Improve Your Lease Experience

I recently conducted an informational interview with Dwayne Magee, director of Messiah College Press & Postal Services, about his copier and printer fleet. Our discussion was the basis for this article, which will hopefully give you some insight and let you learn from one of your peers about his copier fleet lease experience.

What I heard from Dwayne was not surprising; in fact, it was very common. The areas of concern below are consistent with many copier lease bid and contract processes that customers experience.

Messiah College had roughly 50 walk-up MFPs, 200 printers, one payroll MICR printer and two high-end graphics copiers when Dwayne put out an RFP to numerous copier suppliers. The vision for the new fleet was to move prints off of the printers and onto the MFPs. Dwayne was successful lowering the college’s printers by 75% or down to 50 and increased the level of MFP to accommodate the increase in printer volume that was shifted. In doing so, the cost savings were significant.

Additionally, the college was shifting from a capital expense model (cash) to an operating expense model (lease) for its equipment. As in most college settings there are two customers:

1. Faculty and staff, which needed a chargeback system;
2. Students, which were on a pay-as-used model.

The college was also interested in the environmental impact of its decision and wanted the ability to track sustainability (e.g., paper usage, replanting trees to replace usage, electricity used, etc.). In addition, the college required ongoing training for new employees and students.

From Messiah College’s perspective, the program as it exists today is a success from a financial savings perspective and an environmental sustainability perspective. Future changes in the chargeback platform might be required to allow for a more robust platform, and standardizing on one manufacturer for the MFP, graphics printing, payroll printing and printer line will allow for fewer print driver applications to be loaded and monitored.

Improving Future RFPs

Dwayne and I then moved our discussion to areas that he might not realize could be improved upon in the future and how to position things for his next RFP when the time comes. First, to address Dwayne’s two requested changes from his current platform:

1. Print Drivers. A universal print driver for desktop printers, MFPs, MICR printers and graphics-level production copiers is a difficult proposition. My recommendation is to clearly understand how many drivers will be needed across the platform, try to minimize them and then plan accordingly from an IT and staffing standpoint.
2. A more robust chargeback system. Chargeback based on end user activity versus corporate overhead is common in organizations. Virtually every copier supplier has its own or access to one or more chargeback systems. It’s best to get a demo and possibly run a pilot prior to beginning the copier lease, as most often these systems are part of your lease payment, which might be problematic to change once the lease has begun.

The following items are areas of concern that I pointed out to Dwayne along with advice on how to address these in his next RFP.

1. Early upgrade. Due to technology getting less expensive every year, a vendor can lower your costs and put you into a new copier fleet prior to the end of your lease. Recommendation: wait until the end of the term, as you will not be paying the “buy out or stream of payments” to get out of your current lease to upgrade now. Your savings will be even more at the end of term. Also, see minimums below.
2. Fixed escalators. Vendors have two service and supply rates. One is already escalated and the other is not. When you specify in the bid specification that escalators on service will be fixed for the term, the suppliers will use the “escalated” rate (higher) as they know their competitors will do the same. Recommendation: stay silent in the bid specification, which will force the vendors to use the lower rate. A fixed rate for the term will then need to be negotiated, which is a challenge for many customers.
3. Minimum copy volumes not being hit. It is not right for a customer to pay for something they do not get. Additionally, any early buyout for your current copier supplier’s competitor would include these charges, where the incumbent does not have these costs as they are unused. Recommendation: negotiate the same price for a zero-based monthly commitment as one with a minimum.
4. Page fill clause. It is common for maintenance agreements to contain a clause that allows the provider of service and supplies to charge a customer for amounts due to toner page fill exceeding the manufacturer’s specification for toner usage. This clause needs to be deleted, or it needs to also give the customer a credit if toner page fill is less than the manufacturer’s specifications. Requesting the clause apply both ways will allow for the clause to most likely be deleted.
5. Lease end return shipping. This is the responsibility of the customer unless it is negotiated as the responsibility of the equipment provider. Many times, this is accommodated by suppliers, as they can ship for less than it will cost a customer to ship at lease end.

When the time comes for Dwayne to issue a new bid, other topics will come up including competitiveness of pricing for equipment, service, supplies and lease rate; lease auto renewal terms and conditions; late fee terms; and end of copier lease costs.

To discuss your specific situation for potential cost savings and proper contract structure, feel free to contact me 90 days prior to signing your next copier lease and/or agreement.