Wrapping service into lease

[BillyCarpenter]

For us, leasing is totally different from service.

You can lease a device for much longer than you can get service and vice versa if you own it.
They are two different "products" for us. We even have different "plans" of leasing and service

Some of the bigger companies do their own leasing. I suppose they can set the length of the lease to whatever but the standard lease options are

-12 months
-24 months
-36 months
-48 months
-60 months

A lot of smart people have said to never include service in the lease but I honestly don't understand the rational. In fact, I see it just the opposite.

The only argument (in my opinion) against doing this is that toner/supplies could increase over the life of the lease and the service contract becomes unprofitable. However, in most service contracts there's usually a clause that says the service contract will not increase above a certain level. Also, I've never had toner/supplies to increase to the point that it made a difference in profits. Not really.

Just to wrap this up, I think it's always better for the money to sit in my bank account than that of the customer. Anything could happen and you never collect that money. But if you get it upfront, no worries.

[mloudy]

We never did it until other dealer reps began planting the idea in a customers head. Then they started saying "But I don't want two bills". So after decades of paying for the service contact they decided one extra invoice a month is just way too overwhelming for them.

He are the reasons I give a customer why it isn't always a great idea. You are now paying a finance charge on your service. If you decide you want to upgrade early you get none of that money back you rolled into your lease. Once you add in X amount of pages into the lease there is no renegotiating. New HR person wants to cancel the service contacts on your equipment? No probblem but your company has already agreed and financed the next 4 years of service. Churches split, business slows, print flows change... I always needed that perfect example of how things could hit the fan. Then came Covid. I had all kinds of churches calling asking if we could lower their minimums. I graciously did. If they all had service in the lease then sorry folks, I warned you what might happen. Schools shut down for nearly an entire school year and they just kept paying for pages they never ran. Great for a dealer I guess.

We do have a few with service in the lease but we never suggest it.

[BillyCarpenter]

We never did it until other dealer reps began planting the idea in a customers head. Then they started saying "But I don't want two bills". So after decades of paying for the service contact they decided one extra invoice a month is just way too overwhelming for them.

He are the reasons I give a customer why it isn't always a great idea. You are now paying a finance charge on your service. If you decide you want to upgrade early you get none of that money back you rolled into your lease. Once you add in X amount of pages into the lease there is no renegotiating. New HR person wants to cancel the service contacts on your equipment? No probblem but your company has already agreed and financed the next 4 years of service. Churches split, business slows, print flows change... I always needed that perfect example of how things could hit the fan. Then came Covid. I had all kinds of churches calling asking if we could lower their minimums. I graciously did. If they all had service in the lease then sorry folks, I warned you what might happen. Schools shut down for nearly an entire school year and they just kept paying for pages they never ran. Great for a dealer I guess.

We do have a few with service in the lease but we never suggest it.

Thank you. You nailed it. The liability is on the customer, not the dealer, when service is included in the lease.

I also started doing this because other dealers were doing it and the customer liked paying one bill instead of 2. Personally, it's now my preferred way of doing the lease.

[techsxge]

Some of the bigger companies do their own leasing. I suppose they can set the length of the lease to whatever but the standard lease options are

-12 months
-24 months
-36 months
-48 months
-60 months

A lot of smart people have said to never include service in the lease but I honestly don't understand the rational. In fact, I see it just the opposite.

The only argument (in my opinion) against doing this is that toner/supplies could increase over the life of the lease and the service contract becomes unprofitable. However, in most service contracts there's usually a clause that says the service contract will not increase above a certain level. Also, I've never had toner/supplies to increase to the point that it made a difference in profits. Not really.

Just to wrap this up, I think it's always better for the money to sit in my bank account than that of the customer. Anything could happen and you never collect that money. But if you get it upfront, no worries.

We do our own leasing too although we are just a small company of 11 People in total.
You can lease a Machine for as low as 6 Months with an upfront Payment of 150$ and you'll pay off about 50% of the machine. For this lease however, you won't get a service contract and if anything breakes you hvae to pay the full amount of work hours and part costs to fix it.
Otherwise, you can rent it for up to 5 years usually, depending on how small or big you want the monthly payment to be. At the end you'll have paid the full machine costs and if you want to keep the Machine you'll not be charged extra (Except for Service ofcourse)

We have different Service Contracts too:
- Basic: 0.007$ per Copy/Print/Scan, Automatic Toner Delivery withing 3 Days when under 20%, 50% off Service Calls and Part Replacements
- Standard Business: 0.007$ per Copy/Print/Scan, Automatic Toner Delivery within 3 Days when under 20%, Free Service Calls, Free Parts replacement if Units break early, Same Day Tech Support
- Business+: 0.07$ per Copy/Print/Scan, Automatic Toner Delivery on same Day when under 20%, Free Service Calls, Free Parts Replacement if Units reach end of life or break early, 1 Hour Tech-Support Respond Time (We'll drop other Customers if needed)

No matter what plan you have, if you break the machine yourself, you'll have to pay Service Call and all the needed Parts.

This is how we rolled the past 20 years. Worked out perfectly so far