Look out, Small Business: Xerox is out to get you. So are Canon, A. B. Dick, IBM, Mita, Savin, Saxon, 3M, Toshiba, and a dozen other makers and sellers of office copiers. The battle for your affections, and your hard-earned dollars, is being waged on television and radio and in the pages of magazines like this one. The point-men in the attack range from modern heroes like Xerox's John Havlicek, late of the Boston Celtics basketball team and now a restaurant owner, to ancient heroes like Saxon's Saxon, who might have skewered a few original Celts in his time. Their support troops are an army of technical terms like fiber optics, micronics, monocomponent toners, cold-pressure fusing, and microprocessors. For the most part, they're trying to sell you plain-paper copiers -- machines that will copy on ordinary paper rather than some specially treated kind (not all of them will, but more about that later). The stakes they're fighting for are high: An estimated 469,500 new plain-paper machines went into U.S. offices last year, rising to 773,500 by 1985.

Copier companies, like computer manufacturers, have discovered small business with a vengeance. Competition in the low-to-medium end of the market -- machines capable of making 20,000 to 150,000 copies a year -- is intense and growing. On average, you can expect two to three new model introductions per month, and price lists, once so firm they could almost be carved in stone, now change with dizzying speed.

As is usually the case with technology, there's good news and bad news associated with these developments. The good news is that there are more copying options open to even very small companies, at a lower cost than ever before. The bad news is that the vast array of models and prices makes choosing the right machine for your needs more difficult. And, although the financial cost of a bad copier choice may not actually destroy most companies, the human cost, measured in sheer aggravation, lost time, and lost tempers, can be devastating.

Because "state of the art" (an overused phrase in copier ads, which will not reappear in this article) these days means plain-paper machines, the bulk of what follows will focus on helping you understand what's happening in plain-paper land. Whether you decide to pursue that option when you make your next copier choice, or choose a different process, there are several key steps to take if you want to become an intelligent copier consumer. The first is assessing your copying needs. Needs assessment is pretty straightforward. Answer the following questions and you'll be on your way.

1. How many copies do you make? This is the place to start, because if your answer is "fewer than 250 per month," you may not need your own copier. If you make fewer than 1,500 to 2,000 copies per month, you probably don't need a plain-paper copier either. (See "The Coated-Paper Copier," page 44.) Assuming that you make more than 2,000 copies per month, however, it's important to be accurate in estimating your present and future copy volume. "Don't fool yourself," warns Patrick Marasco, an independent dealer with 30 years of experience. "A copier forced to make more or fewer copies per month than the manufacturer suggests will break down -- a lot. With few exceptions, copiers that seem to be perennially broken are low-volume copiers in high-volume environments, or vice versa."

If you already have a copier, one way to go about making an accurate volume estimate is to examine the bills you've received for service during the past year, since many service charges are a function of copy volume. Another method is a user questionnaire, which, if done formally, might mean asking those who use your machine to keep track of the number of copies they make -- as well as what they copy -- over a month's time. The latter idea isn't a bad one, since it will also help you answer the second important question.

2. What kind of copies do you make? Copier experts suggest two simple procedures to make sure that a machine is right for the kind of copying you do. The first step is to make a list of what you need to copy -- for example, internal memos, form letters onto your own letter-head, names onto labels, drawings, computer printouts -- as well as an estimate of how often you need each kind of copy made. Second, take actual samples of the most important documents with you when you try out machines at the dealer or when the salesperson comes to call. "There's classic story," says Marasco, "of the electrician who discovered too late that his new machine wouldn't pick up the particular color of blue ink used for the preprinted numbers on his invoices."

Disappearing numbers aside, there are other important reasons to know exactly what you copy. If most of your copying is limited to internal memos, all you really need is legibility, not letter-perfect quality -- and you shouldn't pay for it. If you need long runs of form letters on your letterhead only occasionally, you probably can use a local copy shop for the job, and save yourself the expense of buying special features, or overall capacity, that you don't need every day. On the other hand, if you regularly copy documents that need to be reduced -- printouts, for example -- you should make sure the copier you buy has the capacity. This point leads directly to the third question.

3. Do you need convenience features? Reduction capacity, automatic document feeders, and collators are the power steering, power brakes, and air conditioning of the copier world. Gradually, as happened in the automobile world, the cost of these options is coming down, but not so fast that they still don't make a significant difference in the final price of your copier. Moral: Be sure you really need them. After watching his office grind to a halt once a month while 10 employees copied, collated, and stapled a massive report, the director of one trade association decided to invest in a copier with a collator. "But even before the new machine showed up," he recalls, "I realized we'd only use the collator once a month." He canceled the order and took his monthly report to a copy shop instead. You might want to do the same thing. In either case, very few copiers costing less than $5,000 offer these features, which leads to the final question you should ask yourself.

