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New or Used?

(September 2012) posted on Tue Sep 04, 2012

Mandel looks at the pros and cons of buying new or used printing equipment in his interviews with well-known industry experts.

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By Rick Mandel

Points on service conracts
Service contracts go hand in hand with the decision to buy used or new. Even continuing the service contract from warranty status is in question. Will the OEM take on a service contract of a used device, and at what cost? Many will create a service contract, though the equipment must be certified before the contract is written. This may cost $5,000 to $10,000, depending on the printer. Many OEMs will not continue a warranty when sold to a third party. The printing equipment may be performing perfectly on the seller’s floor, but it may have issues upon delivery.
Responses regarding service contracts for used equipment elicited the most emotion. Rhein does not believe in service contracts because, in his opinion, they are all over priced: “In my 13 years of owning many digital machines, we never had a higher repair cost than the yearly fees of a service contract. We never exceeded half the cost of a contract. You need a well-trained person on your staff to handle minor repairs. In this way, you can save money by not buying a service contract.”
Mike Altreur agrees. Typically, a service contract on a piece of digital equipment is roughly 10% of the list price of the machine, he adds. There are many companies that will gladly pay this premium because they require a guarantee for response time from the manufacturer and it makes sense for their volumes and business model. However, most companies would be better off paying straight Time and Materials, he asserts. He suggests that to put the monthly cost of a service contract in the bank, as there will be the inevitable repair. At the end of the year, a significant savings should be expected. The downside is that the response rate may be less for time and material clients, and you are at the pricing whim of the slowest tech. That in it self could get frustrating.
Because there are so many different devices within even the same OEM, it has been a long, slow road for any national company to organize support of used equipment. Most of the best support and service comes from past manufactures’ employees operating as small service contractors. These arrangements are harder to find, though.
The economic realities of service are a real issue in running a printing business. Joe Shondel chimes in: “Our printer’s yearly contract was $50,000. Unless your business is profitable and growing, these types of fees are difficult to amortize over the course of a year and still many repairs are not covered completely. A viable alternative to direct factory service is needed to bring these costs down to realistic levels.”
“The level of comfort with do-it-yourself staff and their experience really determines if you would go with third party help,” Bowers says. “The more experience, the more likely a shop will try to save money. Whether warranties are voided from using other techs or inks is a big issue.”
The availability of software upgrades, and patch/fixes, when service contracts are not used can affect the productivity. Variation in digital equipment is equal to the perception regarding used and new large-format, digital printers. The personality of the origination seems to be the deciding factor. Savings can be had, though you need a staff that can deal with service.

Rick Mandel is president/owner of the Mandel Company, a 120 year old,
family-owned graphics firm. He is CEO of the Screentech Division, specializing in large-format color separations prepared for the screen printing industry, large-format color separations for the P-O-P industry and large-format digital printing. He has been a speaker for SGIA, SPTF, and POPAI and is a member of the Academy of Screen Printing Technology. He is a
20-year member of SGIA.



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