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[Karl Bader]

Hey All!

I've done some extensive research on this and am not getting all the answers I need. I work for a production company in the Lehigh Valley and we've been given an offer to supply a service contract for a school campus. We've done many an install before and I have done some service calls for several of the companies that I have worked for. Writing up a service contract... never...

So what are the basics that you cover in a service contract?

Also what is the basis to charge on let's say a yearly basis or so?

Thanks for all the answers in advance!

Karl

[Ric Arnold]

If you have a history with the school then you can make some estimates based on your past visits.
If not then you're going to have make some guesses, but they can be based on some facts.
A site visit is essential to know what & where & how you are going to be servicing. This may give you some time to say if it's going to be economical or not.

If it's a school they may be trying to offload some OHS issues by outsourcing so be wary and make sure that a risk assesment and safe working method for each task is covered in your paperwork.

How to charge... as a business it will be up to you to decide on your break even point but:
 ( Y$ per hour labour plus travel, per visit)  times the number of visits, and not including parts, is a good starting place. Then add your profit margin.

You'll need to determine the  response time to a call, what working hours are covered ( 9-5 monday - friday?) and if there's an out of hours rate/surcharge. i.e. if someone calls at 5 pm Friday night what happens? Give yourself a few scenarios that may happen and work throught them to find out if all possibilities are covered.
You'll need to decide how many calls you will allow per year included in the charge.
You'll need to decide what is covered in your service contract, i.e. is it a fault, or user error, and what to do in that situation i.e. do you charge over & above your contract or just wear it, and if so how many times you allow that to happen.

You WILL need to get a contract lawayer involved to ensure that both parties are covered for all clauses, especially insurance.

I'm sure there are business lawyers that will have pre-set contracts which will just require you to fill in your business specifics and they'll undoubtedly have more things to add.

Good luck !

[Brad Weber]

Ric covered much of it quite well but a couple things I'd add that I've found can be a factor are:
 

• Are consumables (lamps, portable cordage, etc.) covered or excluded?
• Are there any defined period within which you will respond, be onsite and have it repaired or replaced, e.g. respond within 8 hours, be on site within 24 hours and have it repaired or replaced within 72 hours?
• Will you provide loaner or reduced rate rental gear if something has to be sent off for repair?
• Is the contract for service or will it cover service and routine maintenance maybe twice a year or whatever seems appropriate?
• What documentation exists for the systems?  If every service call requires hours just to first figure out how things are wired then that would affect the time for any call and the associated cost.
• What is your familiarity with and access to the equipment brands and models used?
• You mentioned it being a school campus, so would the systems potentially include AMX/Crestron/Extron type control systems, programmable DSP devices, etc.?  If so, are you going to be provided or have access to the related programming?  Are you, or do you have available, a qualified programmer for those devices and systems?
• Are there any access issues to address?  For example, can you get a truck or service vehicle near the building?  Do you have to apply for or pay for a parking permit to allow you to park near the systems you'd be serving?

I'm sure there are probably many other details to cover.

[Tom Young]

Good information from Ric and Brad.

As far as the number of service calls (ie: time & travel expenses) per contract period, my understanding of service contracts is fairly basic and obvious:

You need to charge more than you will actually use. You need to make a profit.

The client (in this case, a school) needs to put a number into their annual budget. There interest is not about whether this is accurate but rather that you simply do not exceed this charge to them.

I would very carefully establish the worse-case scenario for my time and expenses and then add a little "buffer" (fudge number). If the scale is such that there are too many unknowns (there is too much risk that you could exceed the alloted time, etc) then you need an "escape clause" or verbiage that for (at least) the first year there is the option to charge more *should that prove to be necessary*.   

Likewise if you find that the required time is much lower than what you are charging for, the fee can be modified for the 2nd year. But keep in mind that the equipment ages each year.

This should not be a game of Russian roulette where the gun is at your head.

[Alan Clayton]

Before quoting, make sure you are familiar with the local prevailing wage laws. Not sure what that part of the world is like, but where I am, we have to pay our guys Union Electrician wages any time they work in a publicly funded facility. At a difference of $40.00/hr, you can get into trouble real quick.

[Jonathan Johnson]

Another factor to consider is to identify exactly what systems at the school your service contract will cover. The "entertainment" systems -- in the auditorium, the gymnasium, the multi-purpose room -- are obvious. They are largely standalone systems, designed in the traditional "live audio" manner. There may be interconnection between these systems to allow for a feed from the auditorium to the cafeteria, but that is pretty straightforward.

A school's PA/paging system is a completely different beast. At first glance it may appear to be a standard 70.7V distributed system with an amplifier or few, some transformers, and some ceiling speakers, but the similarities end there -- the "control surface" usually bears no resemblance to a mixer. In most cases, it will be a PBX telephone interface tied into a phone system. In older schools that haven't upgraded, it may be a control panel with a bazillion switches that provides bi-directional communication, using the classroom speaker as a microphone.

Bottom line is know exactly what you are being asked to service, and don't commit to a service contract for a system you don't understand. (If you do understand the paging system, great!)

[ProSoundWeb Community]