Anyway, back to the topic, "What's Not to Like About Copier Proposals?" Just yesterday I ran across a proposal from a Dealer in Chicago. I actually picked up the proposal from the clients web site. The site had included a number of pages from the proposal, could have been all or them or just a few, but since there were so many pages, I'm inclined to think that all of them were included. If you need a copy of the quote you can get this on the Print4Pay Hotel forums.
The bid was for one color system, bidders included Xerox, KonicaMinolta and Kyocera. Total monthly volume was 6K for monochrome and 7K for color. The site where the quote was posted only had the "recommended" bid for the Xerox system which was a Xerox 7346. One sheet has a synopsis of all three quotes from the three vendors. Xerox came in at $1,085, KonicaMinolta at $1,183 and Kyocera at $1,265. All bids included maintenance, toner, parts, drums, labor and a pay off for a current machine.
Now, as I was flipping through the pages of the "recommended" Xerox 7346 there was a page for the lease. The lease was for $1,085 per month for a term of 60 months and included 6,000 monochrome (.007 overage) and 7,000 color (.06 overage) for a term of 60 months. OK, nothing unusually here, standard cpc lease. As I migrated through the other pages of the proposal there was a page noted as "Executive Summary". On this page the "Current Monthly Cost was outlined at $1,478.64, then the "Proposed Solution" at $1,085, then the "Monthly Savings" for $393.64 and then the "Yearly Savings" and then the "60 Month Savings". I'm ok with most of this, here's what I'm not ok with and it's the "60 Month Savings", these numbers were obtained by taking the monthly savings and multiplying by 60 months, BUT in the lease document there is an clause that states;
You agree that we may Increase the Minimum Monthly Payment and/or Excess Per Image Charge for each Image Type each year during the term of this Agreement by an amount not to exceed ten percent(lO%)of the Minimum Monthly Payment and/or Excess Per Image Charge In effect at the end of the prior annual period, or the maximum percentage permitted by law, whichever is lower.
Pretty much this means that the Minimum Monthly Payment or the Excess Per Image Charge could increase by 10% for each year. I understand the word "may" is used, however you've pretty much got to be a fool if you don't think that this will be in effect after the first year, especially since there were no supporting documents or cross outs that stated otherwise. Thus in the second year of this contract the Minimum Monthly will increase from $1,085 to 1,193.50 per month with an annual increase of $1,302. The next year (start of 3rd year) the Minimum Monthly Payment would increase to $1,312.85, this brings the increase to $227.85 per month from the original Minimum Monthly Payment, thus the annual increase for the third year is now $2,734.20. You all get where I'm going right? The start of the fourth year, will see the Minimum Monthly Payment increase to $1,445.13, thus the fourth year would see the increase of $360.13 per month from the original Minimum Monthly Payment and the annual increase for the fourth year is $4,321.56. The last year (start of the fifth) will now see the Minimum Monthly Payment increase to $1,589.64, this brings the 5th year increase to $504.64 per month and the annual increase for the last year at $6,055.68!
Add it all up and the increased cost for the term of this is a whopping $14,424.29 just because of that little paragraph that may have gone unread, not noticed or not pointed out. My beef is that the "60 Month Savings" that was shown as $23,618 is misleading.
Does the new equipment save money, well it seems it does, however nothing near what was quoted on the Executive Summary. By the start of the fourth year the customer is spending just a hair under what they were paying on a monthly basis for the old equipment and in year 5, they would actually be paying more. Plus, this is just looking at the Monthly Minimum Payment increase of 10% per year and not looking at the Excess Image Charge. There's also another disclosure on the sales order that states we can raise your payments or charge you an additional fee if your toner consumption averages 10% more than what the manufacturer calls for.
So, ask yourself when was the last time you actually read the T & C's of a lease or sales order. If you're in the business and selling against these types of contracts, are you aware of these tactics?
Truth of the matter is that most reps will supply a proposal first with out the T's & C's and once it's approved. The contracts are then submitted, and most times these contracts do not mirror the proposal.
If you're in the market for a new MFP, do yourself a favor and ask for all of the documents that are needed to move forward and then carefully review each one.
-=Good Selling=-
Great article however it is a safe assumption that the older box will also have escalators and if customer did nothing , would likely see an increase in the current cpc. In most cases, Xerox is 5% in Canada , resellers and dealers will increase at their discretion and is in most cases a lot higher than 5% which means it is fair to express those savings and in some cases , saving could be underestimated.
ReplyDeleteJust another point of view