What To Do With That Service Contract
So it is time for you to renew that service contract for a specific system for your facility...what should you do? Never renew a service contract without closely reviewing your history over the previous term of the contract. What portion of the contract did you primarily use? How many after hours calls did you have? Did your service contract include all parts, or only some newer parts?
Remember that almost 75% of the year occurs during what most service contracts consider "after hours". What are you paying for these hours and how many times did you have to utilize repairs during these hours? These are things you will want to make sure to consider.
It is always to your advantage to negotiate the after hours rate and that portion of the service contract. All too often, a manager or building operator renews a service contract based only on the monthly rate. However, it is imperative to also evaluate the after hours charges and the reference to parts or no parts that may be related to the performance of a repair service.
Recently, a client had to decide whether they should renew a service contract for a major system in a facility or call out for bids to new providers. The existing provider offered the manager a reduced monthly rate, and even offered to give him a discount on outstanding invoices if he would renew the service contract. However, when evaluating the history of the usage, it was found that in the long run, since the contract was a multi year contract, a greater savings could be realized by negotiating the "after hours" rate and the way parts were priced, and what parts would actually be provided as part of the contract.
In conclusion, never be in a rush to sign and renew that service contract. What seems like a deal may in fact not work to your benefit in the long run. Review your multi-year history, arm yourself with the facts, and negotiate.
Hal Finkelstein
Remember that almost 75% of the year occurs during what most service contracts consider "after hours". What are you paying for these hours and how many times did you have to utilize repairs during these hours? These are things you will want to make sure to consider.
It is always to your advantage to negotiate the after hours rate and that portion of the service contract. All too often, a manager or building operator renews a service contract based only on the monthly rate. However, it is imperative to also evaluate the after hours charges and the reference to parts or no parts that may be related to the performance of a repair service.
Recently, a client had to decide whether they should renew a service contract for a major system in a facility or call out for bids to new providers. The existing provider offered the manager a reduced monthly rate, and even offered to give him a discount on outstanding invoices if he would renew the service contract. However, when evaluating the history of the usage, it was found that in the long run, since the contract was a multi year contract, a greater savings could be realized by negotiating the "after hours" rate and the way parts were priced, and what parts would actually be provided as part of the contract.
In conclusion, never be in a rush to sign and renew that service contract. What seems like a deal may in fact not work to your benefit in the long run. Review your multi-year history, arm yourself with the facts, and negotiate.
Hal Finkelstein
posted by Hal at 12:29 PM
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