Another important point to stress to the customer is the support provided under the warranties for their equipment is finite. At some point, customers will no longer be eligible for this support. Service contracts provide your customers with annual or multiyear support that can easily be renewed upon expiration. They provide your customers with the assurance and peace-of-mind they will need to keep their networks and equipment operating at peak efficiency. Additionally, multiyear service contracts can provide customers with longer-term price protection.

Many customers may also not realize they will be charged on a time-and-materials basis for any support they receive after their warranty expires. While these costs may not sound high initially, they can quickly add up.

For example, an unsupported customer who calls into the Cisco TAC is charged an hourly rate of $210 – with a minimum four-hour charge on most major products. You may determine, after talking with your customers, that they could be calling into the TAC several times a year. In many cases, the one-time annual cost of a service contract could be less than these time -and-materials charges.