A Cost Per Copy or Copy Cost solution represents a strong example of an industry developing a product that is designed to enable better end-user access to information that leads to across the board accountability.
Cost Per Copy has been developed by printer and copier companies as a way for their end-users to “drill down” on print costs to get a better understanding of costs and therefore how to control them.
Put simply, a Cost per Copy plan enables the end-user to understand the cost – every time they print, be it colour, black & white, or even a scan.
How does it work?
Consider the elements in play:
Equipment – has to be financed and therefore there will be a rental component. Let's say it is $400 per month for a 4 year term.
Service – already quoted on a cost per click basis in service agreements. Let's say it is 0.8 cents per black & white print.
Minimum Usage – because the equipment is financed, there must be a minimum usage. Let's say 20,000 B&W copies per month.
Colour prints, paper, toner & other products may also be added, but for the sake of simplicity, we will stick with the above.
Calculate the minimum usage: 20,000 x 0.08 = $160 per month.
Then add the rental component of $400 to the service charges: $400 plus $160= $560 per month.
Therefore, the customer will pay $560 per month, but this figure is divided by the number of prints: $560 divided by 20,000 = or 2.8 cents per black & white copy.
Therefore, the end-user commits to 20,000 copies per month or 960,000 copies in total. In other words, the end-user is not buying a piece of tin or a serial number, instead, they are committing to 960,000 copies over the next four years.
Now here is the interesting part:
Usage can be hard to predict. Despite the copier company doing print audits on your work flows things can change.
What happens if you do less than 20,000 copies in the month? Most copier companies will have an averaging system working for you. You still have to pay the minimum monthly payment, but will have earned some credits for when you do ‘overs' or excess copies.
Overs are when you do more than the agreed 20,000 per month. Copies cost money and you will be billed for these overs periodically, but here is the thing - because you have signed up for 960,000 copies, because of overs, you will be free to upgrade, once you have done the 960,000 copies.
This is significant, because if usage is greater than anticipated, wear and tear will also be significant, so you will need a bigger copier. Instead of waiting for four years, you will be able to do so based on usage (which will be accurate) and not on time (which may not be accurate).
Additionally, the Cost per Copy Plan will also be sympathetic to the need to upgrade earlier, as your accumulated overs are continually reducing commitments, allowing cost efficient upgrade sooner than would otherwise be the case.
Significantly, the copier company can also change your minimum monthly usage if you are habitually either too high or too low to better reflect your usage.
Don't think this product is only for SMEs. Large companies may well insist on it, as they demand absolute clarity in relation to costs, particularly large legal and accounting companies.
Cost per Copy plans are seen as the first step in managing print costs. The market has gone on to develop various Managed Print Plans & Managed Service Plans that have the same structure as a Cost per Copy Plan, but they are characterised by the ability to include a more comprehensive range of goods and services. They are also known as Facilities Management Agreements.
These Managed Plans are the future, as the trend is to sell Hardware as a Service (HaaS), Software as a Service (SaaS) & to include a Technology Stack which is a range of hardware, software and services, that is all funded based on usage. At their core, all of these new initiatives are based on the Cost per Copy model – they are just more complex.
End-user demand for these products is increasing, as is the demand from print vendors wishing to accommodate their customers. Therefore, providing finance for this sector has never been more specialised, as finance providers need to develop systems, procedures and documentation to support these endeavours.
Generalist financiers will not have the capacity to support these arrangements and so it represents another reason why the end-user will use the finance offered by the sales person. This finance represents cutting-edge finance options to enable cutting-edge print solutions.