Smoke & Mirrors: Why the Lowest Cost Per Copy Can Be the Highest Price

It is a common practice in the Office Technology industry, to focus a proposal on the very lowest possible cost per copy (CPC). This would seem to be advantageous to the buyer.  However, often the loss of revenue on the low cost per copy rate will likely be made up through multiple charges that are only discovered after a multi-year contract has been signed.

Smoke and Mirrors Example: You selected a vendor that offered the lowest CPC.  Your first invoice arrives and includes a base charge.  The common range on a base charge is $25 to $50 per month.  It was conveniently left off of the proposal.   Your contract covers 5000 black and white pages per month at 1 cent per page which equals a fee of $50.  But now a base charge was added of $25 to your invoice which means you are paying 1.5 cents per page or $75 per month.  Meanwhile you turned down the offer that was a true 1.2 cents a page $60 per month because there was no base charge.  On a 60 month lease you could be paying an additional $3000.  Judging a proposal by CPC alone can be very misleading.

Cost Per Copy (CPC) Comparison Lower CPC Higher CPC
Cost Per Copy Rate $0.010 $0.012
# of Copies 5000 5000
Monthly Copy Fee $50 $60
Monthly Base Charge $25 $0
Total Monthly Costs $75 $60
     
Annual Costs $900 $720
5 Year Lease Costs $4,500 $3,600
Lowest CPC Actually Cost More $900 Increase $900 Saved

 
The VALUE of your office technology system is a combination of three key elements:

1. IMPROVED EFFICIENCY

You are likely making a change in equipment and process with the goal of improved efficiency.  Webster’s definition of efficiency is:

Ability to accomplish a job with a minimum expenditure of time and effort

Do you feel comfortable that the sales person you are working with has a deep understanding of what you are trying to accomplish?  Are they offering you a solution that specifically accomplishes that goal or are they simply selling equipment.  Does the solution accomplish lots more than you set out to do or will likely leverage?

2. COSTS

This is what you pay…your cost per copy, toner, supplies, insurance, overages, service contract, etc.  As you can see, cost per copy (CPC) is not the only fee.  A very low CPC quote often makes up for the loss of revenue via other charges.  Make sure you completely understand all of your monthly, semi-annual and annual charges before signing any contract. Unfortunately, we have seen decision makers duped by office equipment companies for shipping and insurance charges that were added to lease plans.  One plan added close to $100 per month!  That's $6000 extra over the life of a 60 month lease.

3. YOUR TIME

Your time is worth significantly more than any cost per copy rate.  If you are constantly dealing with a machine that breaks down, slow service response time or a process that is not achieving your goals, then you are investing a lot of your valuable time.  No matter how cheap the cost per copy rate is, it won't make up for your time wasted with a non-functioning machine and waiting on a service technician to call back or arrive.

When judging a contract, be sure to balance all three of these key elements and not judge only on cost per copy.  What’s been your cost per copy experience?