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Monday, January 05, 2009

Service and maintenance contracts: a look at why they're worth every penny

When you make the decision to add or upgrade audio-visual equipment for your business, it’s no secret that you’re making a considerable investment of your company’s hard-earned capital. Naturally, you’d want to protect that investment and receive the greatest return as possible. For this reason, some systems integrators (such as electronic evolutions, for example) offer extended service or maintenance agreements on their products and services that can save you hundreds, if not thousands, on repair costs. But as budgets dwindle and the value of every dollar spent comes under scrutiny, you might be feeling tempted to decline purchasing or renewing these programs for your own equipment; however, doing so can be much more costly than you think.

In the A/V industry, there are typically two types of contracts offered: service contracts and maintenance contracts. Service contracts cover repairs, replacement equipment, or any issues that stem from installation or technology problems; maintenance contracts, on the other hand, typically provide preventative measures, such as routine equipment cleaning and testing or systems calibration. Because each contract supports different issues and routine maintenance by a professional can sometimes prevent problems, it’s recommended to invest in both.

Maybe you’re skeptical of the actual value of an A/V service agreement, so let’s take a look at an example: at 2:30 pm on a Tuesday afternoon, you go to your boardroom to prepare your set-up for tomorrow’s big meeting when you notice that your projector has stopped working. The meeting in question is at 8:30 am Wednesday morning, and you need that projector up and running for your sales presentation. So you call your A/V installer and ask them to fix the problem. Two service technicians arrive at 5 pm, rental projector in hand. After spending 30 minutes on the phone with tech support, it is determined that your projector is in working order, but your video source is not. This non-standard problem requires the techs to be at your site for 6 hours to fix the problem and install the loaner projector while yours is sent to the manufacturer for repairs.

Now, assuming these industry-standard charges from the installer for labor and materials, let’s take a look at your total bill:

Rush Service Charge (equip. needed within 8 hours; $250/hr/tech): $3000
After hours fee (after 6 pm, $200/hr/tech): $2400
Shipping fees for repaired projector: $240
Rental fee for loaned projector ($235/day, 3 day minimum, plus overnight shipping): $705
Unit repair (warranty expired): $1200
Re-Install of repaired projector ($125 1st hour, $95/hr/tech 2+ hrs): $600*

Total amount with no service contract: $7675

*This assumes that it will only require one technician and only 6 hours, before 6 pm, for re-install.

Wow, that’s a lot of cash for one faulty projector! Now, let’s assume instead that you were proactive and enacted a service agreement on your projector and take a look at your costs:

Unit repair (warranty expired): $1200

Total amount with service contract: $1200

So you’ve seen the cost benefit to having a service or maintenance contract. But what about the time, and even potential earnings, saved through these agreements? Picture the above scenario’s important meeting as being one with your “number one prospect for the year” or “executives from corporate headquarters” and you’ve got a potential dilemma on your hands. Having a non-working projector or an equipment malfunction may mean a less-effective presentation or no meeting at all, which can lead to lost sales or a less-than-ideal first impression on your company’s key decision-makers. If you’ve got a maintenance or service agreement similar to the example above, however, your down time is greatly minimized and your meeting can carry on as planned with your attendees none the wiser. How’s that for life-saving?