Taking Some of the Mystery out of Copier Procurement

The handling of a copier replacement is an unpleasant project. Fortunately, people only focus on this task every 4-5 years. These projects are disliked because the suppliers intentionally muddle the pricing details, making it very hard to compare multiple bids.

The key to buying copiers is first, understanding your needs. Next, obtaining detailed pricing, and then doing a detailed comparison. If these steps are done carefully, then the quantitative comparison becomes easier. (The qualitative comparison is more specific to your individual needs and won’t be covered at this time.)

Why the Extra Profit Is Worth It 

Yes, copier bids take a lot of work to perform well, but the long-term contracts that are typical for copier leases mean the savings benefits from cost effective printing will last for many years. Take time doing the analysis of the current fleet and compare the bids carefully. That way, you know exactly how the suppliers compare, and you feel comfortable that corporate changes in the future won’t cause a great looking deal today to become a bad deal tomorrow.

It’s also beneficial to do as much research about the way this industry works (to help understand how to bid and negotiate copiers). Solicit your friends for pricing information to see where similar size fleets from others were priced. Below is some specific guidance.

Understand Your History and Your Needs First  

Before you can obtain quotes, you will need to assess your current usage and equipment:

Usage

Before looking at the equipment, review a year of invoices and look at your monthly usage – per device. Are your allowances and your meter reconciliation periods appropriate for your seasonality? What other fees were being paid (and avoided) on the usage invoices?

Equipment

Is each device properly sized for the usage? What features and accessories do you have and what do you really need? How are people using printers? How closely located are the copiers and printers? What extra charges are being applied on the lease invoices? 

Errors in billing are very common in this expense area. Armed with this information, you may request credits from your current supplier.  

You can now decide the optimal time to go to bid – it may not be at the expiration of the upcoming devices.

Use Detailed and Consistent Quotes

Using the details from this analysis, you should map out what devices and accessories you will need for each location. The equipment profiles and the usage data can be used to describe your usage profile by device type and for the entire fleet. These details will help the bidders understand your account and provide tighter quotes because there are fewer risks in their bid.

The equipment bid should be broken down into individual details for each model and accessory, and should request the list and purchase costs for each component. This level of detail will help identify what level of discount is being quoted and help identify anomalies. It will also help to ensure the pricing is applied to the eventual contract and any add-on devices after the initial contracts.

In addition to the purchase pricing, you will want to obtain the lease price and the financing rates that went into the lease price. This will identify financing opportunities that might exist by negotiating or going elsewhere for the lease financing. (Copier leases use "Lease Rate Factors" and not interest rates. The Lease Rate Factor combines the depreciation of the equipment and the cost of money). 

Separate from the equipment (and leasing) costs, you will want to obtain service pricing. Each bidder should be required to provide service pricing by segment (speed) and type of device, as well as specify any allowance requirements and reconciliation expectations.

Now You Are Ready - Do a Long-Term Detailed Comparison

Every supplier embeds their margins in different portions of a bid – either equipment costs, financing, service rates, allowances, escalations or other expenses. Using the bid details and volume predictions, you can accurately model the all-in-cost of the new copier fleet over the entire lease term. Also, take into account the installation, return, and end-of-lease costs.

The service costs in year four or five can differ significantly from the service costs in year one. This can dramatically change the financial comparison between the bids. Since the pricing per device segment can vary, the volumes for each device are required to model the long-term costs. Also, factor in the allowances and know that service rate escalations can affect not only the usage invoices but the lease invoices as well. 

After the service costs are modeled, consider whether a large increase or decrease in future volume could shift the favorability of one supplier versus another. This detailed comparison will help to optimize any current and future fleet asset management.

 Identify Best Practices That Will Save Some Money

Beyond the bidding and negotiating, it is also critical to look at best practice opportunities. This can include brand choice, device choice, accessory selection, configuration of devices, policies, deployment techniques, lease terms, lease vs buy decisions, device placement, etc. These factors can often have more impact on the level of savings than the pricing from the bid. Our experience in over 300 copier reviews gives us a great benchmark. If you’re unsure about whether you’ve missed anything here, give us a call.

As with every technology, there are different products that are optimized for different situations. The analysis of the current fleet and usage are the most critical factors in knowing which brands or models have a particular advantage in your situation. Choosing the right device can make a dramatic difference in the cost (and often the productivity) in your particular environment. These factors will need to be considered before making the final decision on what will be deployed.

The other best practices listed above can be decided after the supplier has been chosen, but should be considered carefully before the contracts are signed.

 You're Almost Ready to Implement

Assuming you have also done the qualitative comparison of the suppliers, you are ready to meet with the chosen supplier to finalize the configuration of each specific device. You should obtain all the pricing details for the final configuration to confirm the negotiated pricing was maintained. You will also want to review the final paperwork in detail, so that the savings don’t evaporate, in the excitement of completing this effort or meeting the end-of-lease deadlines.

This final step is where a lot of the potential savings are lost. We often see inconsistencies between the bid and the final contracts, which need to be corrected. Some of the differences will have an immediate impact on costs, but many will not show up until a few years after implementation. The time and care required in this end-game is well worth it. If the supplier doesn’t provide the transparency of pricing at this stage – insist on it. Also, watch the contract terms and conditions carefully. 

Looks like really useful info, eh? If you’d like to share perspectives or discuss how it relates to your business, call me on 469-310-2971 or email me at mnicholas@expensereduction.com.

Thanks,

Michael