When you agreed your last contract for new copiers and printers it is likely to have been with the same company you’ve used for years. You were probably very busy and didn’t have the time to get involved in lengthy negotiations with several suppliers. Maybe you reduced the amount of desktop printers and upgraded to newer versions of the equipment and software, but after all, if everything works most of the time, the supplier service is ok and the costs look similar to last time, then why change?
Post Covid-19 companies have been forced to change how they operate and that includes changing the way they print, copy, scan and move documents around their business. With more people working from home than ever before, the machinery and software needed then may not be needed now.
So what should your new printing arrangements look like? What can you do to make changes to your current hardware contracts now in order to save money in 2020 and beyond?
Many suppliers operate Managed Print Services Contracts (MPS) or Total Volume Rental Plans (TVRP), which include a predetermined amount of copies to be charged for based on existing usage, all wrapped up in one quarterly finance payment with the hardware. Businesses who signed these contracts could be stuck paying a quarterly charge for prints they would have produced pre-Covid, which bear no relation to their current and forecast usage. Unfortunately, that’s the agreement, it can’t be cancelled and that’s what they’ll have to pay. This is currently good news for the supplier but not so good for the client.
Traditionally the managed print industry also relies heavily on service contracts to generate income. Suppliers will have been hit hard by a huge reduction in service revenue due to their clients reduced usage, even if they have clients on minimum billing contracts, and may also have seen some of their clients close with the potential for more to follow as the economic fallout from Covid-19 unfolds.
With tricky times for the sector lying ahead, suppliers will be desperate to get revenues back up and stabilised. Some have diversified into IT services, but for many their main income still comes from copiers and printers clicking away.
Over the coming weeks and months owners, directors, shareholders and senior management will be putting pressure on their army of salespeople to tie their existing clients into new contracts to prevent losing their business to a competitor.
Long-term service contracts and the revenue they generate are traditionally what gives suppliers businesses their value and, for the immediate future at least, pays their bills. At a time when many long-standing independent suppliers are selling up to manufacturers, this push for contract re-signs will be uppermost in their minds. The bigger their service book, the more revenue generated and the greater the business valuation.
The market will be awash with offers to save you money on your current contracts and costs IF you agree to the new deal now, but always remember that suppliers generally don’t offer to change your contracts early for your benefit.
You may have new suppliers offering great deals to move your business to them. At first sight these may look attractive but the copier industry is still rife with bad practices – poor contracts with hidden charges and page after page of terms and conditions designed to keep you locked in. The fantastic deal you are being offered by a new supplier may prove to be just the opposite and let’s not forget the complications that can arise when you try to terminate your agreement with the incumbent supplier. This is an area that can be fraught with danger and potential financial penalties if not executed to the letter of the agreements.
It’s not all doom and gloom though. There are some really great suppliers out there but how do you really know, who do you really trust and how do you find them?
Firstly I’d advise anyone to stop, slow down the process, take some time and really think about what changes can be made in line with what your business looks like now and into the future.
Be careful of making a quick decision to save a few pounds by refinancing or taking up a new suppliers offer. You could be committing to a long term contract, full of very complicated terms and conditions, that could ultimately prove to be financially detrimental to your business.
Don’t be rushed into signing a new contract, think about how you can engage with your supplier from a fresh perspective and possibly come up with a more flexible rework of your contracts.
To end on a positive note, there has never been a better time to renegotiate or move to a new supplier. Auditel has print experts who have spent their entire working lives in this sector and are happy to help you in any way they can.
Feel free to get in touch if you’d like any advice.
Article by: Peter Spencer & Ian Hopping