If you’re a small business owner or somebody new to the world of copier acquisition, you’re likely dealing with the decision of whether to purchase or lease a copier.
“Should I buy or lease a copier?”
It’s not an easy choice to make, as there are several factors to consider including the costs, benefits, and your specific printing requirements. In this post, we will delve into the pros and cons of both buying and leasing copiers, helping you make an informed decision that aligns with your needs and budget.
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Should I Buy or Lease a Copier for my Home Office
In most instances, working from home or as a solopreneur means you aren’t generating a ton of output and you’re trying to conserve capital. At this level, you’re almost always better off buying a tabletop all-in-one MFP like you can get from the office supply or electronics store. It will let you print, scan and fax small documents, which is probably all that you need. Speed output isn’t great, but by the time the big copiers come out of sleep mode and are ready to print 10 pages they’re just as slow as the little MFPs.
When you’re looking at these low output MFPs, they’re basically disposable. Once you factor the cost of the part(s) and printer technician labor, you’re pretty much on the hook for the cost of a brand new copier. If you have the time and gumption to do your own printer repair(s), it might make sense to keep it going a little longer.
What Copier Should I Buy for my Home Office?
Any major brand is going to do the job and we aren’t going to get deep into various models. But I will highlight the difference between inkjets and laser printers.
Buy an Inkjet All-in-One MFP When…
- You want the lowest up-font cost possible
- You want to print photographs on high quality photo paper
- This MFP is also going to be the family printer
Buy a Laser All-in-One MFP When…
- Your output is inconsistent on a day to day basis (inkjets that sit tend to get clogged nozzles)
- You want “smear free” highlighting of documents
- You print enough that laser output might save you money in the long run (laser tends to be cheaper to print than ink)
In a few select instances, I’ve seen commercial class MFPs fit well in a solopreneur environment. Think of Accountants, Lawyers, and Financial Planners. They’ll often generate output of 50+ pages and their time is very valuable, so a faster MFP and a managed print agreement makes sense for them. But even at this level, buying a used business class MFP is generally their best option vs. leasing a new one. Figure these robust commercial class printers will do the job for a decade or more. It’s worth treating them as durable goods in this type of scenario.
When to Buy Copiers for your Business
Since I’ve just discussed buying a copier for a solopreneur or a home office, let’s start with when a small business or larger organization might want to buy a copier.
The Pros for Buying a Copier
Does your business plan value building equity?
Purchasing a copier means you own it outright, and it’s included on your balance sheet as an asset. If your business is better when it shows equipment on the books, you probably want to buy your copier.
Do you hate monthly payments and encumbered cash flow?
Some business owners and managers have an aversion to obligating future cashflows. Whether they just want the comfort of knowing “it’s paid for” or their industry is prone to boom and bust cycles, purchasing your next copier meets those needs.
Are you a new businesses with no (or poor) payment history?
Copier leases are loans. Loans require a positive credit history. New business are risky, and sometimes good businesses just fall upon hard times. In this situations, getting approved for a lease is impossible or cost prohibitive. You might well do better buying a used copier or doing a copier rental agreement.
Is your accountant telling you to spend money?
Sometimes your wisest financial move is to purchase durable assets that your business needs to minimize your tax payments. You might be able to expense the new copier and deduct the income from your taxes immediately.
You might also wish to consider what your internal rate of return (IRR) is on cash in the bank. If your IRR is lower than the cost of capital, avoiding the interest expense within a lease is a bigger return for you than letting cash sit idle in the bank.
The Cons of Buying Your Copier
You have to spend a large amount of capital up front
When purchasing a copier, cash is king. But cash is king everywhere. Is that cash better spent somewhere else, distributed as profit, or even saved for a rainy day?
Copiers cost more to maintain as they age
Most business elect to enter into a managed print agreement with their copier dealer. As your equipment ages and gathers more use, parts are more likely to fail and more service calls are generated. This leads to escalation of rates, and your cost of output naturally rises over time. A seven year-old copier probably costs twice as much for service as when it was new, and might be as much as three times as expensive than a current model. If you print a lot, you probably want to lease.
