How important is a service contract?

[openletter]

I'm looking at purchasing a slightly used Konica C1060 or C1060L and am curious how important everyone thinks it is to have a service contract. I've seen that they can be quite pricey so I want to understand what they include. What do you think about about using a third party which charges considerably less to repair? Basically, I don't want to get to a point where my cost per print significantly increases due to a service contract.

 

[gordo]

I'm looking at purchasing a slightly used Konica C1060 or C1060L and am curious how important everyone thinks it is to have a service contract. I've seen that they can be quite pricey so I want to understand what they include. What do you think about about using a third party which charges considerably less to repair? Basically, I don't want to get to a point where my cost per print significantly increases due to a service contract.

I can't speak to that particular device - however, as vendors continue to lay off service technicians there seems to be a trend in the industry for those technicians to become self employed and directly service the same customers they did when employed by the original vendor. I would certainly investigate what third party service support is available in your area and ask for, and contact, references. Then compare that to what you would get with a service contract. You might at least get service maintenance from the 3rd party but major work done by the dealer on a pay as you go basis. If you're buying used from a Konica dealer then, IMHO, you should expect the printer to come with some kind of limited warranty.

 

[dabob]

Our opinion is that if, given the option, for software and or hardware support it depends on the device . .. for our Heidelberg ProSetter we opted for the software only option and have been rather lucky that the hardware is very reliable. But for our Digital presses, we've had Indigos, Xeroxs, and now a Ricoh we just go with the total package paid by your click charges . .. you know exactly how much your per piece is and can figure out your pricing soooo much easier.

 

[Craig]

Very important. Everyone gets so caught up in click charges, but reality is even presses have a cost per print.

 

[pippip]

If you're only starting out in digital I think its crazy not to get a service contract.

 

[Slammer]

Tough question. Methinks the answer is do you expect to get your money´s worth out of a service contract? Some customers have a big-ass service contract, pays 1500 per Month and have never needed it, others have needed it and found out that they paid a heck of a lot of money only to find that the service contract doesn´t have the needed service included and they have to pay extra for a "Gold" service contract. For other customer it was the right thing at the right time. I would say that in 70% of all installations a service contract will be more expensive in a longer run than getting techsupport out and paying issue by issue. A service contract is a two edged sword and like an insurance you are betting that something bad is going to happen to you, or in other words: "Do you feel lucky?"

 

[easiprint]

Tough question. Methinks the answer is do you expect to get your money´s worth out of a service contract? Some customers have a big-ass service contract, pays 1500 per Month and have never needed it, others have needed it and found out that they paid a heck of a lot of money only to find that the service contract doesn´t have the needed service included and they have to pay extra for a "Gold" service contract. For other customer it was the right thing at the right time. I would say that in 70% of all installations a service contract will be more expensive in a longer run than getting techsupport out and paying issue by issue. A service contract is a two edged sword and like an insurance you are betting that something bad is going to happen to you, or in other words: "Do you feel lucky?"

Disagree with you on a digital press service contract. Surely you are always using it as you pay per click you do and everything is included?

In my opinion, on a digital press, a service contract is always worth having. When I got my first digital press, I never had a service contract, and what you find is you let quality issues go slightly so you can get away with not replacing a drum straight away if it develops a problem. You think is that line so bad it needs a £300 drum changing now or will I get away with it for a bit longer? Your customers will notice! You end up sending out sub standard work to save money replacing parts now, so you get as much life out of parts as possible. On a service contract, you know every print will be good, as all the parts are covered so you change them as soon as a quality issue occurs. Also, you know exactly how much every print will cost you, so there is no guesswork to costs and toner usage.

 

[Mark]

Service is everything with digital "presses" we have service guys in everyday some weeks.

 

[MailGuru]

Don't even think about it!

First, in some instances where a major component needs to be replaced (not normal consumables) the replacement price can go in to the tens of thousands of dollars. Like Slammer eluded to, "Do You Feel Lucky?"

Secondly, if you are paying a per page click charge, your pricing is much easier. You know exactly what each page costs you. Without it, you are just shooting in the dark. For example, your technical specifications on your toner may say you should get 10,000 images per cartridge, your drums 50,000 images, your fuser, 40,000 images, etc. But, are you really? Have you clocked it yourself? Those yields are "estimates" taken at 10% coverage on an 8 1/2 x 11 sheet. Oh, and that one component that needed to be replaced that is not part of the normal consumables, yes, the one that never should have to be replaced. You remember, the one you had to stroke a $15,000 check for? How are you going to compute that in to your pricing?

