Edit 04/23/24 : The Service Contract session was well attended and I’m very grateful to everyone who joined us for the discussion. I want to thanks the panelists Roy Martin, Brooke Ben Massani, and Julie Auger. Their contributions were incredibly insightful! And a special thanks to the super secret panelist Marjolijn Hameetman who travelled all the way from the Netherlands (to make us fell bad about ourselves). Her experience in negotiating specific benchmarks in her service contracts were illuminating, and highlighted many opportunities – more on that below. Here’s a few thoughts:

1 – The whole session was hanging on the idea that instrument owners are dropping service contracts. I had a come-to-Jesus moment when I realized just how many attendees were actually quite happy with theirs. Brooke and Julie (and myself) were very much in the DIY camp, where we will advocate for avoiding service contracts and budgeting a fraction to cover instrument service and repairs (it’s the self-insurance plan). It works pretty well but has limitations, mainly with the need to get staff trained to look into this type of stuff. So the idea of getting industry to train core staff may be an uphill battle.

2 – Marjolijn managed to negotiate service contracts where 1 – the company had to guarantee a response time and an uptime under penalty of a monetary fee, and 2 – training was provided to core staff to help diagnostic issues. This was made in exchange of many meetings regarding the instruments, and the need to track the instrument scrupulously. It’s also a long term type of thing – it looks like the second they opt out, there won’t be a way to get back these concessions. This is pretty amazing still, It’s a great achievement. I’m guessing that she was able to use the complete chaos that service in the Netherlands seemed to have been as a leverage to these very expensive concessions. It’s unclear that I could pull anything like this.

3 – While I don’t feel an appetite for cores to get staff trained on instrument service, one new idea (to me at least) is the need to collect data on instrument in prevision of service contract negotiations. The best time to negotiate a service contract is when the instrument is being purchased. One it comes time to renew the contract, having copious notes about the type of service that was provided, the amount of down time, the instances when the staff actually got involved in diagnosing or even fixing issues, QC data, all that information can be used to negotiate a service contract in your favor.

I’ll be chairing a session on service contracts at the upcoming ABRF meeting in Minneapolis where my distinguished panelists will explore what are the main issues and what can be done to improve the situation. The general idea I want to develop is that the service contract scheme is serving manufacturers mostly, and there is likely a way to make them more valuable to instrument owners and core facilities, while keeping the manufacturers happy. This is not a blogpost per say, I just needed to jot down some ideas and I can’t find a pen…

1 – In our facility, the cost of service contracts is usually much higher than the actual cost of repairs on our instruments. We pay for service as we go, and rely on instrument duplication to keep the experiments going. The only exception is with the mass cytometer, but that’s an another issue. This is a model that is adopted by larger SRLs (presumably). The service contract is usually purchased by groups who need very rapid fix to upcoming issues – no matter how big or small that problem may be.

2 – The price of service contracts have increased somewhere in the range of 5% to 10% over the last few years. The cost increase is not charged back to the user because that would be debilitating to the research effort. So the cores just keep running in the red. There’s no clear sign that the cost has gone up for the core facility services – the CAT has increased its rates by 6% over the last years, but we had not changed our rates for several years so we needed to catch up. Anyway, we’re special.

3 – Staff shortage has caused an increase in the response time for many manufacturer. There have been reports of manufacturers dropping some items from the contract, like guaranteed response time or number of PM visits. So double whammy: higher rates and lower contract quality. This is not moving in the right direction.

4 – A recent ISAC survey indicates that roughly 53% of respondents (ISAC members) have a service contract on all their flow cytometers, and an additional 39% have a contract on a portion of their platforms. This feels incredibly high to me, and could very much explain why we are here.

5 – While it is not clearly stated in that survey, it is likely that private labs and small cores are the ones getting coverage. My SRL has so many instruments that the funds needed to get a service contract on each machine may amount to the cost of a new instrument every year or so. In a way, this is an incentive for private lab to get instruments instead of using SRLs – unless the SRL is very good at repairing its own equipment.

6 -Getting funds for a service contract is very hard – except when you purchase the instrument. You can negotiate a multi-year contract to lower the cost. But really, you are getting a service contract to cover the early years of an instrument, which is when you don’t really need one.

7 – I’ve yet to meet a completely incompetent service engineer. They are typically well trained and very helpful. I have seen overworked service engineer however, and very rapid turnover of knowledgeable people that just didn’t like the lifestyle. This is cause for concern.

8 – A service contract is just another product that is sold by manufacturers. It needs to bring enough revenue to satisfy management and ultimately, the stockholders. The idea that users can just request manufacturers to lower the prices seems… un-American or something?

8 – The ABRF session is centered on the idea of optimizing the value proposition for service contracts. Essentially, the service contract should fit the values of the users, the core facilities and the manufacturer. I guess we could merge the core and its users into the same group to make things simpler. But essentially, the manufacturer is looking for a reliable (and profitable) source of revenue, while the instrument owners are looking for reliable data points at a fair price. If we can’t satisfy both parties, no one wins.

At this time, it seems the service satisfies a large enough portion of the instrument owners to be viable. But is it just because there is no other options? Could the actual issue be the lack of solutions to instrument maintenance: service contract or bust?

Where is the opportunity for manufacturers to get a better share of the market by offering a more acceptable alternative to the service contract option?

Are there any other solutions from the research community that could palliate the issue?

If you have any thoughts on the matter, get in the comments!