How to Know if you’re getting a competitive Per Click Service and Maintenance Rate on your Office Copier/MFDs

With the advent of more reliable copier/MFDs (or multi-functional devices), both the actual lease/sale price of the device and its accompanying service and maintenance per click costs have come down markedly in recent years. Service and Maintenance pricing, is usually in the form of a per click or per copy/print (but NOT scan as this should NEVER be chargeable by your copier service vendor).

Among the four large copier manufacturer players, in recent copier/MFD equipment, service & maintenance RFPs RAS is consistently seeing per click rates for service in the neighborhood of $.005 for black & white and $.05 per click for color, unheard of rates just five years ago.

Copier servicing costs are determined by suppliers from a complex formula that essentially benchmarks the # of copies between service calls, the cost of device consumables, all the variable costs that factor into service/maintenance per click rate. With devices running longer in between service calls, consumables coming down in price (with the additional influx of recyclable consumables) this have been pushing the service cost down to record lows.

However, in an example of an act of God,  the tsunami/earthquake in Japan a few years temporarily took its toll on product from Ricoh and Canon as well as consumables, which impacted service and maintenance costs to some degree in the years that followed.

One final thought about service and maintenance and that is each copier band or model typically has its own service and maintenance rate. Central Copy Center duplicator or high band devices like a Canon 105 page per minute devices have a much lower per click rate for service & maintenance than a low band copier/MFD that copies/prints at say 22 pages/minute because the duplicators generate high volume copies between service calls and the low band device produces far fewer copies between service calls. It’s not uncommon to see a fairly wide disparity in the service & maintenance rate between say a duplicator (at $.005 per click) and a low band device like a Canon 2022 which could have a click rate of $.0104–three times higher than the 105 copy per minute device!..

In most cases, the copier service provider will provide a “blended rate”, which means they will “average” the variable per click rate of all the different models provided in a customer bid. But be wary that they FIRST compute the total service and maintenance costs for all devices then divide by the total # of clicks to arrive at an average per click rate–they don’t just take an average of all the variable rates! In a recent RFP, RAS noted a vendor that did just that–they averaged the variable click rates of about 6 different models, irrespective of the volumes for each band and came up with a composite average of $.008–still less than what the customer was currently paying, but a statistically incorrect rate.

When RAS applied the various click rates to the different bands and computed the service and maintenance costs based on a monthly average copies/prints baseline for each device specified, the sum of the charges divided by the total clicks came to $.006, not $.008– a savings of over $60,000/year based on this customer’s high volume!

So remember to always verify a “blended” click rate by applying the variable rates to the individual devices by band and taking the overall average–not just the average of the variable rates–you have to use the all-important weight factor of where the clicks occur. In most cases over half of your clicks will be generated on Copy Center equipment, which should greatly offset the higher per click rate of convenience equipment at a higher rate.

Finally, Facilities Management Companies may charge a slight markup on their equipment, service and maintenance to cover their sourcing, technical integration and ongoing support, above and beyond the placement of the equipment and the service and maintenance. While many view this as a necessary “value-add” provided by most providers at gratis in some cases, remember you get what you pay for. In RAS’ view it is acceptable for the vendor to tack on 5% or so margin for the overall fleet management of the equipment–but impose SLAs to ensure they are meeting a high standard!

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All the things your copier vendor DOESN’T want you to know about

These are example of things your copier vendor doesn’t want you to know about:

  • Problems with non-co terminus leases and how it costs money and reduces your flexibility and bargaining power and is a tool of the copier vendor to put you in a disadvantageous bargaining position
  • Are you paying for service & maintenance on copies/prints you’re not even making? The fallacies of included copy figures on service & maintenance leases.
  • Unfavorable contract terms can cost you big dollars
  • The bigger, faster the copier/MFD, the higher the cost and bigger the margin, just like cars. Why every copier vendor is always trying to get you to lease a bigger copier than you need
  • Unused technology add ons add cost and loss of productivity. Why most copier vendors actually have a disincentive to deploy and support technology solution add ons
  • Copier resellers are public companies. Be aware of how to use that to your advantage, and how to anticipate where this is not to your advantage in terms of their offerings, e.g., higher margins and less flexibility.
  • The fallacies of the copier vendor’s leasing strategies to get you to buy out leases and replace MFDs before they expire at a “discount” or cost savings. Avoid this with the correct lease term in the first place!
  • If you have more than one location you should always have a composite or national program to leverage your collective needs and volumes for more favorable pricing.

