School saved from £5m contract

Laser Printer: £320.00 +vat, 12 Months parts & labour cover: £44,000.00 +vat.

A School in the South East were advised that individual printers would work better for them than a centralized printing facility. An office equipment dealer arranged a finance lease for 47 printers on their behalf, including cabling and installation.

Over the 5 year lease, the total payments due came to £56k, plus VAT.  Each printer had an RRP of £320, which totals just over £15k.  It’s an understatement to say that the remaining £41k is a bit extreme for cabling and installation.

The 5 year maintenance and support plan offered by the dealer included colour prints at 4p a copy and mono prints at 0.004p, based on volume.  This was significantly less than the manufacturer’s suggested costs, so the school signed.

Six months into the agreement, the school contacted us; they had started receiving bills for toner alongside the monthly usage invoices.  During our standard free contract assessment, we discovered that toner was not covered in the low prices quoted.  We also discovered this, in very, very tiny print, just above 2 big boxes proclaiming the amazingly low print prices:

“This agreement is for a minimum of 1,000,000 A4 mono copies per item on the equipment schedule”

Putting it bluntly, that’s £44k per printer over the 5 year contract, plus toner – a total of over £2million.  Oh, and the manufacturers don’t reckon the printers are capable of producing 2million copies before they wear out.

But it got worse.  The small print also stated that the parts and labour cover was for the same length of time as the manufacturers warranty – just 12 months.  After that, there would be a call out charge, hourly rate and parts to be paid every time a machine needed attention.

In total, if the contract had been allowed to run, it would have cost the school close to £5million pounds, for printing!

We worked with the school on a no-win, no-fee basis, and after a series of discussions with the dealer, it was agreed that as their overall service was good, it was just their contract which was bad, we should write a new agreement between the dealer and the school. The school now have a service agreement which finishes at the same time as the leasing agreement, they pay just for the prints they have produced, at a rate of 3.5pence per colour and .004 pence per mono print which includes toner, parts, labour, routine servicing etc, in fact everything you would expect except the paper to print on.

We’ll carry on monitoring the situation throughout the lifetime of the contract, just to be on the safe side.

The sad thing is, the school could have paid an extra £75.00 per printer and enjoyed 5 years full parts and labour cover from the manufacturer, buying the replacement toner on the open market as and when required but hindsight is a wonderful asset.

To avoid falling into a similar trap, remember ‘small print’ can just as easily hide on the front of a document as on the back and whatever you do, ensure you read and understand all of the terms before you sign an agreement or sales order document.

Alternatively, ask us for a pre-purchase contract review, like our post purchase review service, it is free.