Service contract charges?
Discussion
Hi just after opinions or even better hard facts on if this is right.
I have recently taken over the company accounts and have received an invoice from the people who supplied our photcopier asking for this years payment for "Annual service contract"
I feel its a frankly daft amount as it only covers broken parts and labour not consumables. It would be cheaper to buy a new copier every year.
I have spoken to the copier people and they say were are on a 5 year contact and this is year 3.
I asked about opting out and they said I can if I like but I will still be liable for the full payment for the next 3 years!
Is this allowed? Charging full price for a service that will not be provided?
I was expecting to pay a reasonable cancellation fee and that be the end of it.
I have requested they give me a copy of the contract as we dont seem to have one here.
I have recently taken over the company accounts and have received an invoice from the people who supplied our photcopier asking for this years payment for "Annual service contract"
I feel its a frankly daft amount as it only covers broken parts and labour not consumables. It would be cheaper to buy a new copier every year.
I have spoken to the copier people and they say were are on a 5 year contact and this is year 3.
I asked about opting out and they said I can if I like but I will still be liable for the full payment for the next 3 years!
Is this allowed? Charging full price for a service that will not be provided?
I was expecting to pay a reasonable cancellation fee and that be the end of it.
I have requested they give me a copy of the contract as we dont seem to have one here.
RB Will said:
I have requested they give me a copy of the contract as we dont seem to have one here.
That's your only hope here - having a look at that.Unfortunately the law doesn't protect you from a 'bad bargain'.
I presume that this on behalf of a business?
ETA: Out of interest, what kind of figures are we talking here for the cost of the machine compared to servicing. Does it include an annual 'service' for example?
Edited by JustinP1 on Tuesday 22 September 09:51
Just FYI - the whole "cheaper to buy a copier every year" maths may be wrong.
The pricing of a copier will depend on the service contract included with it, most likely.
So when you look into the TRUE cost of a copier - be careful that the price is the real price, if you see what I mean.
It's a free market on servicing and selling copiers.
Therefore if it were TRULY cheaper to buy a new one every year, then everyone would do that and no one would ever make money servicing them.
The pricing of a copier will depend on the service contract included with it, most likely.
So when you look into the TRUE cost of a copier - be careful that the price is the real price, if you see what I mean.
It's a free market on servicing and selling copiers.
Therefore if it were TRULY cheaper to buy a new one every year, then everyone would do that and no one would ever make money servicing them.
You have my sympathies, I got stung with one of these 5 year contracts too.
Ultimately my own fault for believing what I was being told and not what was written on the agreement.
Mine does cover consumables though and I make damn sure they do the annual service.
You will likely have to suck it up for the rest of the term, but post a copy here when you get it and we can assess it.
Ultimately my own fault for believing what I was being told and not what was written on the agreement.
Mine does cover consumables though and I make damn sure they do the annual service.
You will likely have to suck it up for the rest of the term, but post a copy here when you get it and we can assess it.
walm said:
Just FYI - the whole "cheaper to buy a copier every year" maths may be wrong.
The pricing of a copier will depend on the service contract included with it, most likely.
So when you look into the TRUE cost of a copier - be careful that the price is the real price, if you see what I mean.
It's a free market on servicing and selling copiers.
Therefore if it were TRULY cheaper to buy a new one every year, then everyone would do that and no one would ever make money servicing them.
Exactly this OP - this is the point I was making RE the price of the service.The pricing of a copier will depend on the service contract included with it, most likely.
So when you look into the TRUE cost of a copier - be careful that the price is the real price, if you see what I mean.
It's a free market on servicing and selling copiers.
Therefore if it were TRULY cheaper to buy a new one every year, then everyone would do that and no one would ever make money servicing them.
What you are buying is not so much the 'unit', you are buying the guarantee of use of the asset for five years for your business - quite a different prospect.
There's also the fact that printers, especially the larger ones with higher throughput do need periodic servicing as they can get clogged with paper dust and all sorts.
ging84 said:
walm said:
It's a free market on servicing and selling copiers.
