Maintenance Service Agreement vs. Billable Service: Which Plan is Right for You?
One of the most common questions asked is what type of service plan is the best value and fit for their organization. Is it best to enter into a Maintenance Service Agreement or just use Billable Service on an as-needed basis? The honest answer to this question is it depends on the priorities of your organization.
First let’s consider the cost of a billable service call. Typically they involve an hourly rate for labor, a travel charge (either fixed or variable) and a cost for parts. The second factor to weigh is priority as most billable service calls are fit in amongst scheduled preventative maintenance calls for customers in committed service contracts. The third factor is the type of the product that will be serviced. Is it highly complex or technical with expensive parts modules? Will there be a sense of urgency when it needs to be repaired, as it could be critical to your specific operation?
Now lets assess the cost and structure of a Maintenance Service Agreement and compare it to the overall cost of the equipment. Is the cost of the agreement roughly 10-15% of the cost of the equipment? What exactly does the agreement include in terms of preventative maintenance calls and parts at no additional cost? How are emergency calls handled in addition to preventative maintenance calls and are they limited? Is a longer life expected out of the product if it is maintained on a regular basis?
Now that we have broken down the components of these two service options, you should be able to identify which of these service options is best suited for your organization, by answering the following questions:
- Is the MSA reasonable in cost for our budget or do we want to pay for service as needed?
- How important is this particular piece of equipment to my operation?
- What is the complexity/technology of this product and would the parts replacement exposure be relatively expensive?
- If and when I need service, do I want to be a priority because of the impact of the product on my operation?
- What value do I place on knowing that if the product that was purchased has an issue, I have someone standing by that will respond promptly to solve my problem with no additional un-budgeted cost?
Still need help deciding? Contact QDS and we will help you determine the best option to fit your needs.
About Sean Farrell
Sean has been in the business since 2003 and always aims to be an expert on whatever solutions QDS is providing. Sean has grown into a thought leader in the space through research and company growth. Sean holds strongly to his Christian faith and uses those principles to guide the business.