The secret pricing of the UK franking suppliers
In the UK you have the choice of buying or renting a franking machine and it is important to understand the advantages and disadvantages together with the “hidden” charges for both in order to make an informed decision.
Buying a franking machine
The cost of purchasing a franking machine outright starts from £1,000 and a used machine can be acquired for around £400, but this can still be a drain on working capital.
Buying a franking machine outright will give you greater flexibility when purchasing supplies and gives you the opportunity to shop around for the best-priced ink and mailing labels. Ordinarily, your approved supplier will only supply the consumables recommended or produced by the manufacturer. This is to protect the equipment from sub-standard products in the long term.
Cost of ownership will be significantly lower over the term too, but you will still have to secure a service contract in order to meet the terms of your licence to frank post issued by the Royal Mail. It may be more difficult and costly to acquire a service contract independent of a rental agreement and this cost should be factored into your calculations.
Renting a franking machine
Lease rental requires minimal initial outlay with the cost of renting a basic franking machine as little as £14.99 a month; you won’t own the machine, you’ll have little control over the cost of consumables that are required for the franking machine and it will cost you considerably more over the lifetime of the contract.
However, when you lease a franking machine your supplier will keep you up-to-date with the latest developments and technology on the market so you know you’re not going to be lumbered with equipment that has become obsolete. If you rent a franking machine you will be able to meet your long term postage requirements whether you need to increase or decrease the equipment’s capabilities.
Trial agreements – be careful what you sign
Most manufacturers will be happy to provide a free 30-day trial so that you can test the machine in your office setting to ensure it meets the demands of your business. The supplier will probably ask you to sign an agreement that sets out the terms of the trial, ensure that this is what you are signing and that you are not unwittingly entering into a rental agreement.
Postage – beware premium-rate top-ups
Whilst direct price controls have been removed from many of the Royal Mail’s products, they remain the only universal service provider and, as such, are regulated by Ofcom. Therefore, anyone wishing to send franked mail must obtain a licence from the Royal Mail and their franking machine is subject to annual checks to ensure they have not been tampered with and are presenting the post in the correct manner.
The Royal Mail change their postage tariffs from time to time and you may be charged by your provider to carry out this update. Today’s franking machines are equipped with smart technology that downloads updates from the internet, but it would be wise to check in any event.
Adding postage to your franking machine should be free. However, some suppliers will tell you the recrediting facility is free, but download the credits via a premium-rate telephone number at £1.50 per minute. And if you have a phone system that blocks premium-rate numbers, you will be unable to add postage to your machine at all.
Consumables – you’ll have to pay extra for ink and mailing labels
Don’t get caught out by consumables suppliers who call regularly to see if you need mailing labels for your franking machine and, if they catch you out, will send you a box of labels that’ll last you years and cost you over £70.00.
Most franking machines have the capability of stamping your company logo, corporate slogan or return mail address and this is a key marketing feature; what is not always clear is the cost – some manufacturers will charge extra for this service and the density of the stamp will have an impact on how much ink you use. Again you should be clear how much you will be charged to replace your ink cartridges, how many imprints they can make with or without the message and ask for evidence from the manufacturer.
The companies that provide the finance, not necessarily the manufacturer or supplier, will insist that the equipment is regularly maintained and therefore a service contract will be mandatory. How much you pay for this service element is negotiable and you should consider and compare this portion of your monthly commitment carefully. These companies will also impose an administration fee that can be as much as £150.00 so shop around if you are renting your equipment.
Installation and ongoing maintenance costs
It’s important to establish if the supplier installs the equipment and trains your staff without charge or if the franking machine is simply delivered and you are expected to do the rest; and be clear about what is included in the annual maintenance charge. This should cover all call-outs, parts and the annual Royal Mail inspection and provide onsite maintenance so that you are never without your franking machine for longer than necessary. Look out for terms such as, “return to base” that will require your equipment to be sent away for repair.
Ideally, you should obtain quotes from several suppliers to gain the best possible arrangement for your business. Whilst the monthly rental may look similar, there may be underlying costs that are not immediately obvious. And do make sure the company is a Royal Mail maintainer and supplier of franking machines – visit http://frankingcompanies.royalmail.com for a comprehensive list.