Thanks for all the feedback Morgan, Steve and Octavio.
Morgan…while I had waited for a reply (just checked again on April 10th, 2012 - today), I had come up with a scenario very close to what you’ve reasoned out. Looking at my standard working hour rate, my after hour rate, my weekend/holiday rate, my programming rates plus the ever negotiable trip charges, I came up with a spread sheet that showed those figures based on warranty of equipment and desired term of services. This allowed me to take a good, realistic look, at the monies which were possible on the table. You hit the nail on the head with the $1000 per month (for standard rates). I took it another step and thought up (from my insurance days) a couple of “rider” provisions ($250-$500 a month) which would add/save the customer this or that “service” if they agree to “X” number of years of such an agreement.
As for the project dollar value, that was in reference to the type of contracts which seem to be available for “any” industry on the market.
4. and Inspection contracts
A full-coverage service contract provides 100% coverage of labor, parts, and materials as well as emergency service.
A full-labor service contract covers 100% of the labor to repair, replace, and maintain most mechanical equipment. The owner is required to purchase all equipment and parts.
The preventive-maintenance (PM) contract is generally purchased for a fixed fee and includes a number of scheduled and rigorous activities.
An inspection contract, also known in the industry as a “fly-by” contract, is purchased by the owner for a fixed annual fee and includes a fixed number of periodic inspections.
So again, the dollar value was to support a Full-coverage contract…which would be dependant on me, the dealer, since it would imply me taking on the FULL responsibility of the projects service, maintenance and equipment replacement over a period of years with or without warranties. Thus I would be completely responsible for the equipment, ergo my question about equations to properly quote such a comprehensive contract.
However, it does look like we’ll be going a combo of contract type #2 - #3 after further meetings with the client. Still it would be nice to know the mechanics of such a beast.
Steve – I looked at all those links, which I appreciate you giving me, yet even after searching for “contract” and “service contract” I did not come up with any hard documentation on “how it’s done”, formulas, etc. The importance to this is if a dealer does not think things through and properly cover themselves (and their client) in a realistically fiduciary manner, they could conceivably sink the ship…especially with a full coverage contract. There should be something out there which lets us plug in replacement costs of equipment, warranties of the same equipment, our labor rates (and costs) for various days of the week and holidays, etc., and come up with various types of contract scenarios; plain English, unilateral or bilateral.
Octavio – I got very interested when I saw the link and it took me to “Labor Estimation”. However, it didn’t work. I downloaded it, virus checked it, and tried every file within the various directories which were in the downloaded compressed file. Nada; nothing. What am I doing wrong? Thanks so much!
Thanks to all of you for your support in this. There seriously needs to be some type of spread sheet which allows us to plug in our figures, so to speak, and have estimates for various types of service contracts come up. I think you might actually have a hush mouthed issue with dealers who have not tried working with service contracts as they either:
A. Don’t know where to begin to look for information on the matter
B. Are not computer savvy (even in our industry you’d be surprised)
C. Are too embarrassed to mention/ask for it
D. Are simply afraid of screwing it up and paying the ultimate price
I do know how to search and data mine…but information on the topic, the real nuts and bolts of it, is almost non-existent.
There is A LOT of MONEY on the table here. We have lost a lot of dealers these last few years. I was dumbfounded at how small our last (and literally last from what I hear) EHX was like. Dealers really do need to be asking this each and every time the sell “anything”.
Bu they need to do it right, with all the proper plain English legalize and the right figures, or they’ve done it wrong.