copier billing problems and understanding rate escalations

Understanding Rate Escalations: What To Look For & How To Navigate Them

 

At Integrity One we know the last time you purchased something personally, you likely did your homework.

So it’s no wonder that when it comes to work decisions, knowing the ins and outs of the printer or multifunction device deal you’re currently reviewing would be no less important. One could argue it is even more essential because nothing magnifies buyer’s remorse like making a mistake on the company dime, which then affects the entire office.

But the truth is there is a lack of information available to the average buyer when it comes to understanding escalation rates. For instance, when searching online “Understanding Copier Rate Escalations” you know what came up? Not much.

So let’s address the real question, and likely what you’ve arrived to this article in search of…

What is a copier / printer / multifunction device (MFD) escalation rate? Why does it exist and what does/should it include?

To address this question, we first must understand what makes up the “rate” that is subject to escalation. For your device(s) the “rate” refers to a set price, paid by the customer, for every document printed by the device. Although this fee can be referred to by many names, you will most commonly see it as:

  • Cost per copy or “CPC”
  • Click Rate or Overage Rate
  • Service Agreement Terms
  • “All Inclusive” Programs
  • “All You Can Print”
  • “All You Can Eat”

Every organization that provides service on office equipment is going to charge a cost per copy of some kind, in some way. Sometimes a “base” or expected number of prints is already included and instead “overages” are only notated. If that’s the case, be sure to understand how that could be effected by an escalation year over year.

Why is it standard for print providers to “escalate” the rate over time?

There are a few reasons why “escalation rates” exists and are the norm for the industry:

  • The older equipment gets (or more page it has ran), the more likely the device will experience complications including parts replacements, troubleshooting and preventative maintenance.
  • Good Technicians have earned the right to expect an annual review & pay raise for delivering quality work as well as obtaining advanced certifications. After all, if you love your tech for providing exemplary service, shouldn’t they get a raise for taking care of you so well?
  • To create the look of a less expensive option, when the initial buying decisions happen.

As you no doubt are able to tell, two of the reasons above are based upon very basic & reasonable consumer principles. The older an item gets the more expensive it becomes to service. This is true with cars, home appliances and almost any manufactured good. And the fact that talented hard working individuals want & deserve a pay raise as their skills advance is not an unreasonable expectation of any person in the workforce.

The third however can be somewhat more devious in nature and is often done to confuse the buyer. To put it simply, sometimes organizations treat their escalation rate as a honey pot for “hidden” fee that makes a proposal look more attractive upfront, but ends up drastically increasing the device’s Total Cost of Ownership (TCO) over the agreed term.

It is important to note that not all technology providers do this, but it is something to look for and research further when comparing proposals. And yes, this practice can sometimes support a customer’s end goal, if they need a lower payment to upfront and could be attractive to organizations expecting significant growth banking on better cash flow in the future.

However, because most consumers don’t know what to look for and don’t have the tools to educate themselves properly, the ambiguous fee can become an unexpected and damaging expense.

 

What is the industry standard for escalation rates?

Honestly, the answer really depends on your specific equipment, technological environment and usage rates. But as an industry norm, you can expect to see a reasonable escalation rate fall between 10-20% annually.

That said, as we discussed above, many factors play into what your specific rate will be, including the class of device, number of pieces under contract, if a printing base is included as well as other items.

Each technology partner has their own formula to create their rates, but if you see an escalation rate that is not specifically stated or does not fall between a 10-20% annual averages, work with your sales rep to dive a little deeper into the details. Ask questions and make sure you understand what your TCO will be at the end of the term, so you can plan ahead and make the best decision possible for you and your team.

 

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About Integrity One Technologies
Integrity One Technologies represents the best of both worlds when it comes to your business solutions – the national resource and strength of Xerox with the agility of locally managed services and support teams. Headquartered in Indianapolis, with additional satellite locations across the South and Midwest, Integrity One offers state-of-the-art technology from knowledgeable and friendly associates who deliver exceptional service at a fair price. Connect with us to learn more or visit IntegrityOneTechnologies.com | One alliance working for you™.