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Discuss Boiler service contract in the Central Heating Forum area at UKPlumbersForums.co.uk.

  1. Raj

    Raj New Member

    Hi all,

    I have my own business and am looking to go into selling boiler cover where I'd charge on a monthly basis. Like BG or Homeserve but on a much smaller scale.

    Has anyone on here tried this?

    Any advise would be appreciated

    Thanks
    Raj
     
  2. rpm

    rpm Trusted Plumber Top Contributor!!

    How much a month will it cost?
     
    • Like Like x 1
  3. Rob Foster

    Rob Foster Top Contributor!!

    Absolute minefield, what if your 1st three customers need new pcb, or hex you will be £2000 down straight away and your getting £15 per month like BG...then there is the nightmare of your van stock
    to fill a transit with regular parts used can get up to £10,000...but maybe I have missed something...you will need a big capital investement
    Centralheatking
     
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  4. Craig Watson

    Craig Watson Plumber GSR

    I don't think these sort of plans work on a small scale. Like Rob says, when it comes to the pcb and hex, you won't want to pay for them and if you try worming your way out of it, you could have a court case on your hands.
     
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    • Agree Agree x 1
  5. Gasmk1

    Gasmk1 GSR

    if you are intent on doing this, i thought about it and its is doable but you have to set up another bank account (called service plan easy if you have internet banking) and initially load it up with a couple of thousand, to cover parts. you need to monitor the account and only pay for parts from this account for boilers on service plan. you also need to decide how much of the monthly charge goes into the account to keep it functioning properly. your monthly charge needs to reflect the service and also call backs and fault calls. good luck if you do. its a gamble really that your income is greater than outgoings for the service plan boilers
     
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  6. Brambles

    Brambles Active Member

    Raj

    I operate a scheme on the basis of what I think you are proposing / considering.

    It only applies to systems that I have installed ( and undertake routine servicing) - these are only biomass and heat pump systems. We divide the offering into long term (10 year contracts) and short term (3 year contracts).

    The business is a separate legal entity to my main business and carries it’s own PI insurance. There are other insurance policies that you can take out to cover the eventualities of a large ( abnormal ) expense. Without a backbone of long term contacts, it is very difficult to secure bank finance to support the business.

    From a business model perspective, the break even point is at around 100 service contracts. In reality you (we needed to achieve) need over 500 service contracts for the revenue to properly cover the indirect costs of a stand alone business.

    If the business is not a separate legal entity, we found it difficult to get a decent (low!) quote for the PI insurance.

    From a return perspective, after 7 years our earnings before interest and tax are now between 15 and 20%. The largest single “abnormal” expense we have had represented 20% of our annual turnover that year.

    In summary, it works, but it needs to be well structured and built to a scale that is economically viable. To achieve the latter we needed bank finance to reach that level.

    Hope this helps
     
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  7. wrxsti265

    wrxsti265 New Member

    Have a listen to Wayne Bettess’s podcast
     
  8. Rob Foster

    Rob Foster Top Contributor!!

    I am not entirely sure here, but if you are...essentially advertising and selling a financial package or a form of insurance...you may need to be regulated
    Centralheatking
     
    • Agree Agree x 1
  9. Raj

    Raj New Member

    Hi Guys

    Thank you all for the responses. I am working on the terms and conditions and will have them checked. As I'll be advertising this as a maintenance contract, will I need to be FCA regulated? I will mention within the advertising and T&C that this is a maintenance contract and not a insurance policy.

    Thanks
    Raj
     
  10. Raj

    Raj New Member

    Thanks for your response Rob. I appreciate what you're saying and I know it is a gamble. I might have a month where I'm getting 20-30 breakdowns where parts are required, or I might get a month where only 5 breakdowns require a part. Like I said, it is a gamble
     
  11. Rob Foster

    Rob Foster Top Contributor!!

    I presume that you will service every system you take on before accepting them into your scheme and charge up front for the initial service..and list any defects before proceeding with any contractual arrangements
    anyway ...thats what I would do
    Rob Foster aka centralheatking
     
    • Like Like x 1
  12. Raj

    Raj New Member

    Yes
    A system check will be carried
     
  13. Rob Foster

    Rob Foster Top Contributor!!

    a
    and paid up front before your scheme starts ..just like British Gas etc etc...I think you might do well if you organise things well
    or just loose your house wife etc if you get it wrong ...plenty of
    fellas gone down both routes...I am a lucky man after 40+ years
    and 3 wives My business is solid and bouncing...but seriously
    do be carefull. Rob Foster aka centralheatking
     
  14. Raj

    Raj New Member

    Hi Rob

    Yes payment will be taken upfront. The terms and conditions are designed so that a system check will be carried out within the cooling off period for the customer. If any improvements work is needed they will be quoted for. If the customer decides they don’t want to carry out the improvement work then the cover will be limited. If the customer decides to cancel within the 14 day cooling off period then they’ll have to pay the full amount for the service carried out.
     
  15. YorkshireDave

    YorkshireDave Plumber Top Contributor!!

    edit
     
    Last edited: Jul 11, 2019
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