Magazine Article | October 1, 2003

Paying Too Much For Service?

Source: Field Technologies Magazine

In many ways, service contracts are like insurance policies. For example, many people choose the wrong type of coverage.

Integrated Solutions, October 2003
Ed Hess

How much are you willing to pay for service? It's a question worth considering as your company starts to extend applications and information to employees in the field. The network infrastructure is solid. The software is configured and up and running. And, you've armed your employees with ruggedized handhelds. But, what happens, for example, when your delivery person pushed the rugged device beyond its limit? ("The thing fell out of the cab and onto the pavement a few times. What's the big deal?")

Assuming you need more than the device's standard warranty coverage of depot repair and return in 10 to 15 days, be prepared to pay a premium. "If a handheld scanner goes down at a small warehouse, they might just revert to a manual, paper-based system for a couple of weeks. When you're talking about mobile workforce automation, then you can't ever have a lapse in high-quality service. Your whole business relies on those systems staying up and running," stated Steve Winter, senior VP of global customer service at Intermec Technologies, in a recent conversation.

What Should You Pay For Service?
So, you need service beyond the basic warranty coverage of your handhelds. You have to pay a premium for it. But, what is that premium?

Of course, it depends on the level of service you require. A five-day repair and return timeframe may be just fine for you. Others, however, may need 24/7 on-site support for their hardware. After speaking with a few vendors on this subject, the costs of those services can range from about 7% of the overall purchase price for a five-day turnaround time to more than 20% of the overall purchase price for 24/7 on-site support. Seven percent for one service and more than 20% for the other - it's a big range with plenty of options in between. That's why it's paramount to determine the level of service you require and pay accordingly. Otherwise, you may be locking up your money in a service contract that is seldom used.

Just like with the handhelds you purchase, service discounts are available for volume buyers. In addition to quantity, several other factors will be reflected in the cost of your service contract:

  • Service response time - go figure, you'll pay more for quicker service.
  • On-site service versus depot repair - pay for the on-site service only if you need it. Otherwise, shoot for overnight depot repair.
  • Length of contract - if you sign a multi-year contract, expect a price break.

Service is like an insurance policy in that it's a prudent investment in most cases. Like insurance, however, there are many options and associated costs. In both cases, unfortunately, many people select the wrong type of coverage.