Owning a copy machine can be a financial burden for many Australian small businesses. Aside from supply costs and maintenance fees, coming up with the initial capital to purchase the copier can stretch operational budgets beyond profitable limits. Copy machine leasing helps ease the up-front monetary investment and may provide a number of other attractive benefits.
Purchasing an office copier outright will cost $1,500 for a low-end copier (20 PPM) up to $50,000 for a very high-end copier (60 PPM). Leasing a $10,000 copier may cost you $12,500 for a 60-month lease. Some leasing companies will offer a $1 buyout option.
Should you buy or lease your next office copier?
Ever heard the saying, "The devil is in the details?" Well, this famous saying applies to your business processes and strategies, and how your office technology operates, such as your office copiers.
As a business owner or even an office manager, part of your responsibilities includes being financially savvy while making sure your staff has the equipment needed to perform their jobs efficiently, such as an office copier. You've probably put a great deal of thought into the phone system, computers, and the management software, but what about your office's copier? With so much online technology these days, the thought of an office copier may seem outdated. Before you subscribe to this train of thought, take a journey with me.
What are the Differences Between Buying and Purchasing an Office Copier?
The main difference between purchasing and buying an office copier is the financial investment. When you buy a copier, you incur a more significant upfront cost if you buy the machine outright.
However, once the copy machine is paid off, you are own the device and are free to do with it what you wish. If you lease a copier, you essentially make payments for the right to use the machine for the duration of your contract.
It's easier to keep up with technology and update your machine from time-to-time when you lease an office copier. If you purchase an office copier, you must keep the copier for a more extended period of time to financially make sense.
Leasing a copier means you do not have the burden or worry of servicing the machine or making expensive repairs should it breakdown. When you own the device, you are responsible for all maintenance and repair expenses.
It is much like owning a house versus renting a home. If you're renting a house and your water heater goes out, you quickly place a call to your landlord to replace it. However, if you own the home, the replacement of the water heater becomes your responsibility.
When you purchase a multifunction printer, you can use it as you wish. However, if you lease an office copier, there may be certain restrictions in place as to how you can use the machine.
Consider of Buying or Leasing a Copier
Capital
Small businesses seldom have unlimited capital at their disposal. Saving financial resources for exploring business opportunities and for making purchases that appreciate over time is far more important than investing in office technology that will only lose value. Avoiding big assets like copy machines keep bank lines of credit available for more significant business needs. Lease agreements may even include the cost of supplies, further reducing the initial payout.
Budgeting
Leasing a copier can alleviate budgeting concerns. Instead of making one large payment at the time of purchase, leasing a copier establishes a set schedule of much smaller payments, enabling you to better arrange financial resources. You may even choose the length and terms of your lease arrangement to offer the most payment flexibility. Changes in interest rates also do not affect the established payment amounts.
Taxes
Copier leasing provides a distinct tax advantage over copier purchasing. If you buy a copier, you may only deduct the machine's depreciation, which is typically 40 per cent of the purchasing price the first year and then 25 per cent of the purchasing price in subsequent years. However, if you lease a copier, the lease payment is considered a pre-tax business expense, meaning you can deduct the entire payment each time it's made.
Technology
Copier machines depreciate over time, losing value due to use and to the constant introduction of newer, better technology. If your business purchases a copier, you can only upgrade in technology by investing in another new machine. You would also need to get rid of the previous model, adding to your time expenditures. In contrast, most copier lease agreements have options to upgrade the copier at a predetermined date. Such lease arrangements enable your business to always be in line with the newest office technology. Avoiding obsolescence also means more efficient copying since newer machines have lower per-page costs. Efficiency translates to increased profit and a greater return on your lease investment.
Buying a Copier
Every business needs a copier. The question is - should you buy or lease one?
Purchasing a copier appeals to those who want full control over the machine and its maintenance. You decide when to have the machine serviced and how long to keep it. There is no contract detailing how the machine should be used because it is your property.
Cost to Buy a Copy Machine
Copier prices vary widely based upon the type of machine you select. The machine's printing capacity has the largest impact on price.
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- Low-end copiers capable of printing about 20 pages per minute (ppm) and 10,000 copies per month start at about $1,500.
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- Mid-volume copiers capable of handling up to 35 ppm can cost as much as $10,000.
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- High-end copiers that can handle 60 ppm or more can run up to $50,000. An only very large business requires this kind of speed.
Pros of Buying a Copier Outright
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- Cheaper in the long run - Buying is always cheaper than leasing in the long term because you avoid finance charges. Think of it much like buying a car: You can save thousands of dollars by paying cash upfront and avoiding interest.
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- Less paperwork - Buying a copier is relatively straightforward. Just hand over the cash, and the deal is done. Leasing involves an application process and providing the leasing company with detailed financial information. Your company will also be subject to a credit check.
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- Tax-deductible - The entire cost of a new equipment purchase is tax-deductible. With a lease, you can only deduct the total amount of the monthly payments for that year.
Advantages
From a financial standpoint, when you buy an office copier, it is cheaper in the long-run. If you keep it long enough, you will recoup your investment. You do not have to worry about any stipulations pertaining to how much and in which ways you can use your copier.
May be less expensive. Depending on the expected lifetime of the machine, purchased printer benefits may be less expensive. This isn't always the case, so be sure to crunch those numbers with the help of a qualified sales rep. They'll be able to calculate the copier's expected lifetime against the maintenance packages that are best suited to the business and usage volume.
May be able to recoup some of the cost later. From an accounting standpoint, a printer can be depreciated over time. Also, as long as the company doesn't wait until their printer is falling apart, they will most likely be able to sell it to recoup some of their initial costs. It's worth noting that technology is changing all the time, so reselling copiers is not always possible.