4. How much do you want to spend? If the answer is "less than $2,000," your choices are limited almost entirely to coated-paper, low-volume copiers. But if you can afford to spend even $3,500 for a new machine, you have choices galore. And if you need to make 2,000 or more copies a month and want to copy onto your letterhead more than occasionally, you'll probably want the flexibility that a plain-paper copier offers.

There are, at last count, more than 100 plain-paper copiers priced under $20,000. Of those, about two-thirds of the models cost less than $5,000. But if price differences aren't a major factor in your choice, there are some important differences to understand. The first is that not all "plain-paper" copiers will copy on plain paper. This stems from the difference between dry toner and liquid toner.

Toner, in simplest terms, is what makes the letters appear on your copier paper -- in other words, the ink. Chester Carlson, the father of xerography (see "Chester Carlson: The Man Who Started It All," page 42) patented in 1942 what would become the basis for the dry-toner copying process. Because the technique was patented, the Japanese, who even then knew a good idea when they saw one, found another way to accomplish the same goal, and so liquid toner was born. Until recently liquid-toner copiers enjoyed two advantages over dry-toner machines. First, they needed no warm-up time, since no heat buildup was required to melt the dry toner so you could begin making copies. Second, because their process was simpler, the liquid-toner machines tended to be both less expensive and more reliable than dry-toner machines. But the liquid-toner machines had one major negative aspect: They required a special "hardened" paper -- paper rolled an additional time at the mill -- to keep the ink from soaking through the sheet and ruining the copy.

That negative may turn out to be a moot point. Xerox's current patents on the dry-toner process expired in the mid-'70s, and ever since, the major Japanese companies such as Canon, Ricoh (maker of all copiers sold under the Savin name, among others), Minolta, Mita, and Toshiba have invested most of their efforts in developing dry-toner machines. As a result, dry-toner technology has advanced rapidly, while liquid advancements have been few and far between. Warm-up time for dry-toner machines has diminished, and their cost has come down. And liquid-based machines still are saddled with their original disadvantage -- the need for special paper. The hard paper doesn't cost any more; it's just that it is the only kind of paper you can use in the machine. And it simply doesn't look like your average company letterhead.

Many liquid-toner copiers deliver excellent quality, and so long as you understand their limitation, they offer good value. But the dry look appears to be in. Japan's Ricoh, long the leading maker of liquid-toner machines (indeed, the leading seller of copiers in the world), is switching completely to dry-toner copiers, as are all of the other Japanese manufacturers. At this point, only Savin, whose exclusive license to sell Ricoh products in the United States expires in 1983, seems intent on producing its own new liquid-toner machine.

As you may have noticed, Japanese names appear rather frequently in the previous paragraphs. Yes, it's true. Distressing as it may be to those who think that "xeroxing" is as American as apple pie, the copier world is yet another place where we've lost a large share of the market to our friends in Tokyo. If this fact is not immediately apparent, it's because of "branding," the practice of putting one company's name on another company's machine.

John Derrick, whose monthly publication What to Buy for Business follows the copier marketplace closely (See "Who's Who Among the Experts," page 46), estimates that 50% of all the machines currently on the market at less than $200,000 are made by one company and sold by another. Indeed, he concludes that it's probably fair to say that only Xerox and Canon, of all the major manufacturers, make everything they sell and that none of their products are available under anyone else's name.

For example, Minolta markets its copiers under its own name but also sells its most popular model, the EP-310, to IBM, which markets it, with some slight modifications, as the Executive 102. Another Minolta, the EP-710, is also sold by Pitney Bowes as the PBC2. A. B. Dick buys its low-end, coated-paper machines from three other companies: Agfa of Belgium, the Japanese Copyer Co., and Minolta. Saxon sells Matsushita copiers as well as its own home-grown models, and 3M buys its plain-paper copiers from Toshiba. Mita, which so far markets its products in the United States only under its own name, sells machines under 10 different brand names in Europe. And so it goes.

There's nothing inherently bad about branding, of course, although some companies are less prone to admit their machines' origins than others. You should know, however, exactly whose machine you're looking at, to avoid wasting time comparing the same machine sold with two different housings -- or to avoid spending a good deal more money than necessary. For instance, the Rex Rotary 5080, a Danish-made plain-paper copier, lists for $2,998 under its own name, but for $3,445 as The Gestetner 2010. Nothing but the label explains the difference in price.

