Copier Contract Negotiations Best Practices

Modern copiers are the most complex piece of conventional office equipment consisting of numerous moving parts and electronics. Many serve as the primary office printers, fax machines as well as scanners. There are many vendors and methods to procure this equipment. The most common approach is to partner with a sales and service company which specializes in leasing equipment and providing maintenance/consumables contracts. These outfits often have slick sales folks who will come into your place of business to analyze requirements. Then, they make proposals which are often slanted in their business’s best interests, not necessarily your company’s interests. The larger your organization and the more of this equipment used, the more interested they will be in becoming your long term “partner.” While there are many flavors of copier agreements, the following are some excellent points to keep in mind as you proceed.

Making the best copier decision for your business

1. If you have a current copier agreement, be sure to:
   a. Identify the expiration date. The copier salespeople always try to lock you into long term leases/agreements, often five years (or more).
   b. Look for automatic renewals and unfriendly contractual cancellation advance notification requirements. Many such vendors put unfavorable clauses in their contracts. Such clauses include automatic renew for another year if you advance notice of intent not to renew is not provided several months before expiration. In 99.9% percent of the cases, there is NO BENEFIT in automatically renewing. It is good practice to notify the vendor of your company’s intent to not renew at the earliest possible point, per your agreement. Of course, this will often instigate the salespeople to start making you offers for an early renewal/new contract. Resist the temptation to re-sign without a proper competitive negotiation.
2. Invite at least three companies to propose solutions – to ensure a competitive negotiation.
   a. Communicate your business needs and expectations.
   b. Negotiate specific equipment relative to exact machines or at least similar specs. There are pros and cons to the different brands e.g., Konica-Minolta, Canon, Sharp, etc. Learn them and make the best pick for your business. Keep in mind that choosing a brand that has the same user interface across all size machines will make it easier for people to learn and use them.
   c. Ask for specific, detailed machine/feature cash prices, as well as lease rates. Many vendors will try to sell using un-itemized prices. Google is your friend to find out what it would cost to purchase the equipment elsewhere.
   d. Separate leasing and maintenance/consumables pricing to understand the components of the proposed pricing structures.
   e. Get pricing on 2, 3, and 4-year terms (no longer). As this equipment ages, maintenance issues with these complex machines tend to increase significantly. As technology advances, lower cost of ownership devices with improved quality are often available. As such, it is desirable to re-evaluate your printing, scanning, and copying situation regularly.
   f. Vendors will usually attempt to establish maintenance/consumable pricing based on monthly minimums per machine. For example, a base of 10K b&w and 1.5K color copies per month costs $X. Any overage is $Y per copy for b&w and $Z per copy for color. In this scheme, you pay for the fixed number of copies whether you use them or not. It is generally to your company’s benefit to negotiate the monthly minimums down to as few as possible. In fact, be sure to not agree to any minimum you won’t 100% expect to easily use each period. Preferably, eliminate minimums all together and agree to some specific amount by machine for b&w and color copies. Generally speaking, you want a rate under $0.01 per b&w copy and $0.05 per color copy. Of course, volume plays a role in this, and pricing is somewhat relative. Some machines are b&w only so the color rates may not apply. Prices per copy may vary by machine capacity. Make sure your vendor offers essentially unlimited electronic scanning (and doesn’t charge a per click rate for that).
   g. During this process, it is a good idea to question everything, including whether you need to print at all for various functions in your organization. Going paperless to the greatest extent reasonably possible is often quite cost-effective. Also, question whether you need to use color copies as black & white are much less expensive. Often there is significant cost-savings in just forcing the majority of users to print in b&w.
3. Spell out how clicks on each device are going to be accounted for and reported each month. Who is responsible for taking machine readings? Or is it “automatic”? Be sure to audit the usage numbers by machine and audit your bills each month. Ideally, your vendor will give you a beginning and ending meter reading on each device (and number of color, number of b&w images). The vendor’s invoice should show all the details and per device per type per click charges. Before you sign, figure out how the invoices are going to be verified, and how often. Insider tip: track your copier paper usage as a whole against total pages printed on a month to month basis – this is for an overall sanity check of usage. If you have three times as many clicks you’re being charged for than consumed sheets of paper, strange things are afoot & this needs investigated. Any major changes in the trend from month to month should be promptly investigated and discrepancies brought to the vendor’s attention. Spell out the process for resolving click discrepancies in your agreement and don’t agree to anything that limits your rights to make a claim for error correction/credit (such as copy totals not disputed within 60 days of invoice are not disputable).
   
4. Services for “other” printer devices. Often copier vendors will also try to gain high margin business in providing equipment and services for inexpensive desktop devices in addition to the bigger copiers. Be wary of this. We have yet to see where this convenience is in the financial best interest of the company. Inexpensive printers are just that, and paying a monthly fee to maintain them usually doesn’t make good sense. Also, inkjet devices are quite often more expensive than laser in the long run, plus they are prone to shorter lifespans. It is often less expensive to expense purchase desktop printer devices when necessary (such as for privacy) and just replace them when they break outside of warranty. Getting your consumable supplies for these items is often least expensive from major retailers like Staples or Costco.
   
5. Once you have, in theory, agreed on pricing, the chosen vendor will present you with contracts to sign (one for the lease, if applicable, and one for the services/consumables). Just remember, everything is negotiable. Don’t hesitate to ask for changes. All they can say is no, and then you can decide if it’s a big enough issue to back out of the deal or ask for a different concession. Some commonly overlooked items to look at in detail in these contacts are:
   a. Installation and training fees – we recommend aiming to get these waived.
   b. Verify the length of term (we recommend 3-year agreements max, if possible).
   c. Cancellation and automatic renewal terms (request 30-days notice to cancel before the end of term and any renewals be month-to-month).
   d. Payment terms – the first draft will often be something like pay within ten days of the invoice date (or be subject to some excessive charge). Ask for net 30 terms. Any company not on the verge of going under can agree to this.
   e. Assignment clause – most of these boilerplate contacts provide to allow the vendor to assign the contract without restrictions. It is not reciprocal. They require your business to notify them “in advance” for their expressed permission to assign the contract in the event your company’s ownership changes. We recommend trying to tighten this up or at least make it reciprocal.
   f. Built-in rate increase allowances – be sure you understand how much they can raise your rates and when. It is to your company’s benefit to minimize the built-in automatic allowed increases.
   g. Disposition fees – at the end of the contract/lease, who is responsible for the expense of de-installing and picking up the equipment? Ideally, this is the lessor’s responsibility, but often it is not on contract first drafts. Be sure to get the details in writing.
   h. If you are changing vendors (or not), if your previous contract requires you to pay disposition fees, be sure to ask the new vendor to cover them. They may not, or may offer you some credit. But, if you don’t ask, you won’t get.
   i. We always recommend that your legal counsel review any agreement before execution.

Hopefully, this will give you some useful pointers on copier agreements. Of course, Soltis Associates is available to help you through the process or review your contracts (and proposed contracts). Our services are certainly not limited to copiers. We can help with any technology-related needs and agreements, including hardware/software, telecommunications, systems analysis, and security. We are very experienced in ensuring the critical terms of the agreements as well as making sure the equipment/services chosen are in your organization’s best interests. We would be happy to be your independent “voice of experience.” Soltis Associates is vendor agnostic and our goal is always to find the best solution for your business’s particular circumstances.