For an individual or a business, that can be a large bite of budget to break off. And the initial investment doesn't include the ongoing costs of a laser printer, such as toner replacements and paper, nor the necessary maintenance and repairs.
The high price points and ongoing maintenance requirements lead many small businesses to consider leasing their laser printer. In the world of printing technology, leasing is commonly referred to as "managed print services," which includes many products and services beyond the printer itself.
Our company serves thousands of businesses of vastly different sizes each year. We often hear many of the same questions, and one of the most common questions we receive is: "Should I lease or buy a copier?"
The answer is there are advantages to both, but the decision should be based on your business' unique needs. In the sections below, we're going to discuss the pros and cons of each so that you can make an informed decision on your own.
When to lease a printer?
You can lease a printer/copier in the conventional sense. Still, throughout the last decade, the idea of leasing has morphed into what industry experts refer to as managed print services. Managed print services go beyond simply leasing to take a holistic view of your printer needs. Often, this means the leasing cost is bundled with costs for maintenance and paper and toner so that businesses get an all-in-one package for their lease.
Big data and IoT have taken managed print services even further. Data can track your print usage down to the department level. Depending on the manufacturer or supplier, managed print services might include supplies, preventative maintenance, onsite support, billing and usage tracking, and more. For organizations with limited IT bandwidth, a managed services lease offers a path to streamlined management (and it's just less hassle).
Is it better to lease a copier for your business?
It is more common for a business to lease a copier. But you just said that it costs more money to lease!!!
It's true that it costs more to lease a copier over the life of the lease (as does anything paid for on credit), but the truth is that most companies choosing this option have little interest in owning a copier.
When I was younger, my dad made a remark about purchasing a computer. He said, "By the time we walk out this door, the computer we just purchased will be obsolete." Now, I don't know if that is 100% factual, but it isn't a hard stretch to assume that your copier will be obsolete in only a few years.
As time progresses, copier manufacturers are adding and refining technology on their machines. They have to because if they didn't, the competition would surpass them and they would go the way of the Zune I mean Dodo Bird.
Why do some companies prefer to lease a copier?
Companies avoid having dated equipment through a copier lease. Much like people who choose to lease cars so that they can always have low mileage or the newest technology, copier leasing is similar.
Leases and service contracts tend to the line-up, so toward the end of your contract, you'll have the option to finish paying for your copier or upgrade. Unless you've made the decision that your copier is the greatest thing since sliced bread, you're probably going to want to keep your equipment current.
The vast majority of businesses opt to lease copiers, rather than buy them outright. However, that doesn't necessarily mean a lease is the best way to go. The decision should be based on your individual needs and preferences.
Copier leases generally span one to five years. You'll make monthly payments until the lease term expires. Then, you can opt to return the copier, purchase it or trade it in for a newer model.
Leasing can offer your business the flexibility of meeting your cash flow needs while wrapping all the other costs like setup, installation and sometimes service contracts. Leasing offers you the productivity of the equipment/technology you require while meeting cash flow needs. Additionally, "soft" costs such as installation, freight, or equipment setup and service contracts can be included in the monthly payment. These are referred to as "soft costs."
What are the types of business equipment leases?
There are two primary types of business equipment leases: operating leases and capital leases.
Operating leases: Most businesses choose operating leases, also called fair market value leases, because they offer lower monthly payments than capital leases. When a business gets an operating lease for a copier or printer, it's essentially renting the equipment, so the asset never gets added to the lessee's balance sheet. When the lease ends, the lessee has the option to buy the copier, but the lessor will calculate the buyout cost based on agreement terms, depreciation, wear and tear, new technology, and market demand. In general, operating leases make the most sense for businesses that don't want the hassle of owning a copier or printer, preferring to lease recent models instead continually.
Capital leases: Sometimes called $1 buyout leases, capital leases are the less common choice for businesses. When a business gets a capital lease for a piece of equipment, it's more like a loan on the money than rental on the equipment, so the interest and principal being paid is going toward the cost of the copier, and the copier goes on the lessee's balance sheet. The monthly rate for a capital lease is higher because 100 percent of the cost of the equipment is being financed. However, a capital lease does offer an advantage for lessees who plan on eventually buying, because the buyout cost is stipulated in the contract at the point of signing. In general, capital leases make the most sense for businesses that want to purchase and own a printer or copier without making the entire purchase upfront.
What are the advantages of leasing a copier?
Avoiding obsolescence: Leasing equipment is an easy way to avoid obsolescence, which is a major concern for some companies and a nonissue for others. Businesses that only require basic printers and copiers are usually less affected by obsolescence than those that rely on highly specialized printers with specific high-tech features.
Low upfront costs: Leasing not only allows businesses to obtain printers with low upfront costs, but it also helps preserve credit. Many small businesses have limited access to credit and want to avoid using it whenever possible; leasing equipment is one way to do that.
