There is a growing trend for IT services to be supplied on a rolling monthly fee basis rather than a fixed or one-off cost. While this can be really helpful to the cash-flow of small businesses there are a rising number of companies who are including (IMHO) somewhat dubious clauses in their contracts. All perfectly legitimate but a potential nasty surprise for people who don’t read the small print – i.e. most people!
Here are my TOP 5 annoyances:
1. Long term contract commitment
Microsoft Exchange is a great email tool but setting up and running your own Exchange Server can be expensive and require regular management and maintenance. As an alternative numerous companies now offer ‘Hosted Exchange’ where, for a modest monthly fee, you can use an exchange mailbox hosted in ‘the cloud’. Some services even throw in a copy of MS Outlook for you to download and run on your own PC at no extra cost. When you sign up, you normally have to commit to a minimum of 12 months. All looks fine so far, the minimum contract ensures the supplier’s set up support costs are covered. But what happens when you get to the end of the 12 months? Sure the service continues with absolutely no additional effort on behalf of the supplier so maybe a rolling contract subject to 1 month’s notice might seem reasonable? Oh no! Many suppliers insist that your contract rolls over into a new 12 month contract. In a market where technology moves so fast, being tied in to another long term contract can be a right pain – particularly as such contracts are based on the technology you bought in the first place. In a recent case, we found a contract based on Hosted Exchange 2007 was rolled over to a new 12 month contract on the same platform at the same cost, even though new sign-ups were being offered Hosted Outlook 2010 – at a lower cost! Top Tip: Microsoft Office 365 Hosted Exchange has a great track record yet is one of the cheapest services around. Although they require 12 month contracts, you can cancel your contract at any time subject to a cancellation fee which (at time of writing) is only 33% of what is outstanding on your contract.
2. Extended Notice Periods
We recently wished to cancel a service agreement for a dedicated web server. The original contract had been for 12 months (fair enough) and in fact, the contract had been running for 2 years with no issues. However as technology moves on we decided to take a different approach to our hosting requirements. We knew the contract period was coming to an end so we contacted the supplier – only to find that although the contract was up in less than a month, we could only cancel it subject to 3 months notice! An extra 2 months fees for no real benefit! Top Tip: When you sign up, make sure you know what the cancellation terms are and, if necessary, set your self a future reminder (in the case above this would be 9 months into the 12 month contract) and, unless you are sure you want to retain the service, make sure you give notice of cancellation in good time. If you do want to stick with the service. you can normally rescind your notice at any time up to the actual ed of the contract with no penalty.
3. Early Renewal
In our experience this is common with Energy contracts – not exactly IT but still annoying With gas & electricity supply, to get the best rates you normally have to commit to a minimum 12 month contract. This is fine but then around 9 months into that contract, you will receive a letter from your supplier inviting you to take out a new contract at the end of the current contract. The catch is that you have to respond to this letter within around 21 days of receipt and if you don’t you are automatically signed up for the next year – even though you may still have over 2 months of your current contract to run! Top Tip 1: Set a reminder to watch out for the letter and make sure you do something with it. Top Tip 2: Don’t assume that the price they offer you in the renewal letter is their best price. We consistently find that by ringing up and asking for their best rates we get significantly improved prices.
4. Cancellation Fees
This used to be very common with ISPs and web hosting companies. Not so much now but easy to get caught out. Web hosting is relatively inexpensive nowadays with professional hosting services available from £10 per month or less. This is fine and if you decide to move your hosting to a different supplier (perhaps as part of a wider services package) most web hosts will initiate the transfer with no fuss – they know it happens and it is part of the service. Some however, still hold the notion that it is OK to charge £30 or more as a cancellation fee. Bear in mind that the work to initiate the transfer will probably take the service provider less than 2 minutes! Top Tip: Check for cancellation fees before you sign up and if there are any charges that look unreasonable – go elsewhere!
5. Web Marketing services contracts using finance agreements
There is no question that marketing is speculative process and it doesn’t always work. It is important that any marketing campaign is given time to flourish but there are limits! We came across a ‘so called’ web marketing company who promised the earth with regular leads and, what is more, a money back guarantee! How could anyone resist such an offer? The only problem was that the cost was around £200 per month and you had to sign up for FOUR YEARS! What is more, you actually had to sign a finance agreement for the whole amount which you paid off over the 4 years. If the service was that good they shouldn’t need to tie clients in. The results should speak for themselves and encourage people to stick with it. They used the lure of fantastic promises in the hope that people wouldn’t notice the flaw in their case. Needless to say the ‘money back guarantee’ had enough wriggle room that it was rarely, if ever, enforceable. Top Tip: Don’t do it!
