“Free” is a powerful word. Unfortunately, this word is often used by copier reps to scam customers into a terrible deal. When a copier rep tells you you are going to get a “free” upgrade if you sign up for another contract, and he offers this upgrade before your current contract expires, hold onto your wallet and run the other way.
How Copier Companies and Leasing Companies Collaborate to Sucker Their Customers
A copier company needs sales, while the leasing company they work with wants new contracts. Since their goals are aligned, they work together on this bogus deal. The leasing company lets the copier company know they will forgive a couple of payments as long as they can get another contract signed. To sweeten the deal, they will also agree to defer some of the fees.
The copier company will look at the equipment portion of the lease (which usually works out to around half of the total) and see if they can bring this price into the next contract and remain under the retail price. They go to the manufacturer and see what specials are available to them.
Instead of giving you the special deal the manufacturer provides them, they take the savings from that deal and make the remainder of the payments, or close to it.
Why Is This Deal So Terrible For Your Company?
There are three reasons why this deal is one you should avoid at all costs:
- If you had access to that discount, you could’ve purchased the copier for much less had you not already been under lease for another copier. Your long term costs could have been much lower.
- This process is easier to wrap into a five-year lease, typically necessary for the numbers to look right from a financial standpoint. This technology advances quickly, and in year four of your contract, you’ll likely want to upgrade. If you do take the upgrade before your current lease expires, your liabilities will go up, and you would’ve been able to pay less per month had you finished your original contract.
- The leasing company and the copier company have all the leverage in this situation. In other words, by taking them up on their free upgrade offer, you have removed the competition (and real competitive quotes) from the equation.
If You Want The Best Upgrade Deal, Finish Your Current Lease First.
When the copier and leasing companies put you in this situation, they have no incentive to give you a fair offer on your next contract. The best way to avoid being suckered by this free upgrade deal is to avoid it altogether. Wait out your contract and allow the competition to work its magic and save you money on your next copier lease.