Leases rarely require a downpayment, so you can acquire the latest technology without shelling out a lot of cash. This is especially useful for small businesses that do not have a lot of cash flow. A lease is a proven financing option to conserve your business' capital when purchasing office equipment or technology. This allows you to place funds in other important areas of your business, like labour, inventory, and marketing.
When you lease an office copier, the upfront cost is less expensive because you typically pay in monthly instalments. Service, maintenance, and repairs are handled and paid for by the company you are leasing the copier from. Leasing a copier also allows you to stay up-to-date with the latest technology.
Buying an office copier is slightly cheaper in the end, but requires a much larger expense upfront. When you lease, there's no upfront fee, but the ongoing monthly expense does accrue over time. The initial cost of buying a machine is often too high for many small businesses. The more manageable, ongoing monthly cost of leasing is much easier to budget.
When leasing a copier, there is generally no down payment or any form of out of pocket expense which helps to preserve a company's cash flow. In almost all cases lease agreements require no down payment and usually not even a first payment in advance. A customer simply agrees to a stream of payments that will begin several weeks after the installation of the machine.
No hassle: When a company leases printers, there is no resale or disposal hassle. Leasing is also convenient because most equipment providers offer maintenance plans, which can be included in the lease itself or paid for separately. Companies with limited IT staff often choose to lease for maintenance purposes alone.
Many lease agreements include a maintenance agreement. When something malfunctions or breaks, you can have your copier serviced at no additional cost. When you buy a copier or printer, the cost of maintenance and repairs is your responsibility. It can be easier to absorb a lower monthly cost than more substantial repair and maintenance costs. One is predictable and easy to budget for, while the other is sudden and may create a financial burden.
Whether you choose to purchase or lease, your options regarding maintenance agreements are the same. Regardless of whether purchasing or leasing, you can set up a complete maintenance agreement that will cover any and all service, parts and supplies needed to maintain the copier. In summary, you will have the same service/maintenance options whether you lease or purchase so this aspect does not need to enter into your decision of whether you choose to purchase or lease.
Predictable monthly payments: Knowing exactly how much you'll pay each month for the copier is helpful for budgeting purposes.
Option to upgrade: When the lease term expires, you can trade-in your old copier for a newer model with better technology. When you enter into a lease for office equipment like a copier, you can easily add to your copier lease by upgrading your equipment and building it into the term or keeping the same payment amount of your lease.
When you lease a copier, you don't have to choose whether to purchase yesterday's technology or a reconditioned model as a matter of cost to fit your budget. It's much easier to buy today's equipment and take advantage of the latest technology since you are wrapping this into a longer-term payment program.
Technology advances at a pace that's nearly impossible to keep up with. Buying an office copier means you'll have to buy newer models to keep your equipment current continually. Leasing provides the option to upgrade every time your lease ends.
What are the disadvantages of leasing a copier?
More expensive: Equipment leasing wouldn't be a business if it weren't profitable, and the reason it's profitable is that the lessee pays interest. At the end of a lease term, most lessees will have paid more than the actual value of the copier. Even in rent-to-own scenarios, such as with capital leases, the lessee/eventual purchaser usually ends up paying more than market value for the printer. In addition to paying more for the actual cost of the printer, many businesses overpay for maintenance plans. When a maintenance plan is included in the equipment lease, not obtained separately, the lessee is paying interest on the copier and the maintenance plan; A $5,500 copier could end up costing around $7,000 if you spread the payments over five years. You'll pay more in the long run when you lease a copier instead of buying it outright.
Locked into a contract: For small businesses, especially startups, being locked into a printer lease can be negative. As businesses change and grow, their printing needs evolve. A printer the company leased when it only had ten employees may not be adequate for a 75-person workplace. Similarly, some small business owners overestimate what they need in a printer or copier and end up stuck with a lease for something unnecessarily expensive.
It's difficult to get out of a lease, even if your needs change. Once you sign the agreement, you're stuck making the payments for the remainder of the term, even if the equipment is not being used. You'll also be required to adhere to the leasing company's maintenance requirements, which can get expensive.
Leasing an office copier means that you do not ever actually own it, which means there isn't a payoff amount, at which time payments stop. Depending on your contract, there may be certain restrictions as to the usage of the machine.
When to buy a printer?
For most buying situations in life purchasing something outright often feels like the best approach because it's often saved for the buyer by not dragging out the payments. By purchasing, the company selling you the product (in your case multifunction copiers) negates any risk by not having to worry if they will recoup the cost of the machine.
Purchasing a copier appeals to those who want full control over the machine and its maintenance. You decide when to have the machine serviced and how long to keep it. There is no contract detailing how the machine should be used because it is your property.
If you have the capital (money in your bank account), then the purchase of a copier may be the best route for you to go. The main benefit of purchasing a copier for your business is not having to pay the finance fees or interest charges. This allows you to keep your business running with little or no debt.
