Yearly contract services are bad for the consumer!

Annual and biannual contracts are bad for consumers, here is why:

In this post I will explain to you why yearly or biannual computer service contracts are contrary to the interest of the consumer.  Please keep in mind that this applies only to consumer oriented computer services.  Where business services are concerned, it may be entirely reasonable to sign an annual or longer term contract with an MSP (Managed Services Provider).  Therefore the scope of this post only concerns consumer (home) users.

That I am aware of to date, there are several local outfits in the Palm Beach County area that have begun providing seemingly low cost annual or biannual subscriptions to computer repair services at what seems upon first glance very attractive rates.  The usual claim made by these companies is something along the lines of $300 for 2 years of unlimited computer support.  The big box stores such as Best Buy’s Geek Squad also offer similar services, although they are more explicit about the limitations of such service.

I have not heard of any specific complaints against any particular company that they do not live up to the ‘unlimited’ support claim of their contract but, am aware of less than ideal outcomes and consumer satisfaction.  The reason behind this is actually a very simple one, which I will explain.  To offer any particular service billed as ‘unlimited’ is simply disingenuous.  No company in existence, not even Apple Inc. the largest company in the world by valuation has infinite resources.  That realization alone should nullify any claims of ‘unlimited’ services.

So, what exactly is on offer then and why don’t I offer such contract services?  The answer is very simple.  ‘Unlimited’ service contracts are a case of overselling and under delivering to the client.  It operates somewhat similar to the way an insurance provider works.  You purchase an insurance policy as a ‘just in case’ backup.  With the exclusive exception of health insurance, no one buys an insurance policy, such as auto or home insurance fully expecting to make a claim immediately after buying the policy.  The insurance company sells many policies to many different individuals under the assumption that the majority of policy holders are never going to make any claim and those that do make a claim will be offset by the revenue received from claim free customers.

The case is exactly the same with a consumer based, home IT services provider offering annual or longer contracts.  The provider is simply counting on the fact that many individuals will not use the full extent of the service they paid for.  But wait, it gets much worse than that!  By offering this type of product, the service provider is creating a conflict of interest between themselves and the customer.  When a customer purchases a plan billed as ‘unlimited’ they have the expectation that it will be as such and quite understandably they will expect value for their money.  This creates a false impetus for the customer to put to good use the service they paid for.  In turn it also creates an impetus on the service provider to get their customer off of the phone as quickly as possible even if it means providing a bandaid solution and not a comprehensive fix to the customer’s problem.  In order to contend with the fact that they do not have infinite resources to provide, the service provider must somehow manage the allocation of their unit labor hours.

The trouble is, the customer’s initial problem often times never gets truly solved which results in more frequent calls to the provider and ultimately frustration on both sides.  Its simply a bad situation for both client and provider.  The provider cannot contend with the constant phone calls because, after a certain amount of time is spent on one client they begin to lose money.  From the client perspective, who wants to spend time constantly on the phone or with a technician in their home getting their computer fixed?  This makes no more sense than someone actually looking forward to continuously take their car in for repair.  They simply want it repaired to its working state and to move on with their day.

As the owner of Boca Delray Tech Solutions, I do not offer from my company and will not offer in the future any long term contracted services for the consumer (home user) based on this fact.  Furthermore, I would like to point out some important figures.  The majority of my clients do not generate more than 3 (once every 4 months) service calls per year for their home computing needs.  Most of these calls are resolved in 1 hour or less.  At a flat rate of  $40/hour this equates to $120 per year.  Providers that offer contracts typically start at $150/year, so right up front you are potentially saving $30 on service fees every year by choosing an on demand, pay as you go service.  Moreover, you also do not put out any money up front.  Fees are only due when a service is rendered.  This model of providing computer and electronic technical support services allows me to focus intently on the specific needs of each client and fully bring their problem to resolution without any temporary fixes being applied that will only fail later.  In fact, customers who generate more than 3 service calls per year generally have 1 of 2 problems that are never addressed by contract providers.  The 1st and a very typical problem is failed or outdated equipment that needs to be replaced.  No amount of ‘repair’ will change that fact.  The second most common problem is that the issue is not requiring any type of repair but rather one requiring training or tutorial for the client.  Contract providers are in no position to provide training services to their customers whereas, businesses using an on demand model such as mine certainly are.

Whether or not you choose to use the services of Boca Delray Tech Solutions, I would strongly urge you, the consumer to consider the above and choose a high quality, reputable service provider that delivers their services on a pay as you go basis at affordable rates.

Adam S Cohen

Owner: Boca Delray Tech Solutions