Friday, 2 October 2009
Sunday, 13 September 2009
60 months of misery- but only for you !
To alot of you readers out there I think this blog will make lots of sense because it has happened to you!It may be happening to you now.
Let me ask you a question.What is the best way to get yourself unreliable copiers with the obvious exception of using a sledge hammer?! The answer is very simple and slightly less violent...all you have to do is use a pen and sign a 5 year lease and a matching 5 year service agreement.Yes it is that easy and guess what, your friendly copier dealer is happy to oblige.Why? Because he is then able to squeeze every last ounce of profit from your account and you stand by powerless and watch it happen...just great!(for them)
Here is how it works...for those that are reliving their own horror stories by reading this please stay strong!!!
You sign a photocopier lease and service agreement for 60 months.The equipment doesn`t last for 60 months because it generally doesn`t. It doesn`t last for 60 months because the supplier isn`t incentivised for it to do so! I will explain...
There are good reasons for this.One is that if you have signed a 60 month service agreement, complete with double digit copy cost increases every year and an outrageous cancellation clause entitling the copier dealer to anything up to 90% of your historical volume for the unexpired term, you are basically going nowhere in the future! You are trapped because you don`t want to pay thousands of pounds to cancel a maintenance contract that would involve paying for service,parts and toner you will never receive.The unscrupulous salesman and his company know this.So what happens? Well because there is no need to provide fantastic service or much point in fitting the parts required to achieve reliability-they don`t!! Remember you are going nowhere. Plus the salesman earns commission every time he changes your lease/equipment and his company makes more profit too.Thats why poor service is good news for them as the equipment is in need of changing or upgrading as they call it much earlier. Even worse- You want to change it too because you are fed up with all the in house complaints.So lets say you are 3 years into your 5 year lease and service agreement and everyone is in agreement that the copier/s have to go! Now you have a choice but not a great one!! You pay off the lease, or build it in as they do and also pay off the cancellation charges of the service agreement and find another supplier(thats fun too.) Or you sign again with the old supplier, who has just failed to do the job properly, because it appears easier and cheaper.It will be neither as the whole thing is repeated time and time again until your costs become so ludicrously high that you snap.Eventually this will happen but it will be painful and expensive. Any thoughts...? Apart from snap early!!!!
Let me ask you a question.What is the best way to get yourself unreliable copiers with the obvious exception of using a sledge hammer?! The answer is very simple and slightly less violent...all you have to do is use a pen and sign a 5 year lease and a matching 5 year service agreement.Yes it is that easy and guess what, your friendly copier dealer is happy to oblige.Why? Because he is then able to squeeze every last ounce of profit from your account and you stand by powerless and watch it happen...just great!(for them)
Here is how it works...for those that are reliving their own horror stories by reading this please stay strong!!!
You sign a photocopier lease and service agreement for 60 months.The equipment doesn`t last for 60 months because it generally doesn`t. It doesn`t last for 60 months because the supplier isn`t incentivised for it to do so! I will explain...
There are good reasons for this.One is that if you have signed a 60 month service agreement, complete with double digit copy cost increases every year and an outrageous cancellation clause entitling the copier dealer to anything up to 90% of your historical volume for the unexpired term, you are basically going nowhere in the future! You are trapped because you don`t want to pay thousands of pounds to cancel a maintenance contract that would involve paying for service,parts and toner you will never receive.The unscrupulous salesman and his company know this.So what happens? Well because there is no need to provide fantastic service or much point in fitting the parts required to achieve reliability-they don`t!! Remember you are going nowhere. Plus the salesman earns commission every time he changes your lease/equipment and his company makes more profit too.Thats why poor service is good news for them as the equipment is in need of changing or upgrading as they call it much earlier. Even worse- You want to change it too because you are fed up with all the in house complaints.So lets say you are 3 years into your 5 year lease and service agreement and everyone is in agreement that the copier/s have to go! Now you have a choice but not a great one!! You pay off the lease, or build it in as they do and also pay off the cancellation charges of the service agreement and find another supplier(thats fun too.) Or you sign again with the old supplier, who has just failed to do the job properly, because it appears easier and cheaper.It will be neither as the whole thing is repeated time and time again until your costs become so ludicrously high that you snap.Eventually this will happen but it will be painful and expensive. Any thoughts...? Apart from snap early!!!!
