Finally was able to get a meeting with one of my prospects to replace and older MFP. Initially they wanted a 75ppm black device and I was told the device was producing 35K per month.  I had a quote ready on the initial meeting but everything changed.  The volume was not 35K per month but 35K per year, the monthly "rental" was not a rental but a 60 month lease with many months left. 

Most might have backed out, however I asked for a copy of the lease and the maintenance agreement and or the invoice.  Here's what I found.

1) the lease is a cost per page lease, 36K built in annually with overages

2) There is an auto escalator @20% per year on the lease and the overage cost per page

3) Each year there is a Processing Fee (cost to ship toner) for $200.00 that is also an annual escalator.

I need to do the math and the projection for how much the client will pay until the end of the lease to see if we can help.

I also understand that most clients do not read what they sign. 

Why is it that almost every agreement I present it gets read from head to toe? 

When I informed the client they were let's say not to happy with that vendor. 

Anyone else seen agreements like this?

If you like something I've posted please feel free to click the "like" button!

Original Post

That one is terrible. I see some similar to that but not that bad. The more you can enlighten the potential new client on what to watch out for the better. 

We do not charge for delivery of toner and our escalation is possibly 10% but very negotiable. We also will track prints quarterly and adjust as needed. 

These things help us keep the client forever.  The sales person that did this original deal is a very bad person to have in our industry. He or she makes us all look bad. And the dealership or manufacturer should be ashamed, Carl Little

At 3k pages per month either a 25 cpm A3 copier or a A4  copier would handle the volume.

What is the configuration of the current copier?

Was the copier 100% new when the customer first acquired it?

When you say, "cost per page" lease do you mean  the customer is invoiced on a cpc,  machine included basis?  This form of leasing is much less common these days.

What was the original cpc charge?

With a 20% annual escalator, the cpc will double in five years.

How many months are left on the lease?

If the customer were to park the copier in a storage area and made no clicks on it for the remainder of the lease, I assume they would still be invoiced for 36k per year.

Depending on the copier, 36k should be no more than 1-3 toner bottles.  I interpret the $200.00 fee as the cost of enough toner to cover 36k plus freight.

SalesServiceGuy posted:

At 3k pages per month either a 25 cpm A3 copier or a A4  copier would handle the volume.

What is the configuration of the current copier?

Was the copier 100% new when the customer first acquired it?

When you say, "cost per page" lease do you mean  the customer is invoiced on a cpc,  machine included basis?  This form of leasing is much less common these days.

What was the original cpc charge?

With a 20% annual escalator, the cpc will double in five years.

How many months are left on the lease?

If the customer were to park the copier in a storage area and made no clicks on it for the remainder of the lease, I assume they would still be invoiced for 36k per year.

Depending on the copier, 36k should be no more than 1-3 toner bottles.  I interpret the $200.00 fee as the cost of enough toner to cover 36k plus freight.

@SalesServiceGuy

Current config is A3 device with scan and print

user has 36,000 pages built into the lease each year and overages are charged at the end of each year

Original overage cpc was .012

Too many, it looks like 30 months

One that I used to run into all the time by sellers of Canon out of the Philadelphia area was what we called the 3/5.  The sales rep would write everything up from the proposal on emphasizing 36-months.  36-months was beat into the customers head like a drum all through the sales process.   Everything was written as 36-months except for the term of the lease document which would be 60-months.  The customer would get suckered into signing a 60-month lease thinking it was 36.  Here's the kicker.  The service contract really was 36-months.  When the 36-month service contract reached its end the rep would come back and re-up the lease and roll the remaining 24-months into the new deal

If you were competing against them the customer would ask you to quote them a 36-month deal because that 36-month term had been beaten into their head by the Canon rep.  Obviously if you quoted 36-months you'd be way high on the first go around and it might not even get caught on the second go around.  Meanwhile the customer is rolling debt until they are completely upside down.

We ran into this over and over for a quite a few years.

 

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