We are in the final few months of our 5-year copier lease agreement with Impact Networking. We need to figure out what we’re going to do for copiers after the lease ends. Currently, we lease three machines, and our lease includes all maintenance and toner at a total cost of $632 per month. Terry and I have been in talks with a few companies about entering into new lease agreements with new machines. Another option is to buy out our current machines at the end of the lease and manage them ourselves. We did this with one of the machines five years ago, and it has been working really well for us, albeit in a much lower usage scenario in Tech Services. Our other three machines, currently serving Youth and Teen Services, Public Services, and Adminstration respectively, have had very minimal issues over the past five years.
This is a really interesting topic, in my opinion. For $3,705, we could purchase our existing machines and maintain them ourselves. Compared to an approximate cost of $700 or more per month for a new 5-year lease, the ROI on buying out our current machines, even factoring in cost of toner and some maintenance, is in the neighborhood of six or seven months. On the other hand, a new lease would supply us with brand new machines and a company that will guarantee their smooth functioning for us for another five years. There’s a lot to be said for paying a bit more and saving some headaches down the road, which has been our approach to copiers going back decades now.
Ultimately, after seeing the proposals from a few companies, I’m recommending that we enter into a new contract with Proven. They made us a very nice offer of $675 per month for a 60-month lease. This includes three brand new Canon copiers, all maintenance on those copiers for the duration of the lease, all toner for unlimited black and white and color copies, and no escalations in fee for the duration of the contract. This is a 6.8% increase over the lease that we signed five years ago, which did not include unlimited copies. With the overage fees that we typically pay on our existing contract, this proposal would actually be about a 2% decrease over what we currently pay per month on average. Adjusted for inflation, this new agreement would be 14.8% less than the previous agreement, were we to sign it today.
The total cost to us for this contract over 5 years would be $40,500.00. That’s obviously a lot more than the $3,705 buyout option. If we choose to go with our existing machines, we’ll have to pay for our toner and maintenance, but we might get lucky and get a few more years of good use out of them before we really need to replace them. But these are heavily used machines. We currently do about 120,000 copies and a few thousand faxes per year. If one of these machines were to go down, we would need a plan to replace it immediately, and I highly doubt that we’ll have a deal as nice as Proven’s if we’re trying to negotiate from an emergent position. In the end of the day, we might save some money by going with the buyout. But we also run the risk of finding ourselves in a bad spot a few years down the road having to sign onto a much more expensive contract at that point.
I believe that this is a good deal and worth the worry-free, no-added-cost, unlimited copies, with new top-of-the-line machines despite what appears to be a huge cost differential.
Recommendation: I recommend that you approve the new 60-month copier lease agreement with Proven IT at a cost of $675 per month.