Beware hidden costs in managed print services, warns Printacom MD

As companies look for ways to minimise office automation costs in the short-term, Neil Rom, MD of specialist printer distributor Printacom, warns that companies need to guard against making rash decisions that could be more costly in the long-run.

"This is particularly true of the many deals on managed print services being offered," says Rom.

"If you are in the market for a printer, be sure to shop around and, most importantly, read the small print in any contracts that are based on a pay-per-page rate," he suggests. "With as much as 60% of the market operating on this basis, there is as much chance of getting a good deal as you are of getting a bad deal."

Rom says that while there are a number of key factors to consider when entering into such a contract, some of the pitfalls are generally quite obvious whereas others are not as self-evident.

"If you are signing a deal that is too good to be true, then it is too good to be true because there are hidden pitfalls," he states. "There is an inherent cost in manufacturing a printer and toner, so there`s only so much on which savings can truly be had.

"The truth is that the office automation industry is under the same pressure as all other sectors of the economy, and they have to put together special deals that may appear very appealing, but these need to be scrutinised carefully for clauses that could prove expensive down the line."

Key conditions to look out for in the small print include stipulations on minimum billing levels, or similarly, a maximum number of pages per month.

Rom says companies do not always understand the implications of these stipulations and that they should either seek further clarity or query the terms.

"It is possible that the vendor may be advertising a very low per-printed-page cost, although the penalties associated with running over the maximum number of pages may be quite onerous.

"Given the inherent manufacturing costs, and especially in maintaining these machines, it is understandable that these penalties exist. What to look out for, however, is the unseen expense or escalation built into these clauses as service providers try to attract new business by advertising very low per-page costs, knowing they will recoup their money through these penalties later on."

Another area that companies are particularly susceptible to is the sometimes wildly fluctuating currency, with some service providers tying their contract rate to the rand exchange rate.

"The imported component of the pages that you print might be 60% to 70%, and there might be clauses in there that if the exchange rate moves more than a certain percentage point, you might be liable for an increase in your per-page charge," warns Rom.

Similarly, he suggests that buyers not fall into the trap of signing a deal that has an annual escalation rate in excess of the national interest rate.

"Inflation is coming down, as is the repo rate, so you must ask whether an annual escalation of 15% is still relevant," he says.