The Big Question: Pay Now or Pay Later?
Machine tool distributors push service contracts aggressively at the point of sale. These contracts typically cost 3-8% of the machine's value annually.
But are they insurance, or just margin padding? The answer depends entirely on your shop's internal capabilities and uptime requirements.
OEM / Distributor Contract
- Guaranteed Response Time (e.g. 24hrs)
- Factory Trained Techs
- Firmware Updates Included
- High Annual Cost ($5k-$20k)
Independent / 3rd Party
- Lower Hourly Rate ($95-$150)
- Flexibility (Fixes usually faster)
- No Response Guarantee
- Limited Access to Proprietary Parts
Contract Evaluation Checklist
Before signing any Service Level Agreement (SLA), look for these critical clauses. If they aren't there, negotiate them in.
- Response Time Penalty: If they don't show up in 24/48 hours, do you get a credit? If not, the guarantee is worthless.
- Parts Discount: Contract holders should get 10-15% off spare parts. This alone can pay for the contract.
- Preventive Maintenance Visits: Does it include 1 or 2 PM visits per year? This is tangible value (fluids, filters, geometry check).
- Travel Costs: Is travel included? "Zone charges" can add $500 per visit even with a contract.
When to Buy the Contract
YES, BUY IT IF:
- You run 24/7 lights-out production. Downtime costs >$1000/hr.
- You have complex 5-axis machines or lasers where calibration requires expensive tools (Renishaw ballbar/laser).
- You have no internal maintenance staff.
NO, SKIP IT IF:
- You have redundant machines (can move work if one goes down).
- You have a strong internal maintenance team.
- The machine is simple (2-axis lathe, 3-axis mill) and parts are generic.