Another important factor is that you don't have to return or purchase anything as it is with many lease programs. Many business owners also take better care of a product they purchase than if they lease it. That's just what they do.
What are the advantages of buying a printer?
Less expensive: It is almost always less expensive in the long run to purchase a printer or copier than it is to lease one. Companies that want to minimize the amount they pay in interest for goods and services will usually opt for buying over leasing.
From a financial standpoint, when you buy an office copier, it is cheaper in the long-run. If you keep it long enough, you will recoup your investment. You do not have to worry about any stipulations pertaining to how much and in which ways you can use your copier.
Recoup investment: Even though a printer is a depreciating asset, a used printer can be sold if it's no longer needed, whereas a leased printer cannot.
No contracts: When a company purchases a printer, it's not locked into a contract with a third-party provider.
Flexible maintenance: A leased printer is the property of the lessor, which typically means the lessee is not contractually allowed to perform any type of maintenance. This puts the lessee at the mercy of the lessor when things break. When a company owns equipment outright, the manager or owner can immediately hire the tech of their choice to service company printers without hesitation or outside approval.
Cheaper in the long run: Buying is always cheaper than leasing in the long term because you avoid finance charges. Think of it much like buying a car: You can save thousands of dollars by paying cash upfront and avoiding interest. When you purchase a copier outright, one of the benefits is that you have one less monthly invoice and monthly payment to process. When leasing a copier, you will have to process and pay a monthly lease invoice each month.
Less paperwork: Buying a copier is relatively straightforward. Just hand over the cash, and the deal is done. Leasing involves an application process and providing the leasing company with detailed financial information. Your company will also be subject to a credit check.
Tax-deductible: The entire cost of a new equipment purchase is tax-deductible. With a lease, you can only deduct the total amount of the monthly payments for that year. In many circumstances, a company can write off the entire purchase cost of a business copier in the year that it was purchased without having to depreciate it over the five-year depreciation schedule.
What are the disadvantages of buying a printer?
Initial expense: The expense of purchasing a printer outright is too much for some small businesses to manage. Businesses that require highly specialized industrial printers and copiers often lease rather than buy, because such machines can cost thousands of dollars and are expensive to repair out of pocket.
Replacement costs: When a purchased printer is outdated or no longer functioning properly, it's up to the company that owns it to replace it. This type of unexpected cost associated with wear and tear (as well as obsolescence) is a major concern for some business owners.
Consistent standards harder to maintain: Companies that have multiple branches sometimes choose to lease equipment because it's easier to maintain the same standards across every location. When purchasing options aren't centralized, different branches can end up with wildly different expenses and levels of technology. When you purchase an office copier, you now assume full responsibility for the machine. Your business is responsible for all of the service and maintenance.
Depreciation: Much like computers, copiers lose most of their value in just a few short years. An expensive, high-end copier won't garner much profit when it comes time to resell it.
Obsolescence: Technology changes rapidly. Five years from now, your state-of-the-art copier will be out of date. But if you've invested a lot of money in the copier, you may not be able to replace it as often as you'd like. Older copiers also tend to have higher per-page printing costs.
Which is better, to lease or buy a copier?
The best decision should be based on what you value the most - staying current with technology or potential cost savings.
If you decide to pay cash for your equipment, keep in mind that your service contract will almost certainly increase as the machine ages. This happens because older machines require more service for replacement parts.
It's easier to keep up with technology and update your machine from time-to-time when you lease an office copier. If you purchase an office copier, you must keep the copier for a more extended period of time to financially make sense.
Leasing a copier means you do not have the burden or worry of servicing the machine or making expensive repairs should it break down. When you own the machine, you are responsible for all maintenance and repair expenses.
It is much like owning a house versus renting a house. If you're renting a house and your water heater goes out, you easily place a call to your landlord to replace it. However, if you own the home, the replacement of the water heater becomes your responsibility.
When you purchase a multifunction printer, you can use it as you wish. However, if you lease an office copier, there may be certain restrictions in place as to how you can use the machine.
Most businesses opt to lease a copier because the upfront expense is minimal. However, leasing is more expensive than purchasing a copier outright so it may make more financial sense to buy your copier if you have the cash flow available.
Leasing is inherently riskier for a dealer or manufacturer because there is a chance the customer may not finish making payments. As a result, the total lease price is often higher than paying for something outright.
Frequently Asked Questions
Copier leases can cost between $100 to $900 a month. – Standard Offices under 10 employees and printing under 5,000 pages a month should expect to pay between $100 to $400 for their copying costs per month.
A copier lease buyout is sometimes called an early buyout. It is the option to purchase a leased copier or printer at any point during the lease agreement. The leasing company decides the buyout amount based on the remaining payments left and the equipment's residual value.
A brand new copier that can print up to 55 ppm costs about $20,000. Copiers that are specifically made to handle demanding workloads cost around $35,000. Used office copiers will cost from $5,000 to $8,000. Copier leases may average between $150 to $2,000 per month.