Question:
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Ken
There seems to be an issue with customers when a device has reached its “end of life” point. Some customers with service contracts believe they are entitled to new smoke detectors, CO detectors or Gas detectors. We believe that the labor is provided but not the parts. Could you please post this question for feed back as the CO & Gas detectors have a useful life of 6 years and smoke detector have useful life of 7 years. After this time the units need to be replaced.
Customers without a service contract are charged parts and labor as if we were performing an upgrade. Do we need to send written notices. What is the issue if they refuse? Does the contracts address end of life?
Alan
APS Security Inc
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Answer:
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The Standard Service Contract, which I know you use, does address this issue. Before understanding how, let's briefly review the format of the Service Contract.
The Service Contract is designed for two purposes.
First, to protect your company when performing service. All of the protective provisions [exculpatory, limitation of liability, etc] are included. Keep in mind that your Sales Contract, or your Monitoring Contract, would provide protection only for those services, the installation and the monitoring, and not for service calls outside of the sale warranty.
Second, the Service Contract is designed to build recurring revenue, thereby increasing the value of your business.
The Standard Service Contract has an option for "pay per call" or "recurring revenue". If the per call option is selected then its easy, the subscriber pays for labor and material when service is requested. If the recurring revenue option is selected then the subscriber pays a fixed amount on a periodic basis and is entitled to call you for service, which includes labor and material. [of course these terms can be modified if you like, but this is how the form reads when you receive it].
When the recurring revenue option is selected your subscriber will expect all labor and all material to be furnished at no additional charge. That's why the periodic payments are made. However, that is not what the Service Contract calls for. Only service necessitated by ordinary wear and tear is covered by the contract. The contract specifically excludes damage caused by illegal or unauthorized acts, lightening, electrical surges, tampering, and other non ordinary wear and tear events.
So what about equipment that has been installed so long it can no longer be repaired, identical equipment can not be found, it's become obsolete, technically or practically, or it has reached the end of it's intended life span, such as the CO detector. Without a specific provision excluding the repair or replacement of this equipment you would be expected to make the repair so that the system is again operable. The Standard Service Contract does however exclude obsolete or end of life equipment from service; therefore the subscriber has to pay for those repairs - labor and material.
This update to the Service Contract is a few years old, so if you are using a Service Contract that is several years old it's time to update. If you don't use a service contract, it's time to start.