So often my clients ask me to give them my “best price.” I always appreciate this request, as it gives me the opportunity to talk about “price” versus “value.” Once I explain the concept (and naturally let them know why X-Tech Systems provides the best value), I then turn to the actual numbers. There are many cost components that go into what we call the “Total Cost of Ownership.” There is the cost of the device itself. It is represented by the actual cash purchase price (plus tax), the lease cost (if applicable). Next you have the cost of service. Usually a “Full Service Maintenance Agreement,” and rarely “Time and Materials.” Then there are the consumable supplies. Finally, there are often miscellaneous costs such as delivery, installation, training, insurance, existing lease buyouts, etc.
In most organizations there is an existing preference between purchasing and leasing office technology hardware products. It is beyond the scope of this blog to point out the advantages and disadvantages of each procurement method. Try Googling “lease versus buy” for the common consensus. I always recommend that if an organization has the capital, that outright purchase is the best financial option. This is due to the double-digit interest/lease rates that most major leasing companies charge. The one exception is a true Municipal Lease, whereby lenders are incentivized to lend to governmental agencies. Oddly enough most organizations lease under the belief that technology is changing so fast that they don’t want to be saddled with a “boat anchor.”
Most Full-Service Maintenance Agreements cover all parts, labor, unlimited service calls and consumable supplies. Paper and staples are usually excluded. These contracts typically charge a monthly minimum fee, contain a copy/print allowance, and then charge for additional “clicks” if applicable. Some providers will offer a true cost-per-copy maintenance agreement where you only pay for the copies or prints that you run. In both instances you can negotiate how long the pricing will be in effect for. It is standard that maintenance costs escalate up to 10% per year.
Once you have established your initial cost you will need to amortize these costs over the machines useful life. Most organizations depreciate MFPs over a three or five-year term. Next you will add the cost for service and supplies over this same number of years. Finally, you would divide the total cost by the total number of anticipated copies and prints to determine your Total Cost of Ownership expressed on a cost-per-copy/print basis.