Maintenance Contracts

Reasons Equipment Should be Covered by a Service Maintenance Contract

1. In effect, a service agreement is an insurance policy. In case something unforeseen happens, the customer is not normally responsible for any amount over the cost of the service agreement.

2. It is easier for a customer to budget for a service agreement -- there is one fixed cost and unexpected "surprises" can be avoided by a customer during the term of the agreement.

3. Without a service agreement, there is a tendency to delay calling when a piece of equipment begins to malfunction and to wait until the equipment completely breaks down and is inoperative. This reason alone is usually enough to justify the acceptance of an agreement when a customer considers the cost of personnel not working because a machine cannot be operated.

4. Policies in many organizations require that a purchase order be issued before service work can commence. This can be costly to the organization both in required administrative time necessary to process paperwork (requisitions, purchase orders, issuance of warrants, etc.) as well as in additional time lost by personnel waiting for paperwork to be processed.

5. With a service agreement, equipment is down less often because customers call as soon as the equipment malfunctions and prior to complete breakdown.

6. A service agreement provides preventive maintenance calls to oil, grease, clean, adjust, etc., a machine.

7. Machines under service agreement are maintained at factory standards which usually does not otherwise happen because without an agreement customers frequently do not wish to spend additional money on equipment that still works but is in fact, in need of repair.

8. Equipment lasts considerably longer when it is properly maintained according to factory standards. Therefore, the effective annual cost of the equipment is much less because it can be used for additional years.

9. Use of service agreement generates a better relationship among a customer, our Company and its Sales and Service Representatives for many reasons: there are no misunderstandings regarding individual service call charges, minimum charges, increases in hourly rates, changes in policy, need for parts, etc. In addition, there are fewer complaints about equipment malfunctions because small problems don't become big problems. (Usually problems regarding equipment and/or service are more directly attributable to the lack of service agreement coverage, which results in equipment not being maintained according to factory standards, than to defective equipment.)

10. Because customers under service agreement have, in effect, prepaid for their service, the Service Department as a matter of policy will normally complete all calls to customers under a service agreement before servicing equipment not covered by a service agreement.