An annual maintenance contract is an agreement between a company and a provider that sets expectations for the ongoing maintenance of machinery or property that the company purchases from the provider. The annual maintenance contract ensures that the service provider will repair or replace equipment or products sold to the customer either when they are not functioning or as otherwise agreed between the two so as to minimize the consequent impact on downtime or irregularities in ensuring business continuity.
Customers appreciate AMCs because they protect their investments in products and services, ensure against unplanned downtime, and guarantee that they will always have a service professional within arm’s reach. As a service provider, AMCs help you plan what your year’s service schedule will look like, estimate how many techs you need, and ensure that you build positive, long-term relationships with a loyal customer base.
There are several different ways that companies and service providers choose to structure annual and comprehensive maintenance contracts. They are generally negotiated based on what works best for both the business and the service provider. Pricing can be structured based on a single parameter or using a hybrid model. For instance, you could price based on your hourly rate, or you could combine your hourly rate with an additional cost for transportation or replacement parts. Some of the most common types of pricing for AMCs are:
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