I recently visited an existing client and got to talking to them about their phone lines.
They advised me they’d just signed a 5 year (YEAR!) contract with Optus, that Optus given them a really good rate.
I almost had to pick my chin up off the floor.
For my signature on a 5 year landline contract, they’d almost have to pay me.
Here’s why –
No-one knows what’s going to happen between now and 5 years time. Even if you’ve been in business for 50 years you don’t know what the next 5 will hold.
So this contract, where you’re getting a “great rate” on your line rental is now a noose of sorts.
This customer advised that they were paying $20 per line per month and they have 4 lines. No equipment leasing or anything of that nature, just the lines.
Without having read the contracts ourselves, but assuming the customary telco agreement cancellation fee of (Monthly Rental) * (Months Remaining) applies here, well you do the math. No, in fact, I’ll do it for you.
If this business wishes to cancel their contract after 12 months they’d have to fork out $3840. Even after 4 YEARS if they wanted to cancel they’d STILL be up for $960. Of course they’re going to give you a great rate – better for them to lock in that revenue now than have to fight to gain or retain it later.
This is why companies lock people into contracts – so they can lock in the revenue. We all know that. With a mobile contract it’s generally 2 years and you’re generally paying off a handset with that, so OK. We offer an IP PBX contract that’s 3 years but we generally sell the 2 year option.
But 5 YEARS??? The way telecommunications are moving, no-one knows what devices or methods we’ll be using to communicate in 5 years. Who knows where your business will be in 5 years? Who knows what the going rate for a landline will be in 5 years?
If someone offers you a 5 year contract on your telecommunications and all you get in return is the line itself, our advice is to tell ’em they’re dreaming.