When you’re done with the copier, they’re hard to dispose of
Big old copiers are pretty much boat anchors. Supplies become expensive. Parts get harder to find after they are no longer manufactured. They’re hard to market to potential buyers. A copier dealer can usually move them because they have an inventory of supplies and parts and they have people speaking to potential buyers every day. They usually also have a network of used copier buyers who will re-market old copiers in less developed countries. And when the machine is really worthless, they have a process to properly dispose of them through scrap yards or electronics recyclers. Copier dealers also handle enough machines that they can store and ship full trailer loads of copiers at a lower expense than shipping one or even a handful of MFPs. If you want to hit the “easy button” when it comes to your old copier, lease one instead of buying. You’ll probably have a difficult time giving away your used copier.
When to Lease Copiers for your Business
The biggest difference between buying and leasing copiers is that a lease lets you make payments over time. You save money up front, but pay interest on the back end. But there are other benefits, as well.
The Pros of Leasing a Copier
You can deploy leased copiers for little or no money down
More sophisticated deployments are more than just putting a copier in place. You might need drivers installed on servers or desktops. Specialized software might provide accounting, print management, security, or integration with line of business software or the cloud. You might be deploying these printers across many locations. The costs can add up, and with a lease you can spread those deployment costs out over time.
You value technology and innovation
There are really two different types of copier buyer personas – those that see copiers as just a “click” or print, and those who see the opportuntity to improve business processes.
Copiers are a highly competitive market. New generations of MFPs are constantly being released with new features and machines are becoming less expensive to operate, as well. Right now, we’re seeing software like Sharp’s OSA Technology revolutionize the copier. We can do things that were unimaginable 10 or 20 years ago, like scanning directly to cloud services and document repositories, attaching digitized paper to patient records (EMR), or even interfacing your copier with connected devices. I promise you, that decade old copier doesn’t let you print directly from your iPhone. If you want access to new technologies as they develop, you might prefer to lease as it makes upgrades much easier.
You print enough that upgrades are cost effective
Remember when I said printing costs go down as new generation MFPs are released? Between advancements in printing technology, market competition, and escalation of maintenance agreements because older copiers require more work to keep them running, old copiers become expensive to run. If you print enough, it can be cheaper to replace your old copier with a newer, more efficient one. Many people don’t expect this, but those pennies really add up over time!
The Cons of Leasing a Copier
You’re on the Hook for all those Future Lease Payments
Sure, you can end your lease contract early. But the leasing company wants to be paid in full to end the lease. Sometimes you can negotiate this down a bit, especially if you are returning to upgrade with the same leasing company. But just expect to pay all of that principle and interest early instead of over time to be safe.
You’re going to pay interest
Interest is an expense, and we all like to minimize interest payments when we can. Copier leasing companies are in the business of lending money, and they secure the loan with the printing equipment.
Governments are going to pay taxes (kind of)
Many times government buyers will declare that “we do not pay sales taxes!” And to some extent, that is true. Technically, the government does not charge itself a use tax on copiers.
But the equipment is technically owned by the leasing company, and the government is charging a sales tax and a use tax for any equipment within their jurisdiction. That’s a cost of doing business. So here’s the little trick – municipal rates have those taxable line items “baked in” to the interest payment.
You need good business credit
Not everybody has good business credit. I’m not going to make judgements as to why anybody is in this situation, but it does happen. If your business has ever defaulted on a commercial lease, you’re considered a bad risk. If your business is new, there’s no positive payment history to rate you. These leasing situations generally mean your choices are limited to tier 2 or sub-prime leasing companies, and it’s pretty much like using your credit card.
So What’s the Best Choice – Should I Lease or Should I Buy these Copiers?
Did we help to answer your question – “Should I buy or lease a copier?” I hate to give a non-definitive answer. As you can see, there are many different goals and scenarios when it comes to buying a copier. Hopefully a few of these points resonate more to you, making the decision easier.
Fortunately for the little guys, we can give a near-universal answer that you probably want to buy your copier. Specifically, a small, table-top MFP.
But for larger organizations, you need to take a more nuanced approach to acquiring that new MFP. It really depends on your business objectives and your buying position at the time. I will say, however, that most organizations tend to lease to conserve capital up-front. And the larger the buyer, the more likely they’ll use a Fair Market Value lease because it makes lifecycle management much easier.
Do you Need More Information About Buying and Leasing Copiers?
We’ve done some some other posts on the topic that you might want to read: