5 Year Contracts – Irresponsible or Visionary?

Time is a funny and strange thing, but no doubt 5 years, and to a lesser extent 3 years, can be a long time in contract terms.

Especially when you consider that the average time a person will change jobs is every 4.3 years. This can and does mean that the people directly involved with the negotiation won’t be working at your company by the end of the contract.

“Someone is sitting in the shade today because someone planted a tree a long time ago” - Warren Buffet

However, there are some benefits from locking in a contract for 5 years, depending on the terms that you’re able to sign. Keeping the price locked away can sometimes be an advantage to avoid inflation costs, but this can also mean that you don’t benefit from competitive pricing. Service pricing usually goes down over time as more competition joins the market.

Other benefits include having a greater relationship between the companies and you should really be obtaining the best customer service possible and see that all your requests (sometimes even the unreasonable ones) are being met.

The investment that goes into installing GPS tracking, cameras and special kit can be quite significant, so it can seem to make sense that you want to have long term use out of it and it’s probably easier to tell your board, CFO, or other finance control that the expense being outlaid now will be good for 5 years. And that can be true, but a lot can happen in 5 years

Sometimes changing provider can be as easy as changing the SIM card.

I’ve recently had a perspective customer advise me that they would love to change provider due to some underhanded tactics within their contract which has meant that they’ve paid a lot more than they originally purposed. They’re stuck in this contract for another 2 years unless they want to payout the rest of the contract.

At iHawk GPS, our maximum contract is for 2 years and we even have a no contract option. That’s because we back ourselves to provide the best service, give the best price and be transparent in how we operate. If you’re interested in finding out how we can help you with your GPS tracking, please message me directly.

Is a 5 year contract irresponsible or visionary? I personally don’t think it’s visionary, but I’m certainly not game enough to say it’s irresponsible. I’m sure much cleverer people than I have chosen 5 year contracts are are happy with their decision.

I’d really like to hear what you think?

Thanks for reading, Brad.

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