What is a Maintenance Contract – really, and do you need one? Well that depends on a number of factors and what type of machine it’s put on. Much of what we’ll discuss can be applied to both copiers and printers, but we’ll start with copiers.
Most new COPIERS are sold with a maintenance contract and the reasons behind it vary however, your new copier is already 100% covered for up to one full year from the date of purchase and should NOT require a maintenance contract until the year is up [BEWARE: Many NEW copiers ONLY come with a 90 day guarantee! Get this information BEFORE buying or leasing anything!]. Although some companies will require that if the machine is under a lease it MUST be covered under a maintenance agreement at all times or the lease is void and due in full immediately – MAKE SURE YOU KNOW WHAT YOU’RE SIGNING FOR!
If you purchased your copier outright, and it’s NEW, have the dealer quote you a Cost Per Copy contract now and tell them you will hold onto it to compare to their quote a year from now when your machine SHOULD be under contract – now you also have time to research other dealers who service the same brand of machine and ask them to give you a Cost Per Copy quote 4 months BEFORE your machine reaches its first birthday that way you will have it in hand when the selling dealer returns and attempts to sell you a higher Cost Per Copy contract than he offered a year ago. Now that you’ve brought competition into the maintenance contract game you’re in control of the negotiating. Bear in mind that your contract is likely to increase every year unless it is scheduled to automatically renew if you DON’T call them – if this is the case do your BEST to negotiate the lowest possible Cost Per Copy now… it will save you a LOT later. If you opt for an annual-renewable contract with signature you will most likely pay a graduated Cost Per Copy every year.
If you lease your copier you should negotiate for the lowest possible Cost Per Copy for your maintenance contract AND you should insist that it be in force for the entire life of the lease.
What you’re getting with your maintenance contract is typically; Toner, Drums, Developer (if separate), Electronic Boards, Paper Jam Service, Fuser, Rollers and any other ‘internal’ component covered (NOT PAPER) – with a simple phone call to the dealer. If you break a part on your machine, such as a panel, cassette, tray, sorter, stapler, etc. you will be paying for that out of pocket – and remember… if that machine is under a lease agreement they have the right to demand that it is in the SAME condition as it was when it was dropped off to you – including the original packaging! If you move to a new building/location make sure the dealer is aware of it immediately in order to avoid breaking your lease agreement and being legally responsible to pay it in full immediately. Most dealers will work with you, but if you’ve been a problem client they will likely do as little as possible to help you when you really need it.
Whether you’re buying or leasing a copier don’t settle for the maintenance contract listed above – do your due diligence to be a better buyer! Always ask for 2 quotes (one with and one without TONER), always get quotes from as many highly rated companies as you can find that service that brand of copier BEFORE signing one, and always READ EVERYTHING before signing!
Copier dealers LOVE to include toner in the Cost Per Copy maintenance contract, and they’ll often sell it as a great service “when you need toner all you need to do is pick up the phone and call, we’ll drop it right off to you WITH NO BILLS!” PLEASE don’t be so gullible as to buy this malarkey! The toner is the one element of the proposed maintenance contract that you can source on your own, including it in the maintenance contract is a license for the dealer to rob you blind!
Rob you blind? Yes, rob you blind… with your permission. The reason is because you are paying Cost Per Copy – in other words, once a month they will collect the page count on your machine and bill you for every copy at the agreed rate; you pay the same to copy a driver’s license as you do to copy a page from the dictionary, and if you copy onto both sides of a piece of paper they count that as 2 separate pages. No problem, right? Wrong! Your copier toner might only cost you .00167¢ per page if you bought it at Staples or direct from a dealer, but since it’s rolled into your Cost Per Copy maintenance contract you might end up paying .00643¢ per page! “Oh what’s the big deal” you ask “even the higher priced one costs less than a penny a page” you say.
Well, let’s take a look at it in money terms. Let’s say last month you blew threw the paper, sales were up (so was invoice printing), quotes were up (which needed to be printed for presentations), and you hired 5 new people to help take on the newly increased work load (which meant applications, reports, research, copies of Driver’s Licenses and SS cards, etc.). So, by the end of the month you printed 37,863 pages… that’s nearly 4 cases of paper, the most you’ve ever printed – and your chest swells with pride. Now comes the bill for all those pages:
37,863 X .00643¢ per page = $243.46 (what you paid for toner, hidden in your maintenance contract) Vs. 37,863 X .00167¢ per page = $63.23 (what you COULD have bought that same toner for!). The dealer charged you 4 times as much for that toner as you could have found it for at Staples… and it wasn’t even on sale! And that .00643¢ per page is only a portion of your Cost Per Copy maintenance contract – it’s the toner portion, but you NEVER see that because the total bill you received from the copier company was $489.00 – and it wasn’t broke out by item. The balance of that $489.00 went toward drums, boards, developer, service calls, etc. – although, since the machine is now 18 months old in all that time you have only had 5 service calls for paper jams you couldn’t get out and the dealer has not yet replaced the drum (rated for 500,000 copies), or any boards, only one developer (rated for 150,000 copies), no fuser (rated for 900,000 copies), and one set of rollers (that caused the paper jams). And if you LEASED this copier you also had a lease payment due at the same time as your maintenance contract bill – you paid $875 for something that you could have gotten for $630. And of the $2,916.00 you pay per year for the actual maintenance portion of your maintenance contract over $2,000.00 of it was pure profit for the dealer! I hope they smiled when they dropped off your “free” toner!