Friday, 11 September 2009
Teaching schools a lesson not to be copied...
Imagine a school paying £305,000 for 6 copiers!! I know one that is!! Lease a copier and you should be given a Ferrari free of charge but nope they also get a service contract that causes the poor bursar or these days, school business manager, another massive headache.How could even the most unscrupulous copier salesman do this! It`s the kids that suffer because, after all, that copier profit comes from the budget and into a fat cat salesmans pocket...what disgraceful practices some photocopier dealers are guilty of.He has tried to extract himself but was quoted a huge termination penalty that was also 5 figures for what? I find the whole thing absurd,why isn`t it illegal.If you find yourself in a similar position then tell the world here what to look for when buying copiers or leasing them.This has to stop,as you can tell I have a real passion for this!!
www.buyersbuddy.org
www.buyersbuddy.org
Lease a copier twice!
Imagine you signed a lease for a copier and then 2 years later you signed another lease with a different leasing company for the same photocopier but they added a small second hand canon and promised to pay the old lease off but then didn`t!!! The sharks!! Thats what happened to a friend of mine...His company is now paying £35,000 for equipment that is worth £1000.00 I am not joking!! He is also being charged for toner £2500 last year!! Easy money,easy street,easy copiers,easy profit!! How do they get away with it?!
www.buyersbuddy.org
www.buyersbuddy.org
Friday, 28 August 2009
Timing is Everything...
It’s standard practice to lease your photcopiers, and spread the capital cost, but there are many factors to consider before you put your signature to a lease document.
If you think the lease period of your photocopier agreement is irrelevant you could be in for a nasty shock. It is extremely common to be offered a 60 month lease, often with a matching Service Agreement period and it appears more attractive because the quarterly/annual costs seem lower. They won’t be for long. A 60 month lease can lead to a slow suffocation of your budget, equipment quality and future freedom of choice
Medium/large photocopiers are changed on average every 36 months and not every 60 months. That means the next time you change the balance of 24 months is added to the new 60 month period and refinanced. Therefore you have paid 60 months’ leasing company interest for the privilege of keeping the equipment 36 months. Had you leased the equipment over 36 months you would have saved two years’ finance interest.
It gets worse...
After 36 months you now have a situation where the equipment needs changing and instead of being at the end of a 36 month agreement you have 24 months remaining which is added to your new equipment cost and financed again.
This is where the quality of your equipment and its reliability begins to suffer. You now need to replace the equipment over the same term, ideally at the same cost, but with 24 months outstanding on your existing lease which is 40 per cent of the original contract. How can you upgrade all the equipment for the equivalent of 60 per cent of the original lease cost? You can’t.
The supplier then puts a proposal to you that only upgrades some of the machines because otherwise you won’t accept his offer as the costs to replace all would rocket. This means some of your original equipment has to last another 60 months until the second lease expires. This is virtually impossible and now you are on an ever increasing cost and unreliability spiral that becomes very difficult to manage.
This is all because the salesman, who knows the average life of his photocopiers, has taken the line of least resistance with his first agreement by proposing a longer, “cheaper” term. His advice should have been: “Don’t sign a 60 month agreement.” It is worth knowing that salesmen earn commission when they change your lease so they are happy to change it as often as possible. They know you will have to upgrade regardless of the term of your lease and they may also have asked you to sign a service agreement with restrictive terms that compound your problems with settlement penalties.
Below is a comparison based on a £10,000 photocopier replaced every 36 months on three occasions using 36 month leases and another replaced every 36 months but using 60 month leases again three times. Look at the difference and whilst doing so bear in mind that the 60 month lease was supposed to be cheaper.