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Executing a Copier/MFD Fleet Refresh

Properly executing a copier/MFD fleet refresh or a new acquisition is a major decision for most firms. Moreover, there are a lot of solid copier equipment choices out there today, with some major factors having recently stirred up the copier manufacturing and distribution world. A copier/MFD (for multi-functional device) is also a choice that needs to involve various different stakeholders at the law firm, not just operations/procurement, but also IT, Litigation Support Services and other legal representatives at the Firm. For these devices are truly multi-functional, not one-dimensional; they are used for copying and printing and scanning for both a centralized and decentralized (convenience) standpoint.

How each copier manufacturer’s devices interface with your firm’s computer network, cost recovery devices, decentralized scanning applications and litigation support services application software is also critical to the decision-making and is the reason why you must involve a broad-based spectrum of firm participants in procurement, technology, accounting, operations and legal staff in the sourcing process.

The copier/MFD choices today are also much more abundant. In the past, Xerox and then later Canon dominated the copier/MFD market, particularly in legal. But now, both Ricoh and Konica Minolta represent virtually the same if not a larger market share than Xerox or Canon in the domestic copier/MFD market space. The reason? All of these manufacturer’s devices virtually provide the same comprehensive and quality features and output capabilities and both Ricoh and Konica Minolta have grown significantly in the US market in the past several years while Xerox and Canon have flatlined their growth.

What distinguishes these copier devices and their manufacturers, again, are the individual nuances we mentioned earlier in terms of the integration with your network and other third party firm hardware/software. Bottom line is, you’ve got to be able to measure and quantitatively analyze these distinctions to arrive at the best copier/MFD solution for your Firm, and it isn’t easy; it takes a trained, experienced eye.

There’s another piece to the puzzle as well, and that is the service and maintenance that you contract for on your eventual copier/MFD equipment. You will lease your copier/MFD equipment (fair market lease; recommended time frame is 48 months in RAS’ view). But you will pay a per click or per impression fee for your service and maintenance. There are 2 things you should never do re: service and maintenance: 1) Never include it in your lease so you’re paying interest on it. 2) don’t let your copier dealer talk you into “including copies” in your copier lease, usually in advance. This will almost always lead to you paying for copies/prints you never make.

Only pay for what you use for service and maintenance (the clicks you actually generate); structure a service and maintenance deal that has no included copies and where you pay your click costs each month after your monthly volumes are established. However, IF the copier dealer is trying to entice you to include copies in the monthly lease by offering you a lower cost per click rate than by paying for your actual volume after the fact (after you tell him “shame on you”), if you do decide to include some monthly copies, try to avoid going beyond 50% of your total monthly aggregate copy + print volume. This way, you’ll still likely exceed the included monthly copy/print figure every month anyway so you won’t wind up paying for unused copies. The copier reseller will try to incentivize you to include copies/prints in the monthly bill because it looks better on a balance sheet for him for the sale that a variable, non-included pay per copy fee will. So make he/she earn it ! (by lowering your per click fee).

How do you evaluate copiers/MFDs effectively to qualify the answers to which device overall is the best choice for your Firm? By tapping into your stakeholder group and embracing their assistance. The  best first step, of course, is to put together an RFP or RFQ for your copier equipment where you can ask all the salient questions regarding the equipment regarding integration, security (how well protected is the device against hacking against file; how quickly does it erase temporary files of scanned documents or prints, etc.), functionality, productivity and of course cost.

Of course, RAS Consulting can help you with that as this is one of our core business functions. RAS recommends you bid out your copy equipment both to the manufacturer directly (e.g., Canon, Ricoh, Xerox, etc.) as well as VARs (value-added resellers). VARs often provide better service than the manufacturer themselves, who are often slaves to service metrics that are focused more on minimizing service costs that providing good service (VARs make their name on service) and VARs also sometimes have access to better discounting due to the fluky nature of the reseller business.

