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  1. #11
    Service Manager 5,000+ Posts
    RJ Young service with unlimited pages

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    Re: RJ Young service with unlimited pages

    Recent talk tracks in our NJ sales office has been about the new KonicaMinolta unlimited click program.

    Just recently one of our reps thought that they couldn't compete with the One Rate program for three A3 MFP's. Those three MFP's were doing a decent volume of color each month. When we did some more digging with the clients color volume and the monthly cost for unlimited pages, we figured the revenue for Konica Minolta was two cents for every color page.

    Just as the rep was ending the meeting, the DM stated, "I should just dump all of my HP's and move the volume to the KM's"!

    Wow, it's kinda scary if you ask me, however with every program, the lessor will protect themselves with the T&C's of the lease. Thus we'll inform you on how to give your sales people the best shot at picking apart the program below.

    T's & C's of the Lease

    1) The Evergreen Clause: Notification for end of lease is a short 60 day window for the client. Clients must send notification in writing between 90 days and one hundred fifty days before the end of any term of your decision to return, purchase or renew. The lease will renew for successive one month terms.

    2) Maintenance & Supplies: If your use of supplies exceeds the typical use pattern (as determined solely by Supplier) for these items by more than 10%, or should Supplier, in it's sole discretion, determine Supplies are being abused in any fashion, you agree to pay for such improper or excess use.

    There's nothing in the contract that states what the cost would be for excess use.

    3) Escalation Clause: The escalation clause allows KM to raise the payment up to 10% each year.

    Here's the verbiage:
    At the end of the first year of this agreement and once each successive twelve month period, we may increase your payment, and the per pay charge over the pages included (Overage) by a maximum of ten percent (10%) of the existing charge, or if less, the maximum amount permitted by applicable law. We may bill you a per charge for all pages for all pages produced between the date of you final invoice and the date when you satisfy your obligations under this Agreement and either purchase or return the equipment to us.

    Okay, so I get the escalation (ten percent per year is a lot of bucks) but I'm not sure why there is verbiage about pages and overages. Maybe it's an oops and someone forgot to change that line from the older cost per page lease. If anyone knows please use the reply thread.

    4) Origination Fee: $100 is added to the first invoice for an origination fee.

    5) Termination Fee: We reserve the right to charge a fee upon termination of this agreement either by trade-up, buy-out or default. Any fee charged under this agreement may include a profit and is subject to applicable taxes.

    Okay, I understand this part also, but how much is the termination fee? It's very open ended.

    6) Supplies: Clients are expected to pay for shipping/handling of supplies. Which leaves us to how much is the cost to ship, and how many times would they ship each month. A mere $20 per shipment per month adds a whopping $1,200 on a 60 month lease. Could it be $30? Seems no one is sure.

    How to Compete Against unlimited clicks

    1) You'll need to have a copy of the KM unlimited click program lease with you at all times. In addition you'll want to highlight all of the terms that I've listed above.

    2) You'll need to read the lease several if not many times to become familiar with each and every one of the pitfalls. Searching for each pitfall in front of the client means you're a rookie and you haven't done your home work.

    3) Have a pen in hand and figure the escalation clause numbers with your client. As far as I'm concerned the verbiage of "we may", means "we will". Don't forget to include the shipping charges, or ask the client if the rep informed them how much the shipping charges will be. I'm betting dollars to doughnuts that most KM reps won't bother to read the lease they are selling. Your knowledge of the KM lease can put you in the drivers seat.

    4) Maintenance & Supplies, especially the line that talks about the additional charges if the client exceeds the typical use pattern by more than 10%.

    While we don't know what the KM pattern looks like, we can present the client with sample print documents that show the percentage of fill (toner) for each document. The key is to also have the "What is Page Coverage Book" that we have posted in the Doc's & Pic's section of this site.

