I have just renewed several service contracts and this time of year always leaves me feeling a bit cold about how much money has just been spent. For my lab the bill is well over $200,000. That is nearly 50 Genomes at todays prices, and people are only just publishing that many in a single paper!
At about 8-15% of the instrument purchase price a service contract is often seen as expensive. But I don't think there are many who choose to take a chance on their microarray scanner, real-time PCR instrument or sequencers - next-gen or otherwise. The impact of downtime is significant. The cost of an engineer visit can be very high and include very expensive travel costs. And the parts can be insanely expensive, over $50,000 on a laser for instance.
Two things amuse me about the whole service contract business. First are the names used for contracts; Gold, Silver, Advantage, Prestige, etc are all very aspirational and suggest we get something truly valuable. Second is how every company professes to make absolutely no profit. Companies are certainly not aiming to lose money here and I guess it is not so easy to set margins as on a consumable item. However I do not believe the this is unprofitable.
Some bits of kit seem to plod along with nothing other than an annual preventative maintenance visit. Others seem to need constant engineer visits to keep them working. The cost of the contract often reflects this although I don't know if anyone has ever tried to compare cost vs reliability?
Many labs, mine included, try to recover some of the maintenance costs in charges made to users. However this can add huge amounts of money to the cost of accessing some little used bits of equipment. And this is one of the major reasons for my deciding whether to keep a system going for another year. Sometimes a system needs to be internally subsidised. But commercial service providers can be good value, who still runs low volume Sanger sequencing for instance?
Recently when I have spoken to people running similar labs the words 'risk management' keep coming up. It seems that more of us are considering not getting contracts on every item in the lab, but nearly all agree the big tickets need to be covered. I'd worry a little though if my centrifuge, bioanalyser or PCR machine broke and I could not run my HiSeq! I guess the crunch in the economy hits us all and anywhere we can make a saving needs to be explored.
At the end of the day service contracts are just insurance policies and ones that most of us would not be without. However I don't know of any large institution that has looked into this in any depth to see if the insurance is worth paying. Perhaps a more holistic view could be taken with no service but a big contingency pot for when things do go wrong. What could MRC or NIH save or would it cost almost as much to administer?