1.Cost using 36 month leases =£34,200.00
2.Cost using 60 month leases =£42,001.20
So for the privilege of leasing the same equipment over 60 months and not 36 months you put an £8,000 dent in the budget which is nearly the cost of the equipment you first leased. How is 60 months cheaper?
If you think the lease period of your photocopier agreement is irrelevant you could be in for a nasty shock. It is extremely common to be offered a 60 month lease, often with a matching Service Agreement period and it appears more attractive because the quarterly/annual costs seem lower. They won’t be for long. A 60 month lease can lead to a slow suffocation of your budget, equipment quality and future freedom of choice
Medium/large photocopiers are changed on average every 36 months and not every 60 months. That means the next time you change the balance of 24 months is added to the new 60 month period and refinanced. Therefore you have paid 60 months’ leasing company interest for the privilege of keeping the equipment 36 months. Had you leased the equipment over 36 months you would have saved two years’ finance interest.
It gets worse...
After 36 months you now have a situation where the equipment needs changing and instead of being at the end of a 36 month agreement you have 24 months remaining which is added to your new equipment cost and financed again.
This is where the quality of your equipment and its reliability begins to suffer. You now need to replace the equipment over the same term, ideally at the same cost, but with 24 months outstanding on your existing lease which is 40 per cent of the original contract. How can you upgrade all the equipment for the equivalent of 60 per cent of the original lease cost? You can’t.
The supplier then puts a proposal to you that only upgrades some of the machines because otherwise you won’t accept his offer as the costs to replace all would rocket. This means some of your original equipment has to last another 60 months until the second lease expires. This is virtually impossible and now you are on an ever increasing cost and unreliability spiral that becomes very difficult to manage.
This is all because the salesman, who knows the average life of his photocopiers, has taken the line of least resistance with his first agreement by proposing a longer, “cheaper” term. His advice should have been: “Don’t sign a 60 month agreement.” It is worth knowing that salesmen earn commission when they change your lease so they are happy to change it as often as possible. They know you will have to upgrade regardless of the term of your lease and they may also have asked you to sign a service agreement with restrictive terms that compound your problems with settlement penalties.
Below is a comparison based on a £10,000 photocopier replaced every 36 months on three occasions using 36 month leases and another replaced every 36 months but using 60 month leases again three times. Look at the difference and whilst doing so bear in mind that the 60 month lease was supposed to be cheaper.
1.Cost using 36 month leases =£34,200.00
2.Cost using 60 month leases =£42,001.20
So for the privilege of leasing the same equipment over 60 months and not 36 months you put an £8,000 dent in the budget which is nearly the cost of the equipment you first leased. How is 60 months cheaper?
Service without a Smile
You buy or lease a photocopier and at the end of the process a Service or Maintenance Agreement appears...These should be studied in great detail because Service Agreements tell you more about the supplier than you can ever glean from a smiling salesman. Once read you may wish to alter your choice of supplier. The trouble is you are almost embarrassed to sit there in front of the salesman you have already awarded the contract to and then pick his Agreement apart. Even if you knew what you were looking for it is difficult not to just sign it as the salesman salivates opposite and you cast your eyes over an ocean of small print. If you do not read and amend the Service terms and conditions your copiers,MFP`s or MFD`s, whatever you like to call them could become very expensive. This is because restrictive cancellation clauses of up to 90% of the unexpired contract term (which by the way may not match the lease term)between 10 and 20% annual copy cost increases and exclusions of toner and some parts or even support costs that start 6 months after signature, will leave you feeling extremely misled and out of pocket. Do the salesmen care? Of course not,the smile turns to a satisfied sneer when they reach their car!!!! Safe in the knowledge that next time you upgrade you will be negotiating with one arm tied behind your back because you now have a service agreement to terminate as well as a lease!! How competitive do they have to be subsequently? It`s Catch 22, you pay off your existing suppliers ludicrous termination fees and buy elsewhere or buy from them again because its easy, but certainly wont be competitive because they have you over a barrel!!!
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