Thirdly, without a per click service contract, you lose your "up-time leverage". You see, if a vendor is getting paid for each page that you print (a click charge), when your printer is down, and, not operational, they are not making any money. They need to get a service technician to you as quickly as possible to get that machine up and running and generating revenue again. You will find, that, with an independent 3rd party technician, his current work load will dictate how fast he can get you up and running again. That may be days, or, even weeks before he can get to you.

We would never think of having a digital press without a service contract. Just last year, we had a problem with an EFI Fiery Hyper RIP on one of our Versant 2100's. They ended up having to replace it to fix the problem. I saw the technician's paper work back to Xerox. That RIP cost them $75,000 to replace to get the machine back up and running. Our cost: $0.00 (because we had a service contract)

 

[MailGuru]

I would say that in 70% of all installations a service contract will be more expensive in a longer run than getting techsupport out and paying issue by issue. "

I disagree. These are "digital production presses", not big hunks of iron offset printing presses. The older your machine gets, the more it will need to be serviced. It's just the nature of the beast. If anything, it's usually the vendor who has found themselves on the short-end of the stick by agreeing to a click charge that was fine in the beginning, but, now is spending more on keeping it running than the revenue they are receiving from the click charges. Which, is why, as your machine matures, the sales arm of that vendor is authorized to give you such big deals such as trade-in allowances, low low click rates, end of quarter discounts, end of year discounts, etc. to get you to move to a newer model that costs less to maintain

 

[dabob]

I disagree. These are "digital production presses", not big hunks of iron offset printing presses. The older your machine gets, the more it will need to be serviced. It's just the nature of the beast. If anything, it's usually the vendor who has found themselves on the short-end of the stick by agreeing to a click charge that was fine in the beginning, but, now is spending more on keeping it running than the revenue they are receiving from the click charges. Which, is why, as your machine matures, the sales arm of that vendor is authorized to give you such big deals such as trade-in allowances, low low click rates, end of quarter discounts, end of year discounts, etc. to get you to move to a newer model that costs less to maintain

Gotta agree with ya Mr. Mail . . . We've been around since 1977 and are capable of doing 98% of the maintenance on our "big hunks of iron" but even though I have a degree in electronics I wouldn't even consider not having a service contract on our digital presses. If you have a local (very local) 3rd party qualified technician which will be available within 4-6 hours of your trouble call it MAY work out . . if he also has a garage full of parts for your version of your machine, the service manuals, and computer software with which to test the machine . . . which I find highly unlikely, especially if you get a hold of one of the latest machines. The technology changes so fast that most 3rd part techs are just not up to quickly responding and repairing todays digital machines.

Like I said before we opted for software support for our Heidelberg Prosetter(s) we now have two - just because of that (no hardware support) and we can afford to be down on one of the machines for a couple of days or even weeks while we look for a part. Which, by the way, just happened this year . . but thats a story for a different time. I know that we cannot afford two of our current digital presses nor do we have the square footage for two of them . . . and with our turn around requirements it has to be up and running virtually all of the time.

If you base your production pricing on click charges you will never be without a machine or with a machine that is outputting work that is sub par which will end up destroying your relationships with your customers . . .

So to paraphrase Dirty Harry . . . Do Ya Feel Lucky????

Because IMHO thats what you would have to be to make a business on one of the digital presses without a service contract . . .

 

[arossetti]

To answer OP's question about the Konica 1060 would be get a contract. But for general philosophy I think it also matters if you are talking about entry level production equipment like any canon, ricoh, KM, Xerox Versant or full production like Indigo, iGen or Nexpress. The latter 3 you might be able to do without a service agreement if you have an operator with over 5 years of experience, a source for parts, and a large budget for when something does go wrong. Also matters if you are printing billing statements or high end work.

 

[Puch]

I agree with the majority here, who said a service contract is a must. Changing the parts in today's digital machines is essential to keep the quality as high as possible. In two years the technicians managed to change ALL the parts in our brand new KM C1085, only the chassis remained the same. Two main board failures which would cost us 6000-7000$ each. Drum changes like we change our socks after a squash match. Coronas flying to the recycle bin like toothpicks.

