From: Docusultant (Original Message) Sent: 1/4/2003 2:08 PM
Factoring the Total Cost of Copier & Printer Ownership for Customers: Are You Doing Your Homework?
By Alexia El Wardani
When purchasing IT equipment, buyers are increasingly being looked at by their organizations to ensure an optimal return on investment (ROI). This holds especially true within the printer industry, where a printer that appears affordable at the time of purchase may cost exponentially more over the life of its operation. Known as total cost of operation (TCO), this increase in cost over the lifetime of the printer is attributed to variables directly related to operating the printer including consumables, warranties, paper and miscellaneous accessories.
Helping your customer to determine the TCO allows them to really feel as though you care about their business and care about their spending dollars. Your customers will make an informed decision based on the information you supply and because you have prepared them to make a good choice, they'll thank you for it with repeat business and support.
To fully understand the importance of considering such issues, look to the following example: Fiction Fred, an IT Buyer for XYZ Corporation, has just received an order from the director of marketing to purchase a printer. Before he decides on a printer and makes the purchase, he knows that there are a few steps he needs to complete in order to make a fiscally responsible purchasing decision.
Step 1: Conduct a Needs Assessment First, Fred should fully understand the director's printing needs, or run the risk of purchasing a printer that is not going to fit the bill. After receiving the inquiry from Fred, ask questions about use, volume and color needs. This will allow Fred to go back to his director prepared.
After conducting this initial needs assessment, Fred has concluded that multiple employees will be printing upwards of 600 pages per day, most of which will need to be high quality color. Based on these requirements and with your guidance, he feels a network color laser printer makes the most sense, but with dozens of these types of printers in the market, further analysis must be done before making the final selection.
Step 2: Narrow the Options To help Fred drill down into details like print speed, processor types, available connections, size and standard and expandable memory, give him information about more than one product that could fit the bill. Supply Fred with data sheets and comparisons that show not only the products' capabilities but give him information on warranties, services and the success rates of the manufacturer. As a result, Fred has a choice between two machines that he feels will suit the marketing department's needs just fine. Color Laser Printer 1 (CLP1) has a price of $2,383.78 while CLP2 has a cost of $2,312.49. Feature-for-feature, both the CLP1 and CLP2 measure up quite nicely, so at $72 less than the CLP1 purchase price, the CLP2 squeaks by as the better deal. That is, of course, if the printer is never going to break down. But who in the history of using printers has been lucky enough to never deal with a malfunctioning one?
Step 3: Compare the Cost of Warranty To aid in choosing a printer, as the sales manager it is your job to help Fred understand that although machines can sometimes be very competitive in price, to prevent costly maintenance expenses, Fred will need to look at the total picture.
Warranty CLP1 CLP2 1 Year $549 $549 2 Year $899 $899 5 Year $1,279 $1,199
Warranty for warranty, there is little difference across the two printers. In fact, if Fred only wants a 1 or 3 year warranty, there is no difference at all. It is only when considering the 5 year warranty that any price difference occurs.
But Fred does want a 5-year warranty, which means adding another $80 to the already $72 more expensive CLP1, thus increasing the delta to $152.00, and clearly making CLP2 the better buy: That is, of course, if Fred forgets to factor in printing costs, but has you.
Step 4: Determine the Cost of Consumables While all printers will accept any standard width 8.5" x 11" sheet of paper, they tend to be a little more finicky in terms of the consumables they use, as manufacturers usually make certain their printers will only accept their own manufactured ink and toner cartridges. And it would be bad business sense not to: According to Chris Barnes, Director of Research at ARS, "Depending upon usage, consumable costs could easily account for 80 percent or more of a user's total printing investment."
Product Total Cost of Consumables/yr CLP1 $12,224.55 CLP2 $13,795.88
Therefore, if marketing is estimated to print upwards of 600 pages per day, or approximately 150,000 printed pages per year (and they will print at least that), then calculating each unit's toner coverage ratio and cost per cartridge, the total cost of consumables will be $12,224.55 for the CLP1 and $13,795.88 for the CLP2 for each year of operation. And based on the warranty Fred selected, we know he plans on the printer operating for 5 years, bringing the total consumables costs of the CLP1 to $61,122.75 and the CLP2 to a whopping $68,979.40.
Therefore, if marketing is estimated to print upwards of 600 pages per day, or approximately 150,000 printed pages-per-year (and they will print at least that), then calculating each unit's toner coverage ratio and cost per cartridge can play an important role.
After all is said and done, giving your customers ALL the information about a product, can really make a difference in determining the best model for their money. Lucky for Fred he has you to guide him into making the right decision for his company. Because you took the time to help Fred, he was able to get the right model, at a great price and examine future costs to determine the total cost of machine ownership.
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