Photocopiers have been around since 1938. And ever since their launch; they have become an indispensable part of every office.
That said, most business owners struggle with one key question when planning to include one in their office.
Should I buy a photocopier or lease it?
This article aims to make the decision easier for you.
We’ll discuss the pros and cons of both buying and renting a photocopier for your business.
Table of Contents
Buy a Photocopier Outright
Before you make up your mind to purchase a photocopier let us consider some of the pros and cons of buying a photocopier.
Pros of purchasing a photocopier
1. Less expensive
- Purchasing is considered a beneficial option (as compared to renting), especially when considering a long term use.
- It helps businesses to cut down the cost they pay as fees for the services and goods.
2. Zero paperwork
- Purchasing eliminates the need for paperwork like providing financial details and filling up lease agreements (which need to be renewed repeatedly).
- A purchased photocopy machine will therefore be a lifelong asset for your business.
3. Flexibility and control
- When you purchase a piece of office equipment, you automatically own the right to use it without being answerable to anyone.
- This also means that you have the choice to go for your preferred technician or maintenance firm based on your budget and needs.
4. Tax incentives
- When you purchase a new copier, you can deduct the tax in the first year.
5. No contracts
- Purchasing a copier helps avoid getting locked into any unnecessary contract with a third-party provider.
6. Recoup investment
- If you plan to shut down your business, you can sell your copier even though its value might have decreased.
- Photocopy machines are always in demand and you’ll always find buyers looking for a second hand one.
Cons of purchasing a photocopier
Agreed that the advantages of buying a photocopy machine are attractive.
However, before you jump in to purchase one, take a quick peek into the drawbacks mentioned below:
1. High initial expense
- Photocopiers with specialized features can cost thousands of Ringgits.
- The upfront expense of purchasing even a small photocopier can be hard to manage for small businesses.
- In such a case, buying one might leave you with less money for purchasing other essential office equipment.
2. Replacement costs
- The cost of repairing a photocopier can sometimes go beyond your expectations.
- Once you have purchased a photocopier within a few years, the technology will be outdated, making it hard to sell at your preferred price.
3. Lack of standardization
- If your business has several branches and each branch buys its own copy machine, it will be hard to estimate each branch’s expenses.
- Additionally, if different branches use different photocopier technologies, it will be challenging to scale up the cost and performance across each unit.
Rent a Photocopier
Before talking about the advantages and disadvantages of renting a photocopy machine, let’s run through the types of lease agreements considered for renting.
Types of photocopier lease
In general, photocopier leases can be classified into two:
1. Operating lease
- This is also called a fair market value lease because of its low monthly payments.
- Operating lease is the most sought lease by the businesses who like to upgrade to the latest models.
- This is renting a piece of equipment so that the photocopier won’t get added to the lessee’s balance sheet.
- Once the lease period ends, you will have an option to buy the equipment.
- The price will be calculated based on market demand, new technology, wear and tear, depreciation, etc.
2. Capital lease (rent-to-own)
- This is a less sought-after lease and functions more like a loan of money than equipment rental.
- The payments are going for the machine’s cost, and the photocopies go to your balance sheet.
- The monthly rate of the capital lease will be higher than that of the operating lease but advantageous for businesses who plan to own the copier eventually.
Pros of renting a photocopier
While renting a copier, it is essential to consider what type of lease (renting lease or operating lease) you are asked to sign.
Businesses often choose the renting lease instead of operating lease because of lower monthly payments and tax benefits.
Let us, therefore, focus on the benefits of the renting lease.
1. Avoiding machine being obsolete
- Printing technology is continually evolving, and in a few years, the current technology is going to be obsolete.
- Businesses that require highly specialized printing features will be more affected by this than companies that require basic printing features.
- You can always choose to terminate your rental agreement and look for a newer machine with more advanced technology and features.
2. Leading technology
- As mentioned above the printing technology is evolving at a constant pace. Newer features are being rolled out every year.
- Leasing helps you stay up to date with the technology as you can always upgrade the equipment after the lease period expires.
- Leasing helps businesses to afford technology without paying substantial upfront costs. This is a great boon for small businesses.
- Lease terms will be valid until the lease period and are not subject to change.
- Besides, it will help make sure that you don’t have to worry about selling if you decide to close down your business.
4. Low upfront cost
- Leasing helps businesses preserve their credit by obtaining sophisticated printing equipment with low upfront costs.
- Leasing provides you with a predetermined monthly fixed cost, helping you to allocate your budget more effectively.
5. Tax deductions
- Leasing a photocopier allows you to get tax deductions by categorizing the monthly rental fee as operating expenses
Cons of renting a photocopier
1. Higher expenses
- Many businesses don’t realize that they would have paid more than the photocopier at the end of the lease term.
- Even in scenarios such as rent-to-own, like capital leases, businesses eventually pay more than the photocopier’s original market value.
2. Tight contractual obligation
- For small and medium businesses (SMBs), getting entangled in so many contracts at the starting phase of their company can be a stumbling block to future growth opportunities.
- As the company continues to expand, the printing needs may change.
- Say for example, at the starting phase of your business, you had 20 employees. A single photocopier is adequate in such scenarios.
- However, if after a few years, the employee size expands to 120, multiple machines may be required to manage everyday office functions.
- The vice versa is also possible where business owners overestimate their requirements and end up with overly sophisticated copiers until the lease period ends.
3. Lack of flexibility and control
- When leasing a photocopy machine, the flexibility for maintenance and repairs is usually with the photocopier supplier.
- This means that every breakdown needs to be reported to them. Their maintenance team will be sent at their own convenience.
- Most business owners know what it means to run a day with a non-functional photocopier.
- Thus, choosing a reliable photocopier supplier is important
Should You Lease or Buy a Photocopier?
Photocopiers are one of the essential pieces of equipment for running a physical office. The purchasing option may not always suit the pockets of an SMB or a new business. In such cases, leasing is considered the best choice.
On the other hand, if your company wants to stick to basic features and technology, buying is considered a better and more cost-efficient option for the long run.
It is safe to say that the choice depends on the type of your business and the goals that you have in your mind.
The article provides a detailed discussion on the pros and cons of both buying and renting a photocopier. We hope it helps you take an informed decision!
Want to explore both renting and buying options? Contact us for a consultation today.
Frequently Asked Questions on Photocopier Lease or Buy
Is there a buyout option in the photocopier lease?
Some photocopier rental suppliers provide a buyout option during the lease period of the copier. This is an option to purchase a leased copier at any point of the lease period.
The leasing company determines the buyout price depending on the equipment’s residual value and the remaining payments left.
Opting for the buyout is a great option when the agreement for lease is not meeting your needs.
How long is a photocopier lease term?
It depends on the terms of the contract. In general, a period of 24 months and 36 months is standard.
If the company wishes, they can opt for an extended lease period.
Does the photocopier need to be insured?
Yes, it is advisable to insure your photocopier to safeguard your company from legal suits. This is a vital requirement for several photocopier leasing companies while you lease their photocopier.
Printer and copier insurance covers situations where your machine is destroyed by some mishaps or accidents such as fire, lightning, short circuits, earthquakes, etc.
The policy can also cover the legal expenses and other related costs.
Can I add to the photocopier lease term?
Yes, you can. It will depend on your service provider.
Several service providers give their customers the option to add to the photocopier lease term.