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Posted by Bill McCharen | February 23, 2017

3 reasons why we avoid long-term contracts

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Have you ever been stuck in a long-term contract you’d do just about anything to get out of? A years-long office lease, perhaps, with someone who drags their feet at every promised upgrade or repair? Or an annual contract for monthly services that you realize you don’t really need after only three months? 

There’s nothing worse than being tied to an agreement that no longer works for you. And these days, when change is the rule rather than the exception, such an agreement all too often ends up being a burden on a business.

As you can guess, I don’t care much for long-term contracts. At MyITpros, we just don’t have them. Here are three specific reasons we believe month-to-month contracts are far more preferable for all parties.

Reason #1: Needs change

Almost anyone who runs a business these days will tell you that things rarely stand still for long. A competitor introduces a new service, and you’ve got to respond fast with your own offering. Or a customer points out a product problem, and you want to nip it in the bud, before it starts affecting sales. If you’re locked into a contract with a vendor that hamstrings you from getting the additional resources you need, you could really be in trouble.

These are the kinds of turn-on-a-dime demands on businesses today that make long-term agreements so problematic. It’s no wonder more and more companies are turning to the cloud to get the resources they need. Buying resources “as a service” instead of on a fixed-contract basis makes it possible to scale up to get what’s required to get the job done and then scale back down.

At MyITpros, if we have a client whose needs change dramatically, we believe in adapting to meet those needs. That can sometimes mean scaling back on what we originally agreed to provide – but as often as not, it can also mean scaling up. Either way, the flexibility of a month-to-month contract makes it possible to make changes fast.

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Reason #2: Value matters

It’s a funny thing about long-term contracts: They’re often the standard operating procedure for companies that are the least responsive to customers and the hardest to do business with. And that makes sense, because if you have a customer locked into a contract for a year or longer, you don’t really have to deliver great service – since the customer can’t really leave without paying a big penalty.

That kind of approach just rankles me. At MyITpros, we strive to apply a “give more than you get” approach to every client interaction we have, following what the writer Bob Burg calls “the law of value.” Month-to-month contracts keep us accountable to that commitment. If we underdeliver, our client is free to walk away at the end of the month. If we overdeliver, we don’t have to worry about that happening. We don’t need a long-term contract to force them to stay.

Reason #3: The golden rule applies

Our clients appreciate doing business with a handshake and a month-to-month agreement, and we appreciate doing business with other companies that have that same approach. It’s simply a case of “do unto others as you would have them do unto you,” as the age-old saying goes.

Our business is dynamic and growing, and as our needs change, we want our vendors to be able to change with us – or to be able to part ways, if that’s the best solution for meeting our needs. If I’m stuck in a three-year contract, that can be a problem. We wouldn’t dream of imposing that kind of rigidity on our clients, and we expect the same from our vendors.

Even though there are still some companies out there sticking with the old, outmoded long-term contract model for doing business, I see more and more moving away from it. I think that’s to everyone’s benefit. What about you? I’d love to hear your thoughts on the shift toward more flexible arrangements and what it means for companies and clients alike. Let me know what you think!

BillCircle.png Bill McCharen, President

Tags » Business Management