Maintenance Agreements, A Good Business Decision - Part 4

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    By Jim D'Amico


    In Part 3 of this series, we discussed some of the important decisions you’ll need to make when you begin your maintenance agreement program.

    Moving on to agreement collections, another really important decision is whether to collect the entire fee upfront or spread the fee over twelve months.  Here’s where the decision you make can really impact your ability to sell agreements.

    Consider a situation where you are selling a two-visit maintenance agreement to a customer for $259.00 annually.  If you divide that amount into twelve monthly installments, your customer will pay $21.58 per month. The decision to buy an agreement becomes much easier for the customer when the cash outlay is only $21.58 instead of $259.00 upfront.

    In addition, monthly installment sales keeps customers on board with you, so you don’t have to re-sell every customer over and over, year after year.  They keep paying your monthly fee and you keep maintaining their system at the prescribed intervals.

    In fact, statistics on this subject provided by Coolfront Technologies indicates that maintenance agreements that need to renew each year only have a renewal success rate of 40%.  That means that six out of every ten customers choose not to renew their agreement when posed with that decision each year.

    What about collecting monthly?  You may be wondering how to effectively collect your monthly fee. You may also have concerns about taking credit cards from customers and keeping that credit card number on file.  You may ask, “Aren’t there laws regarding taking and storing credit card numbers? Isn’t that risky?”

    Here’s what you should know.  Yes, there are laws regarding credit card security but there are also simple and easy ways to comply. tells us that “the Payment Card Industry Data Security Standard (PCI DSS) applies to companies of any size that accept credit card payments. If your company intends to accept card payments, and store, process and transmit cardholder data, you need to host your data securely with a PCI compliant hosting provider.”  That’s the bad news.

    Here’s the good news. Systems like Coolfront Agreements, when used in combination with credit card processors with secure gateways take the  burden of credit card security off of your shoulders. Once the card number is in the vault it becomes secure and cannot be compromised. That makes accepting recurring credit card collections both easy and PCI compliant.

    OK, so just to review so far, we’ve covered the primary reason for selling agreements, and the benefits of offering monthly payments, the types of agreements based on equipment and what factors to consider for pricing.

    Part 5 of Maintenance Agreements, A good Business Decision will discuss ways to market and sell more maintenance agreements.

    Already have a maintenance agreement program and want to grow it?  Check out our maintenance agreement marketing and management system, Coolfront Agreements at




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