Other kinds of labels play an important role in copier land.The manufacturers' advertising is replete with high-tech buzzwords. But before you get too carried away with exciting new technologies, you should realize that the basic copying process hasn't changed significantly in years. For instance, using fiber optics -- essentially glass "wire" that transmits light -- can eliminate the large glass lenses used to focus light inside the machine. This reduces the size of the copier, but otherwise doesn't have much to do with performance. Microprocessors, impressive as they sound, are primarily used to reduce wiring and to simplify the control panel of the machine; they aren't at the heart of the duplication process itself either. The point is not to downgrade some real advances which in part are responsible for the rising choices and falling prices in the market, but simply to put them into perspective.

With all of the foregoing in mind, you can finally make a specific evaluation of the right machine for your needs. For the sake of convenience, we'll divide the 100-plus copiers mentioned earlier into three categories:

Basic Desktop Models Under $3,500 (up to 5,000 copies per month). This is the bottom end of the plain-paper market. Prices start at $1,995 for the Clark copier (see "Clark Copier Challenges the Giants," at right). Basically, these are no-frills machines suitable for annual workloads of approximately 50,000 copies, although some units are made to handle higher amounts. These low-end copiers are designed for fairly straightforward applications, such as making single copies of correspondence, copying pages from books, and other one-at-a-time tasks. A few models offer more sophisticated features such as dual paper cassettes (most machines under $5,000 will copy on 8 1/2" X 11" paper only), self-diagnostic capabilities, and two-sided copying. Two models in this range offer collators and document feeders, although these features add 30% to 45% to the base price of the machine. There are eight liquid-toner and 31 dry-toner models in the category, based on list prices quoted in Derrick's What to Buy for Business and INC.'s own research.

Advanced Desktop Models (up to 10,000 copies per month). Above the $3,500 price line, desktop copiers can handle increasingly higher volumes of work; copy speed increases as well, along with size and durability. Collators and automatic document feeders are also much more common in this class. There is some crossover in capabilities between these copiers, as rated by the various specialty publications, and those in the high-volume, freestanding category, which is next on the list, so no maximum dollar limit is indicated. In general, however, most units in this category cost between $3,500 and $8,000. With this kind of range in price and features, cost per copy becomes increasingly important, and you should consult one of the publications mentioned in "Who's Who Among the Experts" for comparison-shopping purposes before making a decision. There are 12 liquid-toner and 30 dry-toner machines available in this category.

High-volume, Freestanding Models (up to 25,000 copies per month). The distinction between advanced desktop models and freestanding copiers has begun to blur recently, as features such as reduction, once associated only with large machine, are becoming available on smaller, less expensive models. Some of the models in this category are quite old by the standards of today's market and are offered only as rebuilt units. This helps to explain the extraordinary range of list prices, which begin at $3,990 and run all the way up to $19,175. There are 22 copiers in this category; all are dry-toner machines.

Besides the fundamental considerations of volume and price, there are other, equally important, factors to weigh before you decide on a machine.Every copier expert warns that buyers should analyze the cost of consumables -- paper, toner, developer, and parts -- and the cost of basic service. Combining these elements with the purchase price will enable you to arrive at a true cost per copy, which is the real bottom line. Fortunately, most of the publications listed in "Who's Who Among the Experts" have already done the complicated job of calculating per-copy cost, as have the manufacturers themselves. Just remember not to be carried away by a low list price alone.

So far we've dealt only with list prices, but in this competitive market you have quite a bit of flexibility as a buyer, depending on the supplier you choose. You have two basic options here: buying direct from the manufacturer or buying from an office-supply or copier dealer.

Xerox, IBM, and Pitney Bowes sell only through direct-sales forces (although Xerox, in addition to its sales force, is experimenting with a few dealers and has opened some "Xerox Stores" in major metropolitan areas). Savin, A. B. Dick, Saxon, and 3M sell through direct-sales forces and dealers, and everyone else sells almost exclusively through dealers.

You can't bargain with the direct-sales forces, but you can with the dealers, usually to the tune of a 10%-to-15% discount. That's because profit margins, although shrinking, are still high on copiers.For instance, a no-frills Japanese-built copier with a list price of $3,500 costs around $800 to build and will be sold to the dealer for around $1,800. So you've got room to maneuver. As with any other kind of business dealing, playing somewhat hard to get and making sure the dealer or salesperson knows you're considering other machines is standard operating procedure.

Most dealers will offer only one or two machines in a given price and volume range; if you're interested in looking at five or six brands in the same category, you'll probably have to do some traveling. For years every survey of copier users has shown that consumers would prefer to do their buying at a copier supermarket where they could look at a wide variety of brands with no sales pressure. Nothing like that exists yet, although the presence of Xerox Stores and the fact that both Radio Shack and Sears are beginning to sell a few low-end models may signal the beginning of such a trend.

In the meantime, it's wise to recognize that the proliferation of models and falling retail prices are squeezing many dealers' profit margins and, when combined with a poor overall business climate, may be forcing even well-established dealers into troubled waters. As with any other kind of purchase, you should check references of the dealers, both for financial reputation and for service reliability, before signing anything. Any reputable dealer will be happy to supply you with a list of customers using equipment similar to what you're considering.