This is why for years now PrintCartridgePro has cautioned buyers to request 2 Cost Per Copy contract quotes; one with, and one without toner included. Provided in advance of a purchase or lease so that you the buyer, can research the cost and yield for the toner(s) necessary to make your copies and compare that in advance of any contract signature to the dollar amount the dealer will charge you for the toner alone.
And the older the copier is the higher will be your Cost Per Copy. Why, you ask? Because the maintenance contract is supposed to be the Cash Cow for the dealer (in addition to a signed lease agreement) and if there’s no money left for them after replacing your; drums, developer, boards, rollers, fuser, etc. then they will tell you “it’s time to replace your machine because dealer support for this older model is being phased out by the manufacturer.” MORE MALARKEY! Maintenance contracts are designed to be as near to 75% pure profit as possible from day 1 until they convince you to replace your machine. Forget about the fact that after you’ve had this machine for 5+ years now they’ve hardly had to replace a thing and all those thousands of dollars you paid them were supposedly intended to actually PAY for drums, developers, boards, fusers, rollers, etc. – that’s NOT how the copier dealer sees it… they’re betting on that machine requiring as little service as possible so they can bank your money – kind of like a technology entitlement!
Technology has changed over the years and stand-alone copiers are no longer a major industry segment for all sizes of businesses – MFC’s (multi-function center’s) have done much to replace them in much of the marketplace, whether they are combinations of all options; print, copy, scan, fax or print, copy, scan, or just print, copy. But they are still out there and many businesses still rely on that single feature machine to direct employee traffic, determine productivity and protect certain types of documents. That said, the final aspect of the copier we want to touch on is the lease.
Let’s begin with the fact that dealer cost for a stand-alone copier is about 50% of their asking price for the machine – it is NOT hard to imagine that an $8,000.00 copier costs a dealer roughly $4,000.00… this is not common knowledge, but quite factual – unlike laser printers where the profit margin is much closer to only 5% due to sales pressure from big-box retailers. Now one might think that the best thing a dealer could do is to sell this machine for $8,000.00 cash, but you’d be wrong! The dealer will make a LOT more money signing you up on a lease (called “selling the paper”) and here’s why.
· You are much more likely to pay closer to the full list price on a lease as opposed to paying cash for your copier – and why not, even though you were so clever to beat the price down to $7,500.00? so, $7,500 vs. $250/month for 3 years and you feel your chest swell again for how clever you were… low monthly payments and a brand new nearly $10,000.00 shiny copier with all the bells and whistles, my how your office has advanced over the years!
· The leasing company will take the dealer to lunch, provide him with free tickets to sporting events and even send him new high-end clients if he provides them with enough signed leases.
· The dealer will attempt to get your signature on a lease document with no last payment date on it – FACT! While you think he/she is a sweet, caring person just doing all they can to help you update your office, after they leave your office they are putting 48 months on that lease agreement that you THOUGHT you were signing for only 36 – sad but true, I have seen this happen MANY times! And the client ends up legally responsible for $12,000.00 for a copier they thought they were getting for only $7,500.00 that the dealer only paid $4,000.00 for!! Lease companies LOVE these guys and they will HAPPILY cut the dealer a check for $10,000.00!
· The dealer will now tell you that you MUST have a Cost Per Copy Maintenance Contract in place for the life of the lease or you risk defaulting on it and end up in BIG trouble! They have already cleared nearly $6,000.00 profit from your machine and now they can legally coerce you to pay them another nearly $3,000.00/year for the next 4 years to maintain that machine. I REALLY hope you’re getting lots of smiles from them and great gifts on the holidays for being their client – after-all, you paid for it!
It’s all about getting the all-mighty dollar and that maintenance contract is as good as gold when you consider the first two years of it is nearly 85% profit!
With high-end laser printers it’s a bit different, your total upfront outlay is going to be far less, and if you determine you want or need a maintenance contract it’s going to vary somewhat. You will be paying for a Cost Per Page (similar but not the same as Cost Per Copy) Maintenance Contract and most likely the servicing dealer will connect you with some form of MPS (Managed Print Service) which will allow the dealer to connect to your printer(s) via the internet as long as the printers are plugged in and an ethernet cable is connected to it. From there the dealer can see how many pages are printed monthly, how much toner is left in the cartridge, how long the fuser and other components have to go and if you have a paper jam they can even tell what area of the printer it’s located in.
The dealer will tell you that their Cost Per Page MPS Contract will save you time and money, and like the copier contract it will include everything BUT paper. Once again, I would STRONGLY caution anyone looking into this type of service to request a quote with and without toner included. Once again, if you don’t mind taking a moment out of your day every 30-45 days to order a couple toner cartridges online from PrintCartridgePro.com or Staples, or OfficeMax or any number of other outlets then you will save quite a bit of money – and you can still have your printer maintained by a qualified technician.
One final word of caution BE VERY CAREFUL about any dealer (copier or printer) telling you that you MUST use the BRAND NAME toner for your machine or it will void the manufacturer’s warranty. THIS IS A LIE and it is ILLEGAL for a dealer or technician to tell you this. If either tells you this lie ask them to put it in writing and consult PrintCartridgePro.com immediately for advice! You are protected under a Federal Law called the Magnusson-Moss Warranty Act which gives you the RIGHT to select ANY toner cartridge you wish to put in your copier or printer – in fact, this same law gives you the right to decide which brand of gas or oil to put in your new car!