Three Good Reasons To Add Leasing To Your Managed Services Mix

Lease-based cost-per-page contracts provide the answer when customers slash capital spending.

Although a tough economy may be convincing end users to delay purchases of new color multifunction products (MFPs) and printers, solution providers don’t have to wait on the sidelines for better times to return.

Instead, the right combination of hardware leases and managed print services contracts can keep revenues flowing as customers keep acquiring faster, energy-efficient equipment without putting a strain on their capital budgets.

In fact, with the help of a leasing-savvy solution provider, the new arrangements may for the first time bring better cost controls and budgeting predictability to printing operations, which for many companies remains a managerial no-man’s land. In addition to protecting revenues during a downturn, solution providers lock in business for three to five years and gain valuable insights into the future needs of each customer.

Understanding contract structures

The leasing agreement that provides the core of these long-term relationships may be structured in either of two ways.

In one option, once a customer commits to a deal, the VAR purchases the hardware from an OEM or distributor and then receives reimbursements from a leasing-company partner, preferably one with experience in the printing and imaging market.

Alternately, the leasing company may buy the equipment directly from the distributor or OEM, which relieves solution providers of any upfront investment. The leasing company then bills end users for a monthly fee based on the length of the contract.

Some printing and imaging solution providers are taking these leasing basics a step further by bundling them with a complete managed print services (MPS) package. With an MPS program like Xerox PagePack, end users receive a single, predictable monthly bill from the leasing company for the equipment, consumables, and services, all based on a per-page charge negotiated with the solution provider.

“More and more customers are asking for these types of contracts because of pressure on their capital budgets. They want to move the transactions to expense budgets,” says Tom Gall, director of value channel marketing for Xerox.

For example, a company that needs ten color devices would normally have to find $15,000 in its capital budget to pay for the upgrade. Leasing delivers the same capabilities for a relatively low monthly fee. And since end users typically pay about $6 a month for every $200 in leased equipment, that $15,000 tech infusion comes at a more palatable $450 per month in leasing fees for a 36-month contract.

PagePack brings similar benefits for consumables and services. “Some customers would rather have one bill per month for everything, including the hardware, supplies, and services. So we’ve worked with leasing partners to help them understand how the printing world works,” Gall explains. “If 18 cents a page covers the hardware, the service, and the supplies, that’s certainly easier for a customer to pay for out of an operating budget versus in a capital budget where it would need $15,000.”

This also means that in today’s era of closely watched expenses end users can pay as they print instead of investing in consumables and then recouping the investment over time.

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