One rule of thumb: Service response time of four hours or less after a call for help is excellent. Unless you're in the boondocks, however, anything over a normal business day is unacceptable.

Service, of course, is an area about which a book could be written. At one time or another, just about every copier user has probably been convinced that he owned the biggest lemon ever to come down the pike. There's no doubt that some copier models are more reliable than others, but even the best needs regular service to function properly. Copiers are not like typewriters or pencil sharpeners. They're more like cars; they have a warranty and a need for periodic service. Their toner needs to be replenished, their moving parts cleaned, and, on a regular basis, the master copy drum, which makes the whole thing go, needs to be replaced.

Copiers often break down simply because they're neglected, and they're neglected because, unlike other pieces of office machinery, no one "owns" them. It's hard to establish a central copy shop in your office, but if you can at least find a way to make some individual feel responsible for your copier, you may solve a lot of annoying service problems.

The cost of service -- and the kind of arrangement you have with the vendor -- will depend on whether you rent, lease, or buy. Rental contracts, whether with a manufacturer or with a dealer, always include a "complete" service agreement, since the vendor still owns the machine and is responsible for its upkeep. "Complete" means that parts such as the drum are covered, although "consumables" such as toner and developer may not be.

If you lease, or purchase the machine outright, you'll probably get a separate contract with the vendor. According to John Derrick, this contract, after an initial 90-day warranty period, usually guarantees all nonwearing parts and includes preventive maintenance.

When calculating the per-copy cost, you'll find that the direct-sales organizations charge more than dealers; but those organizations also have a good reputation for quality service.

"Remember above all," warns Derrick, "to make sure that your service contract, if you're getting one, is all-inclusive; in other words, that it covers everything but the drum, toner, and developer."

If you buy your machine, you may want to go on a call-out rather than a contract basis for service. With the call-out, you're charged by the service call, as well as for all the parts. Derrick says most dealers charge about $40 an hour, though some, like IBM, go up to $62 an hour. Some dealers also offer what they call "Copy Kits," which are intended primarily for low-volume users of low-volume machines. With this arrangement, you get a set amount of all supplies, often including paper, for about $250-$300; the kit contains enough supplies to last you about 10,000 copies.

Should you rent, lease, or buy? For most people, and almost all small companies, the answer used to be rental or perhaps a lease. But with falling prices, buying a copier is no longer a life-or-death financial decision. Obviously you'll save money if you pay cash, just as you would buying anything else.

There is one obvious disadvantage to buying your copier outright. With advances in the market coming fast and furious, you might find yourself locked into a machine with fewer features than you could get elsewhere for less money. Conversely, rental always offers you the option of changing machines as prices decline or more options become available. Most of the direct-sales outlets and many dealers will rent you a copier for as short a time as a month or as long as two years. Normally a rental agreement, in addition to covering service, will also specify a monthly "free" copy allowance. Go beyond the monthly allowance and you'll be charged on a sliding scale for each extra copy. It pays to estimate your copy volume carefully, since the overage charges can add up. Generally, a month-to-month rental will cost about 10% more than an annual one, while a two-year rental will cost about 5% less per month than the one-year option.

Leasing, the third option, is less attractive for copiers than for most other pieces of office equipment, primarily because copiers depreciate rapidly -- by as much as 90% over three years. So the buy-out option at the end of a typical three-year lease isn't much of a bargain. All direct-sales companies and most dealers will offer you a leasing plan of either three or five years' duration. Analysis done by copier experts shows that an annual rental tends to cost less per month in most cases than the same charges for a three-year lease, and only slightly more than those for the five-year lease. So if you're shopping at the very high end of the market, the best advice would be to buy or rent.

No article of this length can cover all of the copier landscape. But if you keep the points mentioned above in mind when you shop, you've got a better than even chance of making a good decision. And if nothing else, you'll be able to separate the wheat from the chaff in copier sales pitches, whether you're getting one from an ex-basketball player, an ancient knight, or a salesperson.

CORRECTION-DATE: August, 1982

CORRECTION:

The DATAPRO survey cited in "Copier Wars" (June) reports that 62% of A.B. Dick users would buy the same model again. The percentage was mis-stated in the story. INC. regrets the error.

The survey breaks down as follows: All users of A.B. Dick Models 7200 and 695 would recommend these copiers; 89% would recommend the A.B. Dick 980. Midel 675, which received only a 55% favorable rating, is a coated-paper copier introduced in 1968; it does not have state-of-the-art technology and has been discontinued. Model 901 (43% favorable rating) is obsolete; Model 990 (44%) will be replaced later this year.

Published on: Jun 1, 1982