In today’s technology-driven marketplace, printers and copiers are necessities for most businesses. Investing in office equipment, however, can be a major capital expenditure, especially for companies requiring a fleet of multifunction printers. But even for smaller businesses that are just starting out, purchasing a single machine can take up a sizable chunk of its budget.
A more cost-effective way to address an organization’s office equipment needs is by renting or leasing through a technology provider. For most companies, the benefits far outweigh purchasing equipment outright. Most notably, it allows businesses to more accurately forecast their budgets and even out cash flow each month rather than paying for equipment all at once.
While renting and leasing appear to be similar on the surface, there are differences between the agreements. We’ll take a look at what sets each apart and list factors that impact the costs of renting or leasing office equipment so you can determine which is the most practical option for your organization.
Leasing Office Equipment
Overall, the benefits of leasing office equipment have made it a popular option for most companies. Some providers, including the Gordon Flesch Company, offer in-house financing, meaning they don’t outsource their leasing to be managed by a third party. This can provide more flexibility in lease terms, better customer service, and also allows for any maintenance service agreements to be wrapped into one convenient payment. Maintenance, which can be part of either a lease or rental situation, would include any parts, repairs, labor, toner, travel time and preventative maintenance. In short, you just need to feed it paper and the provider takes care of the rest.
The major advantage of leasing equipment is that your company has more options once the lease term is up, including:
- Extend or renew the lease. If you really like the machine, you can extend your lease for another year or more at discounted pricing. Or, you can upgrade to newer equipment under new lease terms. With technology advancing at rapid speeds, many organizations choose to upgrade to stay on the leading edge.
- Turn in the equipment. In this situation, the machine is sent back to the provider and your agreement with them is ended. You’ll have no further obligations to the vendor.
- Take ownership. You’ll have a buy-out option to purchase the machine outright for a nominal cost without penalties. If the equipment has served you well and you see no indications that may dictate an upgrade in the near future is necessary, this may be a great option. You can still keep a maintenance agreement with the provider for the life of the machine to ensure it stays in good condition and operates reliably.
Factors That Determine Monthly Lease Pricing
There are several factors that go into calculating the cost of leasing equipment with a maintenance agreement. Obviously, the type of machine is the most influential factor. A desktop printer will be less costly than a multifunction printer with scanning, faxing, emailing, collating, stapling and other capabilities, and each will require less or more robust maintenance requirements, which is based on usage. For example, if your organization prints 5,000 copies each month, you’ll be charged appropriately, with some variances based on how many of those copies are color versus black and white.
Additional factors include the number of devices you need; leasing a fleet of printers will have a better price structure per unit. The term of lease also plays a role — the longer your lease term, the lower the monthly bill, with the most common durations being 36, 48 or 60 months.
Overall, leasing will cost your company slightly less than renting and you’ll build equity. As with any lease agreement, breaking the lease early may incur a penalty, but if it’s near the end of the term, you can usually upgrade and still have the numbers work out to your advantage.
Renting Office Equipment
Some organizations choose to rent rather than lease because they want to have more flexibility in the event their needs change. For example, if a business is just starting out, it won’t have much historical data to determine what its equipment needs might be two or three years down the road. If the company grows quickly, it might need to upgrade sooner than a lease term allows. Likewise, some larger, established companies prefer renting because they have a history of switching or consolidating devices between departments. If they need a different piece of equipment, they can end their rental agreement and commit to a new one for a different device. There’s no buyout or baggage involved.
Factors That Determine Monthly Rental Pricing
Many of the same cost factors for leasing apply to renting, such as the type of equipment and usage. Flexibility comes at a premium, however. Renting still involves a monthly commitment and can include a maintenance agreement, but the payment will typically be slightly higher than a lease. It’s also important to remember that if a company wishes to keep the device at the end of the rental agreement, there isn’t an ownership option since no equity has been built up. If it chooses to continue renting, however, it can renew its rental agreement at a discounted rate, or choose to upgrade the equipment and agree to entirely new rental or lease terms.
To determine whether renting or leasing is right for your company, do a cost analysis and assess your organization’s use across departments. The Gordon Flesch Company can help you determine which option is best suited to your business needs and provide a side-by-side comparison to demonstrate the cost differences so that you can stay up to date with technology without having to budget for large capital expenditures. Reach out to us today for a free consultation.