When is it fine to sign a five year agreement or contract for IT, support and services? In our opinion, never. We do understand that companies like to offer discount on services signed for long terms, but what should you be looking out for in a contract, and why shouldn’t you sign one for longer than 24-months?
We come across these types of customers all the time. These customers are the one’s stuck with a supplier that isn’t delivering what was promised or keeping expectations met, but still fall within their long, strict contract. We call these customers “stuck”, as there is no exit clause in their contracts and buying out usually means paying up the rest of the contract.
As a business owner, you don’t know exactly what will happen in the future, but that doesn’t mean you can’t plan for it. Certain items that require massive capital investment (ie. deploying business fibre), would require a longer contract to cover, but we still wouldn’t recommend anything above 24-months.
We believe that anything longer than 12 months is unnecessary, unless there is a special requirement that you need for your contract that would create a need for it to be longer. We believe that a client should want to remain with you, not be forced to because of a bad contract.
Our advise is to always get multiple quotes and question why a company would try to force you to stay in a long-term contract and not try build a business relationship with you first. The practice is old and outdated and should be avoided unless absolutely required.
Have any advice on contracts? Leave a comment below, you may help someone out!