Therefore if it were TRULY cheaper to buy a new one every year, then everyone would do that and no one would ever make money servicing them.
Spoken like someone who's never worked in an office of a large organisation Therefore if it were TRULY cheaper to buy a new one every year, then everyone would do that and no one would ever make money servicing them.
I just have a pretty deep understanding of the difference between opex, capex, depreciation, TCO and free market economics.
Thanks all, will post up the contract when I receive it.
It is for a small business.
It does not include consumables or an annual machine service/ clean etc. So I still have to purchase paper and toner.
Its not a super duper giant machine that we have as I know they can cost thousands. In which case the charge would make sense
The contract is £360 a year and I can buy new equal performance machines from Amazon from about £270-290 obviously that is just for supply and no ongoing maintenance.
As far as I can see if my machine does not break then I receive no service, it just covers parts and labour if it does break. The supplier tells me its good value as there is a £100/hr callout charge for an engineer so it only takes 1 problem a year to pay for itself.
It sounds more like breakdown insurance rather than an annual service charge.
If the machine never fails then we will have spent £1800 (+ purchase price and consumables) and received nothing from the photocopier place.
Almost makes me want to go and break something on it just to get my moneys worth
It is for a small business.
It does not include consumables or an annual machine service/ clean etc. So I still have to purchase paper and toner.
Its not a super duper giant machine that we have as I know they can cost thousands. In which case the charge would make sense
The contract is £360 a year and I can buy new equal performance machines from Amazon from about £270-290 obviously that is just for supply and no ongoing maintenance.
As far as I can see if my machine does not break then I receive no service, it just covers parts and labour if it does break. The supplier tells me its good value as there is a £100/hr callout charge for an engineer so it only takes 1 problem a year to pay for itself.
It sounds more like breakdown insurance rather than an annual service charge.
If the machine never fails then we will have spent £1800 (+ purchase price and consumables) and received nothing from the photocopier place.
Almost makes me want to go and break something on it just to get my moneys worth
RB Will said:
It does not include consumables...
The contract is £360 a year and I can buy new equal performance machines from Amazon from about £270-290 obviously that is just for supply and no ongoing maintenance.
I'm clutching at straws here, but how much was the machine new?The contract is £360 a year and I can buy new equal performance machines from Amazon from about £270-290 obviously that is just for supply and no ongoing maintenance.
To give a real example, we've got a £1600 printer and the extended warranty option was £150 a year.
Who agreed to the contract...?
Yeah those sort of figures I could accept.
The copier person says it was our MD who signed us up but our MD has no memory of it so wont know for sure until I see a contract.
I cant find any invoice for the copier itself so not sure on the price we paid.
After a bit of Googling I have found the model was discontinued in 2007 so must have been very 2nd had when we got it only 2 years ago. I found a review of the model with a price of $1120, at todays exchange rate that works out about £730 but that is new so hopefully we paid about half that (probably not knowing my MD)
So using your figs with a purchase price of £400 the service contract should be about £50 and actually involve a bloody service
The copier person says it was our MD who signed us up but our MD has no memory of it so wont know for sure until I see a contract.
I cant find any invoice for the copier itself so not sure on the price we paid.
After a bit of Googling I have found the model was discontinued in 2007 so must have been very 2nd had when we got it only 2 years ago. I found a review of the model with a price of $1120, at todays exchange rate that works out about £730 but that is new so hopefully we paid about half that (probably not knowing my MD)
So using your figs with a purchase price of £400 the service contract should be about £50 and actually involve a bloody service
PurpleMoonlight said:
Are you sure the machine was purchased outright and not leased or lease purchase?
I did buy mine outright and the maintenance is only £160 pa (minimum charge applicable).
Yes - it sounds very much like a lease to me if a non-new unit.I did buy mine outright and the maintenance is only £160 pa (minimum charge applicable).
You would have just leased the unit for 5 year with no purchase price I would guess. Hence the high ongoing cost.
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