Cons of Buying a Copier Outright
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- Depreciation - Much like computers, copiers lose most of their value in just a few short years. An expensive, high-end copier won't garner much profit when it comes time to resell it.
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- Obsolescence - Technology changes rapidly. Five years from now, your state-of-the-art copier will be out of date. But if you've invested a lot of money in the copier, you may not be able to replace it as often as you'd like. Older copiers also tend to have higher per-page printing costs.
Disadvantages
When you purchase an office copier, you now assume full responsibility for the machine. Your business is responsible for all of the service and maintenance.
Sometimes, purchasing a copier requires a more significant initial expenditure than a company can manage all at once. Buying the machine may price them out of the maintenance package they need, requiring them to pay for costly maintenance out-of-pocket.
Whether the copier becomes obsolete, repairs become too expensive, or the company has outgrown their copier, the time will come when it will need to be replaced. The cost of replacing the machine altogether can be a significant concern for many businesses.
For those organizations with multiple locations, it may be difficult to maintain cost consistency because the copiers will be different at each location. This also means maintenance costs will fluctuate wildly. When purchasing is centralized, and all locations get the same equipment and same technology, it's easier to measure successes and failures and budget for each branch.
Cost of Leasing a Copier
The cost of a lease varies based on the type of copier you choose, your credit history and the length of the lease. A $10,000 copier might cost $10,500 if you spread the payments over 12 months and $12,500 if you spread the payments over 60 months or five years.
Most leasing companies also offer a $1 buyout option. For a few extra dollars per month, you have the option to purchase the equipment at the end of the lease term for just $1, rather than fair market value.
Pros of Leasing a Copier
Choosing to lease an office copier means signing a contract for a set amount of time in which the company loans you a copier of your choosing. Leasing an office copier is much different from buying one because you don't own the machine at any point in time. There are distinct advantages and disadvantages to leasing.
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- Lower upfront costs - Leases rarely require a down payment, so you can acquire the latest technology without shelling out a lot of cash. This is especially useful for small business that does not have a lot of cash flow.
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- Predictable monthly payments - Knowing exactly how much you'll pay each month for the copier is helpful for budgeting purposes.
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- Option to upgrade - When the lease term expires, you can trade-in your old copier for a newer model with better technology.
Advantages
When you lease an office copier, the upfront cost is less expensive because you typically pay in monthly instalments. Service, maintenance, and repairs are handled and paid for by the company you are leasing the copier from. Leasing a copier also allows you to stay up-to-date with the latest technology.
Cons of Leasing a Copier
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- Higher long-term costs - A $5,500 copier could end up costing around $7,000 if you spread the payments over five years. You'll pay more in the long run when you lease a copier instead of buying it outright.
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- Strict terms - It's difficult to get out of a lease, even if your needs change. Once you sign the agreement, you're stuck making the payments for the remainder of the term, even if the equipment is not being used. You'll also be required to adhere to the leasing company's maintenance requirements, which can get expensive.
Disadvantages
Leasing an office copier means that you do not ever actually own it, which means there isn't a payoff amount, at which time payments stop. Depending on your contract, there may be certain restrictions as to the usage of the machine.
When Looking for a Dealer or Manufacturer?
When finding the right model for your needs, you may be stuck on whether to purchase your printer through a major retailer or through a local dealer.
Service
When it comes to printer repair service, local dealers come out ahead. If your printer breaks and needs repairs, a major retailer like Officeworks will usually have you ship it away for fixes, which means you could potentially be waiting upwards of a month. Along with being slow, this type of service can also be costly since you pay for a one-time job.
Local dealers build service pricing into your contract, which makes any repairs easier to budget for. Additionally, since your local dealer's shop is located nearby, they can usually send a technician to your location to fix your machine that same day.
Convenience
Although you may not be as familiar with a local dealer as you are with major retailers, the process of selecting and ordering a printer can be just as convenient with either type of seller. Usually, you can visit a major retailer and a local dealer's building to test different models in-person.
Price
While a printer from a major retailer can be cheaper, the prices they charge for cartridges can be as much as five times more expensive than local dealers. Both major retailers and local dealers can negotiate with you for lower prices on machines, but local dealers can keep cartridge prices much lower.
Local dealers try to maintain margins through their service contracts, which is why they value keeping cartridge prices low in an effort to consistently have business with a customer. Major retailers know that a customer may only need a cartridge every few months, which is why they charge so much.
Additionally, when factoring price into the purchase of a printer, consider downtime costs. If your printer purchased from a major retailer breaks, you may be out of a printer for a month while you ship away your printer for repairs. The costs associated with this scenario can quickly add up, as opposed to a local dealer who can usually fix your printer that day.
If you don't print that often and business operations wouldn't be greatly hindered from printer downtime, a major retailer could make more economic sense if their machine prices are lower.
Buy Or Lease An Office Copier?
Most businesses opt to lease a copier because the upfront expense is minimal. However, leasing is more expensive than purchasing a copier outright so it may make more financial sense to buy your copier if you have the cash flow available.
There is much online equipment lease vs buy calculators available to help you with your decision. You should get price quotes for both leasings and buying a copier and then use these calculators to weigh your option.
Every business will want to make the best decision for their budget, current needs, and the foreseeable future of their copy and printing needs. All Copy Products (ACP) is dedicated to ensuring every client gets exactly what they need for their growing business. ACP's long-time experience gives them insight into what may be best for their clients, now and in the future. They can also help their customers calculate the impact on their bottom line, whether leasing or buying so that they can make an informed decision about their custom copier solution. ACP cares about client satisfaction and builds that into everything they do, whether answering questions, clarifying terms, or helping someone optimize their office solutions for the lowest cost and highest efficiency.