Signing copier contracts can be a daunting task for first time buyers. Here are a few tips on what to look out for:
- Minimum Bill
A minimum bill contract is a type of contract set up to recover device capital amount within a cost per copy type of agreement, for example, a supplier may charge 25c per page for a minimum of 5 000 printed pages per month. If a client fails to reach the agreed minimum pages, they will still be liable to pay for the pages not printed, resulting in a higher than agreed cost per page. It is important to agree with the supplier beforehand, how they will bill for pages over and above the agreed minimum. Opting to rent/buy the device outright and entering a service agreement is a more advisable option.
- Cost per Copy (CPC)
Most suppliers have clauses specifying that the cost per page in the service contract is limited to a certain % of page coverage, or else the supplier can claim higher CPC. As a customer, it is important that you understand how these are calculated and what these calculations are based on, as they will affect your cost per copy if your printing coverage is high. Per page costs are usually reviewed from time to time, so it is important to note the clauses relating to escalation so that these can be factored into your annual budget.
- Duration of the Contract
This refers to the number of years a company chooses to lease. Normally, copiers are leased for a duration of 24, 36, 48 or even 60 months. If you choose a longer lease, your monthly instalments will be low but you will end up paying more for a machine you may already want to upgrade. Make sure the contract states whether it will be possible to transfer your existing lease agreement to a larger machine should your business grow, and how the settlement fee will be calculated if you decide to change the device before the contract reaches term.
- Cancellation/Renewal Clause
Most contracts state that if a client does not give termination notice three months prior to the anniversary date, the contract will automatically extend for another twelve months. These are mostly referred to as evergreen contracts. If your contract has gone evergreen and you need to replace a device within the evergreen term, you will be liable to compensate the supplier for loss of income by paying for the remaining months of the contract. You can prevent your contract from going evergreen by adding a clause stating that after initial term, you require the contract to run on a month to month basis, with one month cancellation notice.
- Insurance on the Device
Most companies make the mistake of assuming that the supplier they are leasing the equipment from will be insuring the device. This is mostly not case. If insurance is included in your contract, you need to know what the limits are, whether there is any type of deductibles required and what exactly is not covered.