it could take 30 seconds to warm up in eight seconds for the other.
So you have 22 seconds of it being able to print, and most of your print jobs will be just a few pages. And so you could find that your day to day printing is slower by going with the faster copier.
It sounds kind of strange, but one thing to keep in mind is the more small jobs you have, the less that speed matters. The more long jobs you have, the more speed matters. If you’re doing 2,000 pages, you know, reports or 1,000-page reports, or even 200 page reports suddenly going 70 pages per minute, it starts making more sense because it takes three minutes to do that job instead of six on a 30 page per minute copier.
That’s something to keep in mind: the longer your jobs are, the more essential speed is. The shorter your jobs are, the less important speed becomes.
Duty Cycle Considerations
There are also duty cycle considerations. If it’s 10,000, 20,000 pages per month, you’re still probably going to want to go to a higher-end model just because of the print volume, not because of the speed requirements. So that’s another thing to consider.
I hope this was useful to you because you know that’s our goal here at Copy Lease Center is to provide great information to our clients. And so if you have any questions or concerns, please feel free to give us a call. We always work to get you a fair copier lease, and we’d love to chat with you. Thank you so much.
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