By the way, the C1060 is said to be an excellent machine for the price, but it's "eating the drums" - as one of our techs said.

 

[openletter]

Very helpful. Thank you.

To take this a step further, when would you say a service contract isn't necessary? Is it just based on someone's risk tolerance or is it more a function of the complexity of the machine? I'm wondering if I get a smaller machine, if I need a service contract.

 

[MailGuru]

Very helpful. Thank you.

To take this a step further, when would you say a service contract isn't necessary? Is it just based on someone's risk tolerance or is it more a function of the complexity of the machine? I'm wondering if I get a smaller machine, if I need a service contract.

IMHO, that would be a combination of your risk tolerance and the replacement cost on the machine. Some low-quality, cheap machines are basically just "run it in to the ground, trash it and buy another one".

But, the real question is why are you opposed to a per click service contract? It's like postage. It's a "pass-thru" cost. If my click charge is $0.05 per page, I figure $0.075 per page for that portion of my pricing calculations.

Pretty much anyone who is running a decent digital press has a click charge, whether you're paying it as a "click charge", or, as a per page cost of buying toner, drums, fusers, core-trons, etc. In other words, there is no competitive advantage of not paying a click charge over an operation that is paying a click charge.

 

[MailGuru]

@ openletter: In your OP, you indicated that the Service Contract was "quite pricey". What the sales people don't want you to know is that those service contracts are negotiable (within reason). If you ask for a price, they will give you one. If that price doesn't work for you, then negotiate it, or, the terms, to get it as close as you can to what you need it to be. Since the click charge is a pass-thru cost (a wash-out), I can only assume that what you don't like is some type of monthly base charge in addition to the clicks. We don't have a monthly base charge on ours (Xerox Versant 2100's), but, that may be because our volume is such that they are assured of meeting whatever the base might be.

For instance, (and, I don't have any KM color equipment, so, I don't know what their standard click charge is) if the are saying "$500 per month plus a $0.04 per sheet click charge" you counter with "ok, what if we up the click charge to $0.05 and no monthly base........". A lot of these guys will negotiate, you just have to put it out there.

Also, with whatever vendor you go with, try and negotiate a "fixed" click charge that doesn't increase every year. It may cost you an additional $0.01 each in the beginning, but, you'll save money on the long haul.

 

[DannyB]

From what I know of our Indigo the service charge and click charge are two different things. We have a yearly service charge that we pay for tech support and parts. The click charge is simply for consumables. I would never consider getting a digital machine without both. My tech is in here constantly fixing one problem or another and I have looked at the price of consumables without the click charge they purposely price them so high it would be unimaginable to buy them out right.

 

[dabob]

From what I know of our Indigo the service charge and click charge are two different things. We have a yearly service charge that we pay for tech support and parts. The click charge is simply for consumables. I would never consider getting a digital machine without both. My tech is in here constantly fixing one problem or another and I have looked at the price of consumables without the click charge they purposely price them so high it would be unimaginable to buy them out right.

Danny . . . you are correct, Indigo is different in many ways than the rest of the digital vendors. I had an Indigo for 8 years and about 7 years ago went to a Xerox machine and now to a Ricoh and really like what we are getting out of the dry toner machines. That being said I still believe that Indigo sets the mark for the digital press market and the price it accordingly.

Dry toner is quite acceptable for my customers . . .

 

[AugustaPC]

We are being forced to go without a service contract on a couple of used Ricohs we just ordered.We are going to be doing some in-house marketing and Ricoh's service contract they offered would have cost us $9,000 on top of toner costs each month. Even though we got the per click cost down to .0425 it still made no sense as we could nearly buy a new printer each month for what they wanted. Instead we went with another dealer in town on a per hour + parts basis. While I wish we could have had an all inclusive service contract, we don't have a consumer to help absorb that cost.

 

[MailGuru]

We are being forced to go without a service contract on a couple of used Ricohs we just ordered.We are going to be doing some in-house marketing and Ricoh's service contract they offered would have cost us $9,000 on top of toner costs each month. Even though we got the per click cost down to .0425 it still made no sense as we could nearly buy a new printer each month for what they wanted. Instead we went with another dealer in town on a per hour + parts basis. While I wish we could have had an all inclusive service contract, we don't have a consumer to help absorb that cost.

You mean $9,000 per month? Or, $9,000 per year? ($750/mo plus clicks)