Question : Problem: Maintenance Contract - how much?!

Hi,

I have been asked to provide a hardware maintenance contract to a company. We stock all the parts they need.

They want to pay one sum per year which covers parts & labour.

I'm looking for recommendations on how to charge for this?
They have HP/Compaq DC7700 desktops (around 60)
HP NC6400 Laptops (around 15)

Any thoughts?

Answer : Problem: Maintenance Contract - how much?!

This is widely variable across the industry.

The first suggestion listed above is purely speculation, and could lead you to charging much less that necessary.  

The second suggestion is major overkill, since unless there is a disaster, all 60 machines will not have all their parts fail.

The service contract business is more of an insurance business, than a repair business, and most service contractors have backup insurance policies to cover major failures.  And many of these type businesses make a bulk of their money on non-covered repairs.

As this is your first service contract, you should be real careful on how you setup the contract.  The price is the least of your worries.

You need to be clear on what is a covered repair, and what is not.

For example, a flood or lightening strike may seem like a covered even to a customer, and if you did not specify, the you may be stuck replacing 60 machines.

Laptops usually fail from abuse rather than normal component failures.  Broken screens and keyboards are the most common failure mode.

Another point is that with today's hardware, a software failure is more common, although lots of parts swapping monkeys will spend hours trying to fix working hardware...

As far as the industry standard, service contracts run from 10%-25% per year of the original purchase price of the machines.

As I said, be very careful, since you can lose your shirt (and everything else that you own) if the contract is poorly written, and there is a major failure.