Once you have your RFP response results in, you want to arrive at a short list of maybe 2 or 3 finalists. Again, your decision-making criteria is going to be integration, cost, security, reliability, features, market share, etc. Once you have your vendor/solution short list, the perhaps most invaluable stage of the evaluation now begins–getting loaner equipment from each of your vendor finalists to deploy fully configured in your environment for trial testing. Ask each vendor finalist to loan you a model that they’ve specified in your solution, for 30 days, BOTH a convenience device and a central copy center, duplicating class device and test it in your environment.

The devices should also be fully configured the way you want and the way they would have been in in full operation in your firm, for scanning, cost recovery equipment, lit support application software, etc. For the convenience devices, get stakeholders involved to use the devices and put them to the test. Get pilot test users to record their feed back on usability, ease of use, features, productivity, concurrency, etc. Same for your copy center; let them put all the loaner devices through their paces on normal copy/print/scan as well as more complex lit support jobs.

What are some of the key distinctions you’ll look for? For Copy Center equipment; do the devices require separate print servers to do large blow back printing, which can result in delays? Do the devices scan at the same rated speeds as they copy/print? How about duplexing? How do these devices comparatively produce the nature of the copy/lit support work your center and firm generates? What is its’ footprint? Paper capacity? What is the paper path (how efficient) and how does this relate to paper jams? Is the equipment licensed to operate LAW or IPRO lit support application software? (not all are; if so, for how long?). What are the punching options? How much extra does it cost? What comes standard with the unit? A lot of questions!

On the convenience side, does it have it’s own embedded decentralized scanning solution that mitigates the need for eCopy/AccuRoute, or if you have either of those solutions, can it run embedded or on external devices? What is the scanning compression rate on documents? Document formats it scans to? Do the black & white devices scan in color? Does it have a place for a keyboard; offer secure print;what is that work flow? Some of the same questions you’ll need to ask on the copy center equipment also apply.

Finally, what is the quality of the customer service response from each vendor in responding to questions, setup issues, bugs and the inevitable performance issues that will crop up? Are they responsive? Informed? Tireless? Regarding third party integrations, do they offload the responsibility on those partners or do they take responsibility for this part as well?

Again, major copier/MFD decisions are not for the faint of heart; they require research, proper sourcing techniques and the buy in and participation of many stakeholders at a firm in order to make an informed decision.

And on top of that, it’s a buyer’s market today with at least four major players now vying for the overall domestic copier market and each providing award-winning equipment, Xerox, Canon, Ricoh and Konica Minolta. There are other second tier vendors like Sharp, Toshiba and others that provide fine equipment as well, though they just don’t have the market share in legal nor offer the same level of integration. In addition, most copier/MFDs now own major Office Support Services outsourcing companies, which they use as a distribution channel for their copier/MFD equipment. Ricoh owns IKON, Canon, OCE Business Solutions and Xerox has always had it’s own outsourcing division.

As always, take whatever time it takes to make an informed decision. And write us with any questions you may have.

 

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The Benefits and Results of our RFP/RFQ MFD bidding process

The Benefits and Results of our RFP/RFQ MFD bidding process will spare you from many pitfalls the vendors may try to navigate you through:

  • Optimized Fleet; copier vendors always strive to oversell or over-specify devices. The higher end the device, generally the more margin for the copier vendor/reseller. We have proven formulas and methods to determine what is a right sized device for each location/situation.
  • Reduced device costs from benchmarking other RFPs and bids for MFDs, service & maintenance plus our industry knowledge of copier device, industry and other trends
  • More competitive service and maintenance costs
  • True evaluation of your add on technology or third party needs by exploring your company’s workflow and requirements and helping you to select the best match/fit among the supplier’s offerings at the best price. Don’t buy what you won’t use or what is overkill.
  • More favorable contract provisions saving money and avoiding costly penalties
  • A strategy to co-terminate leases that eliminates copier buyouts, which is revenue out of your pocket straight to the copier vendors/reseller’s bottom line
  • True industry knowledge on the nuances and subtle distinctions between the major copier manufacturer’s devices.
    • While copier devices attributes and features are general comparable among the major manufacturers, how the device operates on your network, integrates with third party applications such as scanning solutions, DMS, cost recovery software and even the handling of company templates will vary.
    • Also copier workflows on how it handles functions such as secure print, data security, basic scanning can vary from device to device manufacturer.

    Please also visit our website at www.ras-consulting.com   To sign up for our blog, please click here.

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