Achieving a Steady Cash Flow by Using Computer Service Contracts

One of the challenges in running a computer repair business is achieving a steady cash flow. A layman would say, “Virus removals must keep you busy all through the year.” As computer techs, we know that computer repair tends to be seasonal with predictable busy and slack months.

Occasionally there are unplanned surges of activity with virus epidemics or updates. This uneven workload can cause problems with cash flows. What is a satisfactory solution? One excellent solution is to have regular payments coming into your bank account by the way of a service contract.

The problem for the customer with these agreements they err on the high side …in favor of the computer company. In other words, they are expensive for the computer users. How do we tailor a maintenance package, that is priced …exactly right?

One way of guaranteeing that the basic repairs and maintenance is done and the customer gets a good deal, is by the “Service Block” arrangement. This way the customer buys a block of hours or labor at a discount. They don’t pay for the labor in a block …but by a monthly payment. This way they are certain to get the basics done …without overpaying.

The epicenter of small business to-day is often a computer system. Unfortunately, a high percentage of computers in this environment are inadequately maintained. The result is inefficiencies sabotaging business. How many times have you heard about company horror stories concerning high tech disasters?

Calling in support for problems is usually delayed until the problem has ballooned into major trouble. This can be used as a wonderful marketing concept for the computer tech. By stepping in and suggesting a finely tuned service agreement, this ensures everyone is happy.

We all know by buying in bulk you get a discount. It is the same with computer repair and maintenance agreements. By making a regular payment the customer gets the niggling jobs done …and they are minimizing the unexpected. The “Service Block” arrangement ensures they do not pay any more that necessary.

It acts like an insurance policy as well as a maintenance agreement. The advantages for the tech is that every PC attracts a regular payment into your bank account and solving the cash flow problems.

Service contracts allow enhanced management of customer relationships. They make long term dealings much easier to achieve and lower marketing costs. When a customer upgrades their equipment, an agreement can greatly improve the chance of making the sale.

A service agreement is a win-win situation for both parties and makes hiring tech staff more straightforward.

Pricing Computer Service Contracts

So how do we charge for a “Service Block” arrangement? Ten hours per year for every PC is a good start. If ad hoc maintenance costs, say 75 dollars per hour, a “Service Block” cost per computer could be 65 dollars for 10 hours or 650 dollars total, annually.

For a 12 month period, it works out at 54 dollars per month on automatic payment. This way the computers are guaranteed to be serviced and at the same time the sting will be taken out of an unexpected failure. This includes three, four monthly maintenance calls a year plus any other callouts.

Your customer may ask. “So what happens if I have serious trouble with my single system and go I beyond the “Service Block” of ten hours?” Your answer would be, “This will happen occasionally and you will be invoiced for the extra hours at $65 within the 12 month time frame.”

If a customer has a site with a computer network …the other computers will tend to smooth out the extra hours involved with one particular problem. For example if you have five computers and one fails, you have a resource of 50 hours labor to draw from.

Service Block agreements work very well for both parties as the customer never pays too much and you the computer tech get the benefit of a regular income during the year.

Customer Relationship Management

This page is about achieving a regular cash flow by service contracts. It is really all about CRM or customer relationship management. CRM is one of the business buzzwords on the Internet these days.

It promises better service at lower costs and higher customer satisfaction. From this, you get better customer retention and ultimately customer loyalty. It is a philosophy in business about involving, identifying, understanding and better providing for your customers.

By building this relationship, the spin-off will be, to maximize your profits. Having a computer service contract is a good start down the CRM track. By regular scheduled repairs and maintenance, you will have the chance to be in regular contact and so, get to know your customer.