How do you charge for warranty failures?

[DaveC]

I do network installs in small businesses and homes.

Occasionally, I have to replace a failed router, or such, during the 30-day
warranty period my local supplier gives me for direct exchanges. Outside that
period, it get sticky: the unit has to be sent to the factory for exchange,
which necessitates me (or someone) buying a replacement to install
immediately.

How do y'all see such costs? Do you just "eat" the labor you spend replacing
the unit? Or do you charge labor to swap out the unit (ie, warrantee the
unit, but not the labor)?

Comments from all specializations (audio, etc.) welcome.

Thanks,
--
DaveC
me@privacy.net
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[Howard]

DaveC <me@privacy.net> wrote in
news:0001HW.BCCA4D32002110FFF03055B0@news.individual.net:

I do network installs in small businesses and homes.

Occasionally, I have to replace a failed router, or such, during the
30-day warranty period my local supplier gives me for direct exchanges.
Outside that period, it get sticky: the unit has to be sent to the
factory for exchange, which necessitates me (or someone) buying a
replacement to install immediately.

How do y'all see such costs? Do you just "eat" the labor you spend
replacing the unit? Or do you charge labor to swap out the unit (ie,
warrantee the unit, but not the labor)?

Comments from all specializations (audio, etc.) welcome.

Thanks,

I kinda liked the "tier" answer you already got. If they want it replaced
5 minutes before it went down, that costs $X. If they want it replaced
that day, but doesn't have to be immediately, that's $Y. If they don't
mind waiting while it is sent off for repair, that's $Z. That lets THEM
select what level of service they want and what they want to pay.
Obviously, the $Y level of service includes a charge for having a router
swap, and $X includes a charge for a router swap and a "drop everything and
get here now" charge.

--
Minister of All Things Digital & Electronic, and Holder of Past Knowledge
stile99@email.com. Cabal# 24601-fnord | Sleep is irrelevant.
I speak for no one but myself, and |Caffeine will be assimilated.
no one else speaks for me. O- | Decaf is futile.

 

[Dan Seur]

My two cents:

As an independent entrepreneur, where reputation matters a lot:

1. Always install high-quality gear.
This is good for your reputation. Also, such
gear fails less frequently and is therefore
likely to be less expensive to you and your
clients in the long run.

2. Always try to recover all costs.
This can be tricky, as you said. It implies
you keep very careful records and can tell
what your actual costs are. This is not
particularly burdensome once it's habitual.
It is a tremendous benefit in planning and
charging intelligently.

3. Costs are recovered in 3 ways:
(a) By actual invoice/contract.
(b) By repeat business, based on current client
satisfaction.
(c) By new business, based on current client
word of mouth, references, etc.
Recovering all costs (maximizing your revenue)
is a tap dance involving all three of these
factors.

4. Always state terms completely and up front.
Stick to them even if occasionally painful.
Terms may include mention of "extraordinary
circumstances," which gives you some leeway in
dealing with particularly important clients.

Once you know exactly what it costs you (on average) to do an initial
installation, an in-warranty replacement, an out-of-warranty
replacement, or get a client back on the air in other situations, you
have the ability to set your fee structure to yield the net income you want.

You can also do such things as offer "service plans" with different
guaranteed response times, offer certain kinds of "free" services after
installation, or even maintain a modest inventory of replacement devices
that can be installed temporarily or permanently when necessary.

In bid situations, you can offer a menu ranging from "bare bones install
and walk away" to "guaranteed long-term 24-hour service on demand."

You can also specify different labor rates within any of the above
scenarios.

==============

You asked 2 specific questions: in-warranty and out-of-warranty
charging. If you're not able to do any of the above, I'd recommend:

1. For in-warranty work, eat all costs. Such costs should be covered by
your installation charge, so you're not actually losing anything. If the
installation contract specifies labor charges for these, then there's no
problem.

