Payment for maintenance agreements

[Okeespec]

Thanks to anyone who cares to reply. My quesitons is: Do you offer different payment terms for maintenance agreements? For example, if an annual maintenance contract costs $1,200.00 per year, do you allow monthly, quarterly or annual payments? Do you offer a discount for paying annually?

Any tips are greatly apprecaited.

Craig

 

[NickCat11]

Thanks to anyone who cares to reply. My quesitons is: Do you offer different payment terms for maintenance agreements? For example, if an annual maintenance contract costs $1,200.00 per year, do you allow monthly, quarterly or annual payments? Do you offer a discount for paying annually?

Any tips are greatly apprecaited.

Craig

For yearly contracts I get paid month to month. I never really thought about giving a discount if they pay annually because no one has ever asked. Plus, I'm not sure that I would want to anyway.

 

[JosephLeo]

In the future I do plan on offering pre-paid maintenance at a discount- kinda funny that you would ask this question.

The way I see it is I would still charge by the hour without my customer knowing. For example, I come out there check out how many computers & servers they have calculate how much time it would take me to do them with a buffer of 30 minutes per computer and 1 hour per server and then calculate how much I would charge them in one lump sum.

Say they have 8 hours of work with a 2 hour error buffer (10 hours) for me each visit- I'll charge $75 per hour at the standard "month to month" rate. then there is the seasonal payments- the semi-annual payment and the annual payment rates.

So- lets look at it like this.

Monthly Payment - $75.00/hour * 10 hours = $750
Seasonal Payment - $62.50/Hour * 30 hours = $1,875
Semi-Annual Paymnet - $50.00/hour * 60 hours = $3,000
Annual Payment - $40/hour * 120 hours = $4,800

It saves my customers money and gives me a nice lump sum. I might adjust the pricing to the point that the minimal payment is $50/hour and the max is $80/hour. We'll see as time goes on.

 

[NickCat11]

I don't know, that seems a bit steep of a drop off even at $50 an hour after the discount. In the long run you're missing out on over $4,000 for the year. $75/hour is a very competitive business rate, dropping down to $40-$50 is to low, at least I think so. If you are going to do that method maybe start at $95 an hour although it depends on the going rate in your area.

 

[JosephLeo]

I don't know, that seems a bit steep of a drop off even at $50 an hour after the discount. In the long run you're missing out on over $4,000 for the year. $75/hour is a very competitive business rate, dropping down to $40-$50 is to low, at least I think so. If you are going to do that method maybe start at $95 an hour although it depends on the going rate in your area.

remember I'm new to the business, I don't know the going rates very well.

 

[breadtrk]

You better be finding out then. That should have been a known factor before you had your first business card printed.

 

[JosephLeo]

You better be finding out then. That should have been a known factor before you had your first business card printed.

Business cards? I'm still working on getting setup. I need to properly organize my USB drive- toolkit- website- logo- letterheads- hire a lawyer to register a company- hire another lawyer to write up some legal documents and a whole bunch of other stuff.

I got an idea of my pricing- just it's not at the top of the list of things I have to do right now. I'd say I'm a week away from that.

 

[NickCat11]

I used these guys to get me setup with my LLC. Everything was completed and official in less than 48 hours. They were great. http://www.mynewcompany.com/

 

[NickCat11]

I used the Entrepreneur service in case you were wondering

 

[JosephLeo]

I used the Entrepreneur service in case you were wondering

Ahh- well I might just go with my fathers accountant. He's a one stop shop and actually a family friend for the past....30 years. He was my grandfathers accountant (Rest in Peace), my fathers accountant and probably soon even mine...although he's getting a bit old which is why his son is taking over soon...no one really needs to know that, but meh.

Also- if I was going to use the web my first bet was going to be Legal Zoom but I will look into that website.

 

[NickCat11]

Yeah I almost went with legal zoom but I read about some issues they were having and actually had a friend who used them and said it was nothing but problems. So, I stayed clear and went with the guys I mentioned.

 

[JosephLeo]

Yeah I almost went with legal zoom but I read about some issues they were having and actually had a friend who used them and said it was nothing but problems. So, I stayed clear and went with the guys I mentioned.

I see- well, I guess those guys will be my first choice then if I go the online route. These guys are MUCH cheaper than my families guy- but it'd still be nice to have everything done by one person, I actually sort of have to pay respect to him since he helped my grandfather out of $1m of back-taxes in 1980-something. that's 1m of 1980-something dollars...not today's dollars.

 

[NickCat11]

Wow, considering that I'd say that's the least you can do.

 

[JosephLeo]

Wow, considering that I'd say that's the least you can do.

Yep- assuming it was in 1985 (I think it was around there) $1,000,000 then is like $2,005,892.19 today. And it was a little over a million. Like I said when I first joined the site. I've been rich and poor many times and right now I'm in a poor stage- I prefer the slightly above poor stages because when my family has money we usually avoid each other...and we're far too big of a family to do that.


BACK ON TOPIC....

Starting tomorrow I will work on my prices.

 

[cmonova]

I do yearly contracts that are paid monthly. For some reason though some businesses pay a few months prior not sure why. One of them actually sent a check for 6 months. But, nobody has ever asked for a discount to pay early or anything else.