When’s the last time you took a good look at your organization’s copier lease? What’d you see? How much did you know about what you were looking at? Copier leases can be confusing, even to someone who’s worked with them before. From the length of a lease to confusing language like an “origination fee” or “residual value characteristic,” leases are full of potential misunderstandings. Leases can be scary.
Thankfully, we here at ClearView Business Solutions have had more than 1,000 customers since we got started, so we know a thing or two about leasing copiers to customers. We know what you want. All customers want to get a great deal on their copier lease to know that their lease is working in their favor. Customers also want to know exactly what they’re being charged for, so as not to be overcharged or charged for unwanted solutions.
After reading this article, you’ll know all about what copier leases have in common, what makes them unique and what makes them more expensive. Let’s begin to demystify copier leases, which really aren’t that scary after all.
What do most copier leases have in common?
Most copier leases share certain characteristics. Leases generally have a fixed and defined duration, a reference to a service agreement, something called a documentation or origination fee and a residual value characteristic. Let’s explore what these terms actually mean:
- Fixed and defined duration
Copier leases aren’t just over whenever. Rather, they’re over at the fixed and definite end of the lease.
- A residual value characteristic
Most copier leases have a residual value characteristic at the end of the lease. That means that the copier has some kind of financial value left over at the lease’s end.
In a fair market value lease (the most common lease type), the leasing company maintains ownership of the asset. They give the lessee the option to purchase it at the end of the lease for its “fair market value” (residual value).
In a dollar-out capital lease, the customer owns the equipment from the beginning. The customer then grants the leasing company a secured interest in the asset until the final payment is made. Finally, the customer can purchase the copier for $1. Check out the differences between fair market value and dollar-out leases.
- A documentation or origination fee
Copier leases commonly have a one-time documentation or origination fee that usually costs about $100 or less. Customers pay this fee to a leasing company to cover all costs associated with initial leasing paperwork.
- Service agreement references
The lease can also sometimes reference the service agreement. It could, for example, reference service allowances and rates. However, leases don’t always include the service agreement itself.
What makes some copier leases different from others?
Now that you know what most copier leases have in common, take a look at what makes some of them unique. Leases vary by length, type and method of expense calculation. Different copier leases also have different sizes and quantities of paper used. Let’s take a look at each of these factors in greater detail:
- Lease length
Organizations often choose between 39- and 63-month leases. The shorter the lease, the higher the lease payment. The longer the lease, the less an organization pays per month.
Organizations also choose longer leases because they allow them to stay with a copier dealer they trust for a longer time. As the (grammatically incorrect) saying goes, “If it ain’t broke, don’t fix it,” right?
A longer lease also lets an organization not have to go through the lengthy, detailed process of finding a copier lease every three months.
- Page numbers and paper size
Generally speaking (and all other things equal), the larger the size of paper on which an organization prints, the more expensive the lease will be. A company printing on tabloid-sized paper (11 x 17), for example, pays more than a company printing on letter- and legal-sized paper.
Leasing costs are also affected by the number of pages that a customer prints monthly. The more pages you print, the more that costs.
- Cost per click vs. allowances
There are two ways that usage expenses are calculated in a copier lease: through a cost per click or an allowance.
With the cost per click model, usage expenses are determined by each copy or print.
With the allowance model, a customer pays for a maximum number of black-and-white and color copies per month. If a customer exceeds its monthly allowance, it is charged overage rates on a quarterly basis. Overage rates are similar to rates per click: for example, there’s a $.01-overage rate per page for black-and-white copies, and a $.06-overage rate per page for color copies.
- Type of lease
A copier lease is different from a rental. With a copier rental (that’s not in-house), customers can pay according to fair market value or dollar-out pricing.
However, “there is no purchase option at the end of the term on a rental lease,” said Evan Boddicker, sales support specialist at GreatAmerica Financial Services. “[That] is how it differs from a…fair market value…lease…or a…dollar-out…lease.”
At the end of a rental lease, a customer can continue to rent the equipment on a month-to-month renewal basis.
What makes a copier lease more expensive?
Here are some factors that commonly raise the price of a copier lease:
- Pricier hardware
The kind of copier that your organization leases affects the price of the lease. All other things being equal, a lease will be more expensive for a copier with more advanced features.
Copiers themselves aren’t exactly cheap, although they’re certainly cheaper to lease. The manufacturer’s suggested retail price to own certain equipment can range from $1,000 for a business-oriented desktop printer to $100,000 for a production printer. Hardware will also be more expensive according to the brand, age and speed.
Don’t forget how much add-ons can cost. Everything has a price, including a document finisher, multi-purpose tray, software for print applications and card and USB readers.
What’s in a copier lease?
As you’ve learned, copier leases differ from one another in many ways, such as the length of the lease, the hardware itself and the paper size. Those and other variables make copier leases more and less expensive. Just like with other aspects of your organization, copier leases are an expense.
As a rule of thumb, your organization should pay for all features of a copier lease that are worth paying for. Hopefully as a result of this article, your organization will have a better idea of the right copier lease for its needs.
If you’re looking for a flexible lease length, stellar service and minimal costs, then ClearView might be a good fit for your organization.