    Your job is to show the client every page of the book and let them tell you what type of documents they print the most. In many cases the coverage will far exceed the industry standard which is 20% coverage for color and 5% for black. You then need the client to buy in that thier coverage could be more than the KM pattern. But how would they know if they don't have a copy of the KLM pattern. Point is they don't unless they can get one. The un-certainty what that document is will lead to the risk that they will use more fill (toner) that what KM allows.

    Closing

    The unlimited click program is going to be awesome for certain clients, and we're not going to be able to beat it. But for heavy users there can be a lot of risk entering into agreement that is severely one-sided for the lessor.

    Keep in mind that any reductions or waivers require approval of the President of the Direct Channel. Taking a sales persons statement that we'll waive that part may not the right statement.

    Me? I'm doing exactly what I outlined. I'll have everything with me to give myself the best chance of winning. Remember the old saying, "if you can't beat them, then join them". It may come to fruition sooner than we think.


    Four Ways to Compete Against the KM Flat Rate Program

    ART POST
    VIP
    7/11/1812:03 AM

  2. #12
    Service Manager 10,000+ Posts
    RJ Young service with unlimited pages

    BillyCarpenter's Avatar
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    Re: RJ Young service with unlimited pages

    That's a lot to take in. I should have a copy of the proposal tomorrow and I see I have a lot of homework to do on this one. Thanks for the info. I'll be following up in this thread tomorrow.
    Growth is found only in adversity.

  3. #13
    Field Supervisor 500+ Posts mloudy's Avatar
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    Re: RJ Young service with unlimited pages

    Quote Originally Posted by SalesServiceGuy View Post
    Churches have to deal with declining attendees as people age with less contributions so they do not want to get stuck in a fixed cost program. There is also the probablility that a new virus like COVID could reappear forcing people to stay at home away from the Church.
    So this is where you may have a huge advantage on the service side. The equipment cost will not go away but if you can offer a MA that is flexible you have the upper hand. I would never agree to any fixed cpp more than a year anymore. Sure others dealers will but use common sense. Is anything the same price it was 5 years ago. The Transit Connects we buy for service techs were $27k in 2019. Same exact van is $37k now.

    We never want to include service in a lease payment and always give our reasons why a customer shouldn't include it. It is great for the dealer but can be bad for the customer.

    Enter Covid. So now all these customers like churches and schools were paying for pages they aren't running with no option to stop it becasue they have signed a 5 year lease or agreement. It really was the perfect storm for why we always encouraged customers to keep the service side out of a lease. There is also NO option to canel except for a complete buyout. I took lots of phone calls from churches during that time asking if we could stop the minimum billings for their Maintenance Contracts. As a small dealership I could make that decision in less than 30 seconds. When they called in they were transfered to me in a matter of a minute. Push this. For a church this is still fresh in their mind. Many have a fixed budget and giving fell dramatically for a year and has never fully recovered in most churches. For a larger dealership they would likely not budge on any minimums and if it is in the lease there is no option to stop. Image how long it would even take to get to talk to someone that could even answer that question. Unfortunately most ex-customers find these things out the hard way. Then they call us and ask if there is anything they can do to get out of their contract with the other dealer and come back to us. Ugh.

  4. #14
    Service Manager 5,000+ Posts
    RJ Young service with unlimited pages

    SalesServiceGuy's Avatar
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    Re: RJ Young service with unlimited pages

    ... if you are the current vendor and the four copiers are on a FMV lease, it is the customer's responsibility to return the copiers at their effort and expense to a destination of the lessor's preference.

    You have to play hardball on this one (phrased nicely) to maintain an advantage.

    It is very unlikely that the RJ Young quote has built in extra money to return the copiers for a seemless customer experience. The Church could get a signicant unexpected cost to return the copiers.

  5. #15
    Service Manager 5,000+ Posts
    RJ Young service with unlimited pages

    SalesServiceGuy's Avatar
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    Re: RJ Young service with unlimited pages

    I would probe and ask if the RJ Young sales rep actually asked for the historical print volumes or is he just going with the One Rate program that assigns a print volume to a speed range.

    Lots of customers have faster copiers than they need.

