Are You Sure Those Costs Are Real?

If you are one of the many business managers considering entering into a fleet management agreement today how are you measuring the potential savings to your organization? Are they based on real verifiable expenses or projections provided by a print assessment that you or a vendor has performed?

If you are able to accurately accumulate the expenses you have incurred for hardware, service and supplies you are an exception and have the ability to develop precise cost models for your print output.

However, since most organizations have trouble putting their hands on all of this information they must rely on assumptions and projections; this is where the potential problem may arise.

If this is your case, the question you should ask is "how accurately do these assumptions reflect my unique print output environment?"

Hardware Expense

• Are they based on actual monthly lease payments or amortization?


• Are they based on projected amortization and if so do the assumed life cycles meet your actual experiences?


• Are the projected amortizations based on current asset investments or on today's replacement costs?


• Are the projected amortizations based on retail pricing or current market prices?

My experience has been that often the costs of printer hardware are ignored, usually presented as insignificant but probably driven by not wanting to do the homework to accurately develop these cost components. Depending on your actual page volumes per device these costs can be a fairly significant factor and I would suggest should be based on replacement costs for a like asset.

Supplies (Operating Costs)

• Are the costs per unit based on your actual purchasing history or an assumption?


• Are the assumed costs retail pricing or current market prices?


• Are the assumed costs based on the actual ink or print cartridges that you purchase (standard, high-yield, new OEM, compatibles, return program etc.)?


• Have you included all consumables (toner cartridges, fuser units, transfer kits, drum units, ink heads etc.)?


• Did you factor in supply inventory shrinkage, waste and obsolescence?


• What were the monochrome and color page coverage assumptions (five, nine, twelve, fifteen percent per channel)?

This is the area you should inspect since some sales professionals pad these expenses to make their proposal seem much more attractive. It is not unusual to read a proposal where the highest possible cost per toner cartridge is used (standard cartridge at retail) and unrealistic page coverage models employed. If your projected costs were based on anything higher than eight to ten percent (per color channel) you should ask for a good justification. To understand the impact, a fifteen percent (15%) coverage model used by some sales professionals increases your operating cost three-fold. Just because it is almost impossible to accurately measure your actual coverage you should not accept unreasonably high assumptions.

Service & Support (Operating Costs)

• Are the service costs based on actual in-place contracts, care kits or incurred expenses?
• If assumed costs what is the basis for them and are they realistic (e.g. the cost of care kits)?
• Have you included a cost for your internal IT or Technology support?
• Have you included a cost for infrastructure, network connection, wiring and switches?
  
  

This is another cost factor that gets ignored since it can be difficult to find your actual expenses. Unless you utilize internal support software it may be hard to determine what percentage of your time is spent on printer-related issues. There are published assumptions on these topics within the IT industry itself that you can use to base your assumptions.

I am going to go out on limb here and make the suggestion that the current cost projections contained in most proposals will be overstated as will the potential savings. I am not stating there will not be savings but even if they are small to none a comprehensive fleet management program is worthwhile since it provides so many other benefits for you and your constituent internal clients.