Total cost of ownership when procuring printers

14 May 2019 By Richard Sykes - Regional Field Sales Manager, Kyocera

Why TCO of ownership is important blog

When procuring a printer, something to consider is the total cost of ownership (TCO). TCO is the sum of all costs that occur when purchasing your printer. But why is it important?

An often overlooked mechanism for determining the most cost effective quotation received is the TCO calculation. TCO not only includes rental or purchase price, but also the click charge. The click charge is how much the supplier is charging you every time you copy or scan. You need to look at how many times you do this (the volume of your print) over a period of time and add this to the rental or purchase charge to understand what your total cost would be.

Many customers consider the rental or copy charges within the quotation in isolation. This should be avoided, and best practice is to consider them in conjunction when analysing various received quotations.

Most framework contracts are arranged in the following profile;

  • Lease rental; usually calculated based on the lease term chosen (typically 3 – 4 – 5 yrs).This cost is quoted as a quarterly rental charge normally and should always be fixed for the agreed term of the lease

  • Service charge; this accompanies the lease rental and applies to the on-going charges for maintaining and resourcing your contract. This cost is quoted as a cost per page (mono and colour) and should always be a fixed page rate for the agreed term of the lease. The variance of costs associated with the service charge is based simply on your print usage (from the previous quarter) and billed in accordance (copy charge multiplied by quarter volume = £ service cost per ¼ ). Service charges should always include consumables (toners & staples) and NO minimum billing should be agreed.

The TCO exercise simply takes the above quoted charges (rental and service) and simultaneously inputs them into a calculation table combined with your expected volumes (by device or location) and term of contract. The TCO calculates the cost of ownership for the contract and allows you to fully conceptualise the quotation received. It can often expose (based on your individual scenario) that one quotation is more cost effective than a corresponding one when combing all elements of the contract together in a volumetric calculation.

It is extremely important that ‘all’ suppliers quotes use the identical volume data and contract term to avoid misrepresentation and false calculation results. To ensure this – it is advisable that any published TCO tables are sent to the supplier ‘pre filled’ by the customer with lease term required – volume per ¼ (mono & colour as applicable). Instructions should then be passed to the supplier to fill in only designated areas of the table. 

A pre designed table (see example below) with auto calculation fields in accompaniment is vital.  This avoids cross contamination and variance in the quoted costs received.  Auto calculation field must always be authored and controlled by the originator (customer) to ensure accuracy and fairness.

Kyocera TCO table

 

Click here for more information on the framework.

Categories: Procurement , Frameworks

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