Things to be aware of in contract leases?

[dagoof]

Hi all,

Until now I've run a few used digital machines I've sourced online but maintenance has always been the issue - I'm pretty handy at keeping them running now but some issues are insurpassable and I have to get tech's out on a call-charge basis. However, the maintenance side of things is getting tricky (my current line of machines are being phased out) and I'm considering going contract lease. In the past I'd read some horror stories about dodgy contracts putting small print shops like mine out of business.

I believe things are better now, but I was wondering if there's any issues I should be aware of? Do manufacturer's offer a standardised click charge or is it variable?
I was considering one of KM's current lines, however, I think they're currently mid-life-cycle, so thought a 5yr lease may not be ideal (though I'm not sure if a shorter term is common?).
Is it common-place to get a trial period?

It's pretty daunting for the uninitiated so any advice that's relevant would be welcome!

 

[MailGuru]

I'm a tad-bit confused. Typically, equipment leases have nothing to do with maintenance contracts, so, I'm assuming that your post is really about maintenance contracts (not leasing a machine).

I'd say the main thing to accomplish during a negotiation for a maintenance contract would be to lock-in your click charge for an extended period of time. If you happen to be leasing the equipment, also, then, you should lock in the click charge for the life of the lease. We failed to do that on our initial piece of equipment with Xerox, and, per the terms of the maintenance contract, the click charge increased 10 to 20 percent per year (Not Good). If you negotiate a locked-in amount, it will be slightly higher in the beginning, but, will not change in the long run.

 

[dagoof]

Thanks for the advice MG - that's surprising because anyone I'd ever known who had a maintenance contract was also leasing the machine in some form, so I thought they went hand in hand!

Has anyone taken a maintenance contract on a privately owned machine? (could be worthwhile hanging onto one of mine).

 

[Yroc]

There are many options and variables to consider, but I'll throw in that getting a maintenance contract on a used printer is pretty hard and you usually pay quite a bit more for it. The sales people usually sell the contracts and the printers, and they are interested in selling you a new printer. I have a good Xerox sales guy and he realized early on that helping me grow my business might result in purchasing a new machine from him in the future, so he was actually 'pretty decent' working with me when I was looking at used machines, he still tried to throw in his deals, but ultimately he got me good contracts on 2 used machines then I bought a 1000i from him a couple years back.

Now, there are 3rd party service companies, and it is good to get quotes from them if you are looking at used machines, you can at least use the quotes to bargain with, but in my case, the 3rd party companies here had a really bad reputation, so I knew I had to have Xerox maintenance (and my sales rep knew it too.)

Once my volume grew to a certain point, which was about 20,000 impression a month in my case, it made more sense to lease a new machine with the lowest possible click rate, when you have a $.02-$.03 difference in your click charge, you can save enough to just get into a new printer.

You also have to consider if these machines are worth anything beyond the lease, IE buying the printer and not having a lease payment. I have decided that they are not and that I will always have a lease. My first printer was a Xerox 242 and I bought it, thought it was nice not having lease payment after 5 years, but my service contract rate started to climb the 10%-20% per year, so at 5 years, I owned the printer, but was paying more than double the click rate of a new leased machine...so it cost less to lease a new machine, and every machine after that I've leased...

 

[MailGuru]

Thanks for the advice MG - that's surprising because anyone I'd ever known who had a maintenance contract was also leasing the machine in some form, so I thought they went hand in hand!

Has anyone taken a maintenance contract on a privately owned machine? (could be worthwhile hanging onto one of mine).

A little known fact when it comes to vendor sales people trying to score a deal: You CAN negotiate things that have nothing to do with your new machine. Once, we needed a new black & white printer. After researching for a couple of months, the printer we needed was a KM Pro 1250. We agreed to lease the 1250 from KM with a highly competitive B&W click charge, but only if they cover the maintenance on our two older out-of lease KM 1050's at the same click charge rate. They Agreed to it. With Xerox, we've also negotiated special discounts on accompanying software if we leased their new machine. You can also negotiate deals such as a bonus of xxx,xxx number of free clicks for the first year, etc. It really depends on how good a negotiator you are, how bad they want to move the machine, and what time of year it is (end of their fiscal quarter, end of their year, etc.)

 

[dagoof]

Thanks guys, sounds like good advice - I guess I'll just need to have a talk with them!

 

[KopyBoss]

Not only lock in the click charge make sure it includes all supplies...Toner, Developer etc.