When purchasing a copier there are 3 different options a business can choose from. Knowing these options helps with your total costs of ownership. It will also help with budgeting your business expenses.
Option 1: The Purchase Out Right Option.
The purchase out right option is when you buy the copier outright. If you have the money to expense upfront and you know you’re going to keep the copier for longer than 3-5 years, then this would be the option for you. A copier has a life span of about 7-10 years. However, it is dependent on what type of copier you purchased and if you think your needs may change in the future. Buying a copier outright then having to upgrade it within 3-5 years would not make sense. As you will need to buy another copier to meet your needs.
Option 2: Fair Market Value
Fair market value is when you lease a copier for a duration of time. The average duration is 3-5 years. You pay a monthly fee with interest charges to use the copier. After the duration has ended the leasing company will offer you to buy out the copier at fair market value should you want to own it. Fair market value is about 25-30% of what the copier originally costs if you had bought it out right. If you choose not to buy the copier at the end if the duration, then you will just send the copier back to the leasing company and get a new copier to lease. Doing this has it’s pros and cons. You may be subject to package the copier yourself and ship it off. Which is an expense. If your needs have not changed then it may make sense to buy the copier at the end of the lease, so you no longer have a monthly payment. This will all be dependent on what your business needs are and how much money you can expense.
Option 3: Dollar Buy Out
Dollar buyout is similar to fair market value. You lease the copier for a duration of time paying a monthly fee with interest charges. However, at the end of the duration you now have the option to pay $1 to keep your copier and you own it after the duration. Dollar by out option is a bit more expensive when it comes to the monthly fees. As you are expected to pay what the copier is worth over the duration of time and only pay $1 after the duration to keep it.
All options need to be considered when making a copier purchase. Everything is dependent on your business needs, what you can expense, and what makes sense. With all of these options you will also need to take into account the maintenance costs. Normal maintenance agreements on a new copier is 3 years. After 3 years the copier company will increase their prices to align with today’s market. If you are purchasing a used copier the normal maintenance agreement is about 1 year.
Total costs of ownership are determined by the costs of the copier, the options you choose to purchase it, how long you utilize the copier, and the maintenance agreement. Interest rates are determined by your business or personal credit score. Contact C Three Business Consultants today to help with your next copier purchase.