Despite the fact that the world seems to be moving towards being paperless, business owners will often find themselves in need of a copier. And while they’re still called copiers, they do much more than just copy these days; they can scan documents into emails or PDFs, resize documents or images, collate, staple, hole-punch, and more.
For most businesses, the question isn’t if they need a copier, but rather how to get the best deal on a copier when negotiating new copier contracts.
There are many pitfalls in copier lease contracts that organizations need to be leery of. If you’re interested in learning how copier leases work, keep reading for the six things you should know.
A copier lease is when a company, instead of purchasing a copier, rents it. The lease payment would include the cost of the copier, plus interest, divided over the term of the lease, usually 36, 48, or 60 months.
There is also a maintenance agreement, sometimes bundled with the lease payment, but usually billed separately. This would typically cover all copier parts, labor to fix the machines, and supplies (toner, not usually staples of paper).
The maintenance usually is computed as a cost per copy/print. Sometimes copier dealers include a fixed number of copies/prints into your total contract price. Don’t be fooled, you are still paying for the copies/prints that are included in your contract.
Additionally, if you fall short or don’t use those copies/prints included in your contract, you are basically paying for services not used. It is best to have a maintenance contract that either bills you only for copies/prints used, or one where you have overage charges (cost per copy fee for copies/prints over contract included ones) ensuring you are using all the copies/prints in your contract.
For most leases, at the end of the lease, the leasing company owns the machine, not you. The lessee (you) are responsible for 3 things:
Businesses have two choices for purchasing copying machines: leasing (renting) or cash purchase. When you pay cash for a copy machine outright, you’ll spend less for the machine, as you won’t have any financing fees, but you’ll have to come up with more cash upfront. With a large fleet of copiers that could be very expensive and not budget-friendly for most companies.
Additionally, you will still have to negotiate a maintenance contract for your cash-purchased machines. Those maintenance contracts will often have pricing escalators in them that would increase your maintenance costs each year — potentially to a point where they would cost significantly more than maintenance on a new machine.
This will force you to upgrade to a new machine at about the same time as someone who leased a machine. Therefore, paying cash is often not the best choice for companies if you are able to negotiate a lease-purchase correctly.
Consider these six factors to make the process more straightforward when shopping around.
If you’re still on the fence about whether leasing is the right move, you’ll be happy to hear that there are many advantages to leasing over buying. For starters, leasing allows you to use the capital cost of the equipment that would have been spent buying it on other projects.
The copier companies also offer service agreements, helping with maintenance and upkeep. These periodic payments can help you budget, and you’ll be able to avoid a large down payment upfront.
You have some options when deciding which copier lease to choose:
There are hundreds of different types of copiers out there, all with different functions and technology. Before you get excited and go with the newest, shiniest, high-tech machine available, take a hard look at what your usage will look like.
Does your business need color printing or would black and white only be ok? Do you really need an expensive sorter/stapler option? You need to make sure to select the proper size (speed) of the machine, and not go overboard with extra whistles and bells that can cost a lot of money in the end.
When considering a new lease, one of the biggest mistakes that organizations make is not making changes to the “Terms and Conditions” of the new lease. These T’s and C’s are the fine print in a lease contract that are written so that they are highly favorable to the leasing and copier companies.
There is a level of flexibility that the leasing and copier companies have in copier lease negotiations. The larger the deal the more they are likely to allow certain contract changes. If your organization would like help with negotiating these contract terms, companies like P3 Cost Analysts have experienced staff skilled in such contract negotiations. Either way, make sure to read the lease terms and conditions so you don’t get locked into an unfavorable lease.
As with most leases, there are quite a few terms that need to be negotiated and agreed upon. At the end of the day, your contract is legally binding, and you’re responsible for that monthly payment for a certain length of time. Make sure you look through your lease agreement carefully and that you fully understand all the terms stated.
Keep in mind that you can negotiate with the leasing company while discussing the terms, but always confirm that the contract reflects what was agreed upon. Here are some of the main points you should check out before signing any agreement.
There are plenty of reasons you might want to get out of your current agreement, but it can be a very expensive process. If your business has outgrown your current equipment, you might get some help in the buyout process with the leasing company’s competitor.
A prospective copier dealer may offer to buy out your current lease to secure your business with them. This is the perfect move for business owners who need to upgrade their equipment and have 23 months or less on their contract. Terms vary, but typically you will be trading your current lease for a new, more favorable one with the new supplier. In turn, they bring in your business and acquire new equipment.
For some other potential options for getting out of a copier lease early, check out our article on How to Terminate a Xerox Lease Early.
When buying a copier, it can be claimed as depreciating assets on your taxes. That being said, many leases can also be claimed similarly. For example, capital leases are often qualified as depreciating assets if they meet all the proper criteria.
Copier leases can also fall under Section 179 deduction, which can save small and medium-sized businesses some money during tax season. It’s always best to consult with a tax expert when weighing the options between buying or leasing business equipment.
Whether you’re just starting to shop around for printing services, you’re coming up on the end of your lease, or trying to get out of one early, let one of our managed print auditors help you save money. We can help you manage the cancellation of your lease without penalty and negotiate a new lease to avoid unfavorable terms for you.
If you’re interested in having P3 Cost Analysts take a look at your copier lease agreements to see what options are available to you, feel free to reach out today for a free copier contract and savings estimate audit.
Depending on your business’s needs, a copier lease might be more beneficial than buying one outright. There are some advantages to leases, like saving the capital investment and having a service agreement with the leasing company.
When shopping for leases, consider which type of lease makes the most sense for your needs, the fine print of the lease, and the tax implications of leasing over buying.
Only you can decide whether leasing copiers rather than buying them is the best business decision for your company. Make sure to consider these six factors when weighing your decision.