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Service Agreements...HELP!!!

By psk ·
I'm hoping for some advice and feedback. I'm new to IT and started a consulting business about a year ago in South Florida, after 25 years of insurance sales and the resultant burnout, and have managed to accumulate about 25 customers via word of mouth references.

My best client is a very successful small family business that is growing, and we've mutually agreed a service/ maintenance agreement is appropriate going forward. They have a p2p network with five workstations, but are in the process of building a new office and will be growing to about 10. They also have satellite sales offices thoughout south florida which I occasionally visit.

I've managed to bill this customer approx. $10,000 this year, but that includes a minimal amount of hardware/ software that I purchased on their behalf. I've been charging $65 per hour and plan to increase to $75 by January. So, my question is how do you guys customarily structure these agreements? How many hours per week/ month and at what rate and how much for additional hours when needed?

Thank you, in advance, for any suggestions and advice and your time.

Best wishes for the holidays and new year!!


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by mjd420nova In reply to Service Agreements...HELP ...

Agreements can be simple even plain language as
long as they are written and agreed upon by all.
One example would be a straight call-out charge
of $95. per call and a one hour minimum at
whatever amount you choose. Parts can be cost
plus whatever percent markup you decide. This
is best for small volume busineses but something better will be needed to lure the larger clients.
One large service company I worked for took this
to extremes.. They charged $50. per workstation
and peripherals, per month. If the workstation went down for any reason, the service would be completed within 48 hours or the cherge for that workstation was waived for the rest of the year.
This paid very well, as the product line was well defined and parts easily available. We're
talking about 500 workstations at one site
alone. That's the extreme side. The average
user who just wants it to work when he needs it
can be the biggest headache of all. That's
why the call out charge is needed. I've had users who called multiple vendors and go with who gets there first. Tough for the small guy
who may travel 50 miles only to be turned away
at the door. CYA ALWAYS

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about 14-20%

by stewarth In reply to Service Agreements...HELP ...

I currently have a real job so I'm not out there digging up my own contracts, but when I was I usually tried for contract work. Generally I tried to get as close to 20% of the capital cost for the infrastructure, apps, and equipment cost for the systems included in the contract.

I always negotiated higher for picking up contracts on pre-existing systems and gave a big break on systems I put in myself.

Off contract work varied based on the customer but $75/hr is a fair price these days. Of course you would want to charge 2X on nights and weekends and 2.5X on Sundays and holidays.

I usually tried to get an annual contract signed. That way money came in on a regular basis. I visited my customers routinely to keep my name and face familiar. I offered free training sessions etc... Anything to make sure I was worth the money.

It can be a good living, but a lot of work. Good luck.

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Beware of service agreements

by jaysoard In reply to Service Agreements...HELP ...

In my experience (10 years as an independent consultant) service agreements usually end up being more trouble than they are worth. The end client has a perception that they are not getting their money's worth if you are not there often enough(meaning them seeing you in the office), which in actuality is a benefit because you are keeping their network running without downtime. On the flip side you can end up being there more than expected and their perception is that you are "milking" the hours to make more money. Either way you run into an issue of mistaken customer perceptions. I find that the best way to go is to just charge a market average hourly fee (which for me in the Miami Metro area is $125) and I don't have issues with them feeling taken advantage of. Every time they call they know what they are paying for.

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