My firm manages over 50,000 pieces of mailing equipment for the largest companies in the US. What is always surprising when we take on new clients, is the lack of information they have about their mailing spends that can lead to bad decisions and higher prices. We want to arm you with the tools to know what to look for and what questions to ask to put yourself in a power position to reduce costs. Here are 10 questions that you should ask your mailing equipment vendors that we feel are essential to managing this category that should help you save money for the future.
1. When does my lease expire?
We estimate 80-90% of all mailing equipment (outside of the smallest postage meters) is leased. The typical terms range from 3-5 ½ years. You may be able to dig up your original contract and assume that you can calculate the end date based on when you signed the agreement, but this is not the case. There could have been time remaining on your old lease or other processing delays that could change the start date by 1-9 months based on the type of agreement you signed.
Knowing the end of lease date is incredibly important because most mailing equipment agreements have evergreen clauses that extend by one year or more if you do not notify the company of changes 90 days prior to the end of term. To make matters worse, the end of lease date will typically not be visible on your invoices.
2. What are my current costs?
Mailing equipment costs are broken down into the following categories and all need to be factored:
- Meter Rental
- Scale Rate Changes
All of these costs may be included in your equipment lease but you should validate in case you are getting separate bills for these services. If you have other equipment from your vendor like folder and inserters, letter openers, envelope printers, tracking systems etc., make sure to get these costs quantified as well.
3. How much postage have you used over the last year?
All of the mailing vendors should be able to give you detail on the amount of postage you have added to your mailing equipment. We are always looking at the price of the equipment compared to the postage use and find the numbers are frequently out of proportion. You should never be paying more than half as much for the equipment as the postage being used. If you have medium to larger mailing systems, this number should be less than one quarter.
4. Can you explain the fees we are paying on our bills and how we can avoid these for the future?
This industry has many fees that most customers do not fully understand. Here is a list of the most common that you should validate if you are paying and ask for advice on how to eliminate them in the future.
5. How do we get access to our data? (Inventory, Invoices, Postage Activity)
Your mailing equipment account manager should be able to provide you some of this data, but the real question is can you get set up to access this information on the vendors website? Find out if they can set this up for you or at least provide you the core data (account numbers, model and serial numbers) and instructions to get you started. Most of the vendors have really good online tools that will allow you to see the following:
- Inventory – Listing of equipment with models, serial numbers, descriptions and installation dates.
- Invoices – Lease, meter, maintenance and supply invoices.
- Postage activity – Refill dates, amounts with associated meter and account numbers.
6. What equipment models do you have that fit our application?
We are averaging 63% savings for our clients mostly because they are not choosing the right levels of equipment. It is important to get at least 2-3 machine choices from your mailing vendor and push them to explain the differences between the systems. There is very little information available outside of the vendors websites on what this equipment is supposed to cost and volumes that systems can handle. You need to validate that you have as many options as possible to make the best decisions.
7. What is included in the new agreement?
When you are acquiring new equipment, validate that the following items are included or that the pricing is broken out so you can understand the charges:
Leases – We recommend all inclusive agreements that include equipment, meter rental, meter resets (The fee to add money to your meter), postage advances (The fee to have the vendor loan you the funds until the statement date), maintenance and scale rate changes.
Purchases and Rentals – Make sure to validate the amounts for all of the items mentioned above with leases, because most will be charged individually.
8. Which items on the equipment description are chargeable?
When you look at the typical mailing equipment lease agreement it will show you a bunch of line items that together make up the mailing system. The problem is the price of each line is not broken out and you have no way to know which are chargeable or included. We often times find chargeable items that can easily be eliminated if they were properly understood. We recommend going through each line item with the vendor and validating what it is, what are the incremental costs and if it is needed. This will help reduce the costs of the agreement.
9. Can you provide purchase prices and 2-3 lease terms?
Most mailing equipment transactions are renewals of current agreements. The vendors may try to do the easiest path and get you to renew the current or new equipment at similar terms. We recommend doing a cost comparison between leasing and purchasing as well as looking at 2-3 lease terms. To make it easy for you, ask the vendor to provide purchase pricing as well as 36, 48 and 60 month lease terms so you can make the best decision.
10. What can we do to get the price reduced?
It never hurts to ask the question to try to get lower pricing. Here are some things to try that may help:
- Are there any special programs running?
- Do you have any remanufactured or demo versions?
- What if we waited until the end of the month or quarter?
- Are you adding in any remaining balance from our current agreement and if so what would be the cost if we waited until the end of our current lease to renew?
- What if we had a quote from another vendor?
- What would be the cost if we kept what we have today?
- Can we set up national pricing that includes multiple sites?
Hopefully from this list you can see that there is a lot more you may need to know to make sure that you are maximizing your mailing equipment vendor relationship. When you have the information above, it puts you in a power position to better manage your current account and future renewals. All of which can save you money.