Contracts For Outsourced Systems Administration

[spacebass5000]

So I am partnered in an S Corp with a buddy of mine. We are basically selling Contractually Outsourced Systems Administration.

We are looking at entering into our first crontract with a local small business and I have a few concerns.

Ultimately, in my head, all that my clients are going to get out of a contract from me is a discount on rates, continuity of service, and preference over other non-contractual clients.

Let me state that we can do business by answering the phone and running out to someone's location and putting out whatever fire it is that they have. We would like to get away from this business model however. Yet, we CAN operate this way...

My initial rough draft of our contracts goes something like this...

The client will basically get X number of hours for some Y dollar amount (at a discounted rate). We derive X by inventorying their systems and calculating how many hours a month we expect to spend servicing said sytems. Plus we add in a few extra hours just to be on the safe side...

If they go over X number of hours, we begin charging them per hour at a discounted rate (as opposed to our normal rate). Granted, this discount isn't as generous as the one used to generate the figures of our original contract.

I need to stipulate that these are NORMAL business hours. Anything needing attention after normal business hours needs to have a stigma attached to it such that there is a motivation to have us rectify the problem during normal business hours. As in, I don't want my clients thinking it is ok to call EVERY night at 10pm because they can't figure out why their cupholder won't work anymore. Granted, I do want to be there for them if they have a REAL problem. I need to find an amicable balance with respect to this...

I feel that my client expects some canned pricing on our services. I really don't want to go this route as I feel I will end up being at there beck and call and that they will lose all respect for my time (and the time of my other clients).

I'd really like to get some input on this from those who have dealt with similar issues. Any thoughts on the matter?

 

[spacebass5000]

*bumping* this with my updates and so that the Monday crowd can have a looksee at it...

I have worked up a unit system that reflects our current pay scale with respect to in-shop work, on-site regular business hours, and on-site after business hours.

I will lay this out and ask for your criticisms and suggestions...

I figured integers are easier to swallow as opposed to real numbers with respect to explaining my pricing structure to our clients. So our updated plan, in a nutshell, will start with what we are calling a "Service Fee". For now this is $100. The purpose of this fee is to keep me from siging contracts with people who will need us onsite for less than around 5 hours.

From here we basically give our clients a 25% discount (for now it's 25%) on our hourly fees (or units).

Again, we are charging by the unit and not hour (sort of). Our baseline for these units is one hour of on-site regular business hour service. Our pricing structure has an approximate fractional relationship that allows us to use integers to represent a "unit". To better explain:

1 Hour of Holiday On-Site Service = $150
1 Hour of Non Regular Business Hours On-Site Service = $115
1 Hour of Regular Business Hours On-Site Service = $85
1 Hour of In-Shop/Remote Service = $55
1 Hour of Holiday In-Shop/Remote Service = $85

If you take the regular business hours rate of $85 and divide it by 3, we have our base "unit". This allows us to form this approximate relationship

1 Hour of Holiday On-Site Service = 5 units
1 Hour of Non Regular Business Hours On-Site Service = 4 units
1 Hour of Regular Business Hours On-Site Service = 3 units
1 Hour of In-Store/Remote Access Service = 2 units
1 Hour of Holiday In-Store/Remote Access Service = 3 units

So after we do an initial free inspection of our client's site, we estimate the number of hours they will need each month.

So say a client needs 6 hours (this boils down to 18 units).

We tally up 6 x $85 which comes to $510. For now, we discount that 25%. Which somes to $382.50. Then we tack on the "Service Fee" and we finally come to: $482.50.

Any hours they incur past 6 we will give them an overage discount of, let's say, 15%.

We're thinking of throwing in web-hosting, email, and offsite data backups for no extra charge.

The client's main reasons for sigining a contract with us is to obtain "Continuity of Service" (documentation and a guarantee that we'll remember what was done from each visit to the next) and "Priority of Service" (guaranteed response times).

This pricing structure is set up (mostly by the amount of the service fee) such that clients will save more on our services by signing up more more hours (units) each month. As a client, you won't see large savings until you sign on for more than 8 or so hours a month. We like it this way...

What are your thoughts on this? Too cheap? Too much? Just right?

Thanks...

 

[spacebass5000]

*bumping* this with my updates and so that the Monday crowd can have a looksee at it...

I have worked up a unit system that reflects our current pay scale with respect to in-shop work, on-site regular business hours, and on-site after business hours.

I will lay this out and ask for your criticisms and suggestions...

I figured integers are easier to swallow as opposed to real numbers with respect to explaining my pricing structure to our clients. So our updated plan, in a nutshell, will start with what we are calling a "Service Fee". For now this is $100. The purpose of this fee is to keep me from siging contracts with people who will need us onsite for less than around 5 hours.

From here we basically give our clients a 25% discount (for now it's 25%) on our hourly fees (or units).

Again, we are charging by the unit and not hour (sort of). Our baseline for these units is one hour of on-site regular business hour service. Our pricing structure has an approximate fractional relationship that allows us to use integers to represent a "unit". To better explain:

1 Hour of Holiday On-Site Service = $150
1 Hour of Non Regular Business Hours On-Site Service = $115
1 Hour of Regular Business Hours On-Site Service = $85
1 Hour of In-Shop/Remote Service = $55
1 Hour of Holiday In-Shop/Remote Service = $85

If you take the regular business hours rate of $85 and divide it by 3, we have our base "unit". This allows us to form this approximate relationship

1 Hour of Holiday On-Site Service = 5 units
1 Hour of Non Regular Business Hours On-Site Service = 4 units
1 Hour of Regular Business Hours On-Site Service = 3 units
1 Hour of In-Store/Remote Access Service = 2 units
1 Hour of Holiday In-Store/Remote Access Service = 3 units

We then use these "units" to charge our clients as opposed to hours...

After we do an initial free inspection of our client's site, we estimate the number of hours they will need each month.

So say a client needs 6 hours, this boils down to 18 units.

We tally up 6 x $85 which comes to $510. For now, we discount that 25%. Which somes to $382.50. Then we tack on the "Service Fee" and we finally come to: $482.50.

Any hours they incur past 6 we will give them an overage discount of, let's say, 15%.

We're thinking of throwing in web-hosting, email, and offsite data backups for no extra charge.

The client's main reasons for sigining a contract with us is to obtain "Continuity of Service" (documentation and a guarantee that we'll remember what was done from each visit to the next) and "Priority of Service" (guaranteed response times).

This pricing structure is set up (mostly by the amount of the service fee) such that clients will save more on our services by signing up more more hours (units) each month. As a client, you won't see large savings until you sign on for more than 8 or so hours a month. We like it this way...

What are your thoughts on this? Too cheap? Too much? Just right?

Thanks...

 

[spacebass5000]

gah... buggy ass forum code

Sorry for the double post, I was given an error on submission so I re-replied.

/me shrugs