Thanks Sam for that nice viewpoint. By the way I really enjoyed looking at your website...there was alot of eye opening info there....thanks!
GIntel:
Let me give you another example that starts to get tricky when you have a buyout to consider.
Here is the formula:
(Machine Cost + Buyout + Profit) X rate factor = total monthly payment that should be (but does not need to be) less than CURRENT monthly payment for similar equipment.
Define similar equipment? That means if they have a 20ppm unit now but they now need a 60ppm unit....there is a good chance the monthly payment will be higher as a result.
Overall customers like to see a monthly savings so they know they are getting a better deal than they have right now. Why pay more for a similar machine that does not make sense.
The tricky part say if they are on a 60mo FMV lease and have over 4 years remaining. They are not happy with the current vendor and want out. Well this will not happen. The B/O is way too high....unless they were raked over the coals the first time then it may be possible to help them. Remember the shorter the ORIGINAL lease term the more time needs to be expired in order to help them. Example 36mo FMV...the monthly payment will be higher so you have to wait close to 1 to 1.5 yrs to help them.
Please understand there are a bazillion different scenarios that I could list here. I just wanted to provide some food for thought so you can logically put your own scenarios together.
GIntel....I have one last scenario for you to consider and apply your skills. Customer is paying $389/mo 60mo FMV rate factor 0.0203 for a 60ppm unit. They have 2 yrs remaining. They really want to work with you. They are given 10,000 copies/mo built into the current lease then 0.0138 for overages. Their monthly volume is 20,000 per month. Your unit cost is $8000 and cost per copy 0.01.
1) With 2yrs left can you save them money each month and still make a profit? About how much profit?
2) With 1yr left can you save them money each month and still make a profit? About how much profit?
I hope this has been helpful for you.