  6. #16
    Field Supervisor 500+ Posts mloudy's Avatar
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    Re: RJ Young service with unlimited pages

    Quote Originally Posted by SalesServiceGuy View Post
    ... if you are the current vendor and the four copiers are on a FMV lease, it is the customer's responsibility to return the copiers at their effort and expense to a destination of the lessor's preference.

    You have to play hardball on this one (phrased nicely) to maintain an advantage.

    It is very unlikely that the RJ Young quote has built in extra money to return the copiers for a seemless customer experience. The Church could get a signicant unexpected cost to return the copiers.

    We have lost 5 clients to a KM dealer. All but one have returned. A church, go figure.

    ALL five of them called us a few months into their venture with the KM dealer. Almost word for word they said to us that "We could come pick our our equipment". This was all leased equipment through Wells Fargo. They each were told how a good dealer does business when they acquire a new customer who is leasing equipment from another dealer. Like SSG said RG is likely leaving out any buyout andor shipping charges for the old equipment.

  7. #17
    Service Manager 5,000+ Posts
    RJ Young service with unlimited pages

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    Re: RJ Young service with unlimited pages

    ... I often see Xerox state to a customer that any leased equipment returns can only be handled by a Xerox approved carrier often at a cost well above market rate. $850.00 is not uncommon.

    I make customers aware that I am building this much money into the lease and whatever the acutal charge is, I might have to to make a +/- payment to the customer. Settlement of these shipping charges can involve writing the customer a cheque once the lease is funded.

  8. #18
    Service Manager 10,000+ Posts
    RJ Young service with unlimited pages

    BillyCarpenter's Avatar
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    Re: RJ Young service with unlimited pages

    Quick follow up. I delayed the meeting. The pastor is going out of town so our new meeting will be on the 8th of November. When I spoke to him today over the phone, I asked if he had read the fine print on the service contract and if there was any line that capped the number of pages even though they claimed it's unlimited. He said there was a line in there like that but he had them to remove it. Also, I asked if he could send me a copy of the proposal and he said no. He said that I should be able to give my best proposal without needing to see it. That, IMO, was smart on his part. If I were a buyer, I'd never show the proposal to another vendor. It's makes it too easy to slightly undercut the competition and you're probably not getting the best deal for your company. I could go over his head by going to the other pastor that I do business with but I'm not going to do that.

    Instead, I'm going to take this approach. Basically, I'm going to ask him this: If I offered you a billion copies per month at a price that was agreeable to you, are you really getting a billion pages per month? The answer is no because they'll never print that much.

    He's gonna send me the page usage over the past year. From there I'll quote him a page count that his high enough that there shouldn't be any overages.

    It's still very early in the sales process. I want to end on this note: NEVER BE SCARED TO WALK AWAY FROM A DEAL. A dealer can lose a lot of money if you're not careful. I will give him my best deal and if that's not good enough, walk away. With all that being said, I don't plan to lose. Will follow up when it gets further along.
    Growth is found only in adversity.

  9. #19
    Field Supervisor 500+ Posts mloudy's Avatar
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    Re: RJ Young service with unlimited pages

    We lost a school to a dealer who was with $300 of us over 5 years. $500K plus deal. They had all the "we may" things in their quote that SSG listed. We had decades of usage history which was given to them to do their quote.

    Just a few years in and they were wanting out becasue of the horrible service. At the end of the term the school had to cough up an additional $18K for overages because the lowballed the included pages. We were told we lost the deal because our overage cpp was higher. Well, there wouldn't have been any overages if they went with us so the cpp didn't have mattered.

    It is too bad he want give you their quote. Maybe you could ask just to see the verbiage and not the actual dollar figures. In their best interest...

  10. #20
    Service Manager 5,000+ Posts
    RJ Young service with unlimited pages

    SalesServiceGuy's Avatar
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    Re: RJ Young service with unlimited pages

    Many lease vendors will charge a Lease cancellation fee of approx $150.00 if the new lease is not signed with them.

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