2. For out-of-warranty work, charge for labor at your usual rate. Charge
for any temporary or permanent replacement gear at a pass-through rate
or at a very modest markup. Suggest to your supplier that a small
inventory of "borrowable" gear would be a neat idea, or start one of
your own. If you have to buy/install a device while the original is at
the factory, try to work a deal with your supplier or the factory.

3. Always use your own judgment in the above situations. Some clients
may be more important to you than others. But be careful about setting
precedents; word gets around, sometimes to your advantage - and
sometimes not.

DaveC wrote:

I do network installs in small businesses and homes.

Occasionally, I have to replace a failed router, or such, during the 30-day
warranty period my local supplier gives me for direct exchanges. Outside that
period, it get sticky: the unit has to be sent to the factory for exchange,
which necessitates me (or someone) buying a replacement to install
immediately.

How do y'all see such costs? Do you just "eat" the labor you spend replacing
the unit? Or do you charge labor to swap out the unit (ie, warrantee the
unit, but not the labor)?

Comments from all specializations (audio, etc.) welcome.

Thanks,

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[shope]

"DaveC" <me@privacy.net> wrote in message
news:0001HW.BCCA4D32002110FFF03055B0@news.individual.net...

I do network installs in small businesses and homes.

Occasionally, I have to replace a failed router, or such, during the
30-day
warranty period my local supplier gives me for direct exchanges. Outside
that
period, it get sticky: the unit has to be sent to the factory for
exchange,
which necessitates me (or someone) buying a replacement to install
immediately.

i used to work for a network reseller - we had the same issue with
equipment - typically high end enterprise stuff from cisco, nortel, ibm,
enterasys and similar suppliers

"normal" maintenance is based on how quickly you have to react to a fault
report within SLA, and how quickly you have to fix it. As soon as you
install a piece of kit which goes onto maintenance, you need equivalent
spares holding where your engineers can get at them for swap out

industry standard in the UK for the maint that everyone does is for 4 hour
response to customer site, 24 / 7, at some %age of list price of the kit -
there are usually varients with limited hours, next day, 2 or 4 hour fix,
onsite spares that the customer can swap in, and so on.

part of the "bundle" is software maint, upgrades and helpdesk. Usually the
maintainer needs hooks back into the manufacturer for software assist,
escalation and spares fix - fixes again need a fairly quick turnaround from
them

early failures and the manufacturer warranty are usually of little help -
all that happens is that the manufacturer gives a non binding turn around
time in weeks rather than hours or days for swapping a failed unit. The only
exception is where you "burn in" the kit as part of off site prep for the
network - warranty fix times might be good enough if you have a stock of
similar untis for a roll out.

The maintainer may give a small discount during warranty as the warranty may
help cover the spares fix costs (usually doesnt help due to the turnaround
times), but it makes little difference to the cost to the maintainer, so has
little effect on the service pricing.

usually there are exclusions for faults that are really finger trouble, or
part of a reconfiguration - maintenance pricing involves fixing kit that is
in steady state - ie. working correctly before something goes wrong.

How do y'all see such costs? Do you just "eat" the labor you spend
replacing
the unit? Or do you charge labor to swap out the unit (ie, warrantee the
unit, but not the labor)?

maint. is like insurance - what you can economically provide and what
someone is willing to pay for comes down to the cost of downtime to the
customer - if the system is critical, then they really need an onsite
engineer and spares, and / or a network design where critical bits are
replicated for resilience - but you need a big network to justify the bill
this implies.

warranty doesnt seem to have any affect on this in practice - warranty is
for non critical equipment only, or where you design around lots of the same
item, so you can keep a buffer stock of spare items.

Comments from all specializations (audio, etc.) welcome.

1 further comment - if your customer sees a significant number of failures
from any one manufacturer - then you shouldnt sell that kit.

Thanks,
--
DaveC
me@privacy.net
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--

Regards

Stephen Hope - return address needs fewer xxs