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Factoring the Total Cost of Copier & Printer Ownership for Customers: Are You Doing Your Homework?

15 Dec, 2002 By: Alexia El Wardani imageSource

Factoring the Total Cost of Copier & Printer Ownership for Customers: Are You Doing Your Homework?

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

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.

El Wardani is a marketing manager for ARS Inc., a competitive market
intelligence, tools, and analysis company that analyzes daily market, channel,
and product changes to inform clients on what is happening and why, analyze
relevant impacts, and predict what to expect in the near term. Located in La
Jolla, CA, ARS can be reached at 858/551-0008 or www.ars1.com.

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