How to Price a Biomedical Service Contract: A Worksheet for Biomed Shops
Short answer: price a biomed service contract from the bottom up. For each device type, multiply the number of units by the PMs per year and the hours each PM really takes, add expected repair hours from history, add travel, decide whether parts are included or billed with a markup, then multiply the hours by your fully loaded hourly cost and add your margin. Check the result against what the same year would cost the customer on time and materials, and write the terms (response time, coverage hours, exclusions, parts) so the price and the promise match.
The companion guide pricing strategy for a biomed repair shop covers labour rates and time-and-materials pricing. This one is about the contract itself, with a worksheet you can copy.
Which kind of contract are you pricing?
| Contract type | What it covers | Who carries the risk |
|---|---|---|
| PM-only | Scheduled PMs and safety inspections; repairs billed separately | Mostly the customer |
| Full-service (comprehensive) | PMs, repairs and labour; parts included or capped | Mostly you |
| Labour-only | PMs and repair labour; parts billed at cost plus markup | Shared |
| Ad hoc / per visit | Time and materials, with agreed rates | The customer |
Step 1: Get an accurate equipment list
Never price from the customer's spreadsheet alone. Walk the site or ask for a recent inventory export, and confirm counts by device type, model and condition. Note devices that are end-of-life, unsupported by the manufacturer, or missing. A contract priced on 400 devices that turns out to cover 460 loses money on day one.
Step 2: Estimate the hours, device type by device type
Use your own procedure times, not a guess. Copy this worksheet:
| Column | How to fill it |
|---|---|
| A. Device type and model | One row per type (e.g. infusion pump, model X) |
| B. Quantity | Confirmed count |
| C. PMs per year | From the manufacturer or the customer's AEM program |
| D. Hours per PM | Your measured average, including electrical safety testing and paperwork |
| E. PM hours per year | B × C × D |
| F. Expected repair hours per year | From your history for that model, or the customer's records |
| G. Total hours | E + F (full-service) or E (PM-only) |
| H. Parts allowance | Expected parts cost per year if parts are included |
Then add the site-level items once: travel time (visits per year × round-trip hours), could-not-locate time (searching for equipment is real labour), and reporting and account management (monthly reports, survey-week requests, meetings).
Step 3: Turn hours into a price
Contract price = (total hours × loaded hourly cost) + parts allowance + travel and expenses + margin.
Your loaded hourly cost is everything a technician hour costs you: wages, payroll taxes, benefits, vehicle, test equipment and its calibration, insurance, software, training, and the unbilled hours every technician has. Divide the annual total by the hours you can realistically bill.
Worked example (a made-up site, to show the arithmetic)
| Line | Calculation | Result |
|---|---|---|
| Infusion pumps | 120 units × 1 PM × 0.75 h | 90 h |
| Patient monitors | 60 units × 1 PM × 1.0 h | 60 h |
| Defibrillators | 15 units × 2 PMs × 1.0 h | 30 h |
| Expected repairs | From last year's history | 50 h |
| Travel, locating, reporting | Site-level estimate | 40 h |
| Total hours | 270 h | |
| Labour cost | 270 h × your loaded cost per hour | 270 × L |
| Contract price | Labour cost + parts allowance + margin | Your number |
The figures above are invented to show the method. Use your own procedure times and history.
Step 4: Sanity-check against time and materials
Price the same year as if every PM and repair were billed at your standard rates. A full-service contract should usually come in below that figure, because the customer is paying for predictability and you are getting guaranteed revenue. If it comes in above, either the customer will notice or your hour estimates are padded.
Step 5: Write terms that match the price
- Coverage: which devices, listed by asset tag and serial number, and how devices added mid-term are priced.
- Response time and hours: business hours only, or after-hours and emergency call-outs at a fee.
- Parts: included, capped, or billed at cost plus a stated markup. Exclusions such as batteries, probes, accessories and physical damage.
- Rates for work outside scope: labour rate, travel rate (per mile or flat), overtime rate, emergency call-out fee, minimum billing per visit.
- PM schedule source: manufacturer intervals or the customer's AEM program, and who decides.
- Reporting: what the customer gets each month and how fast you respond during a survey.
- Term and renewal: dates, notice period, and how price changes at renewal.
Mistakes that make a contract lose money
- Pricing from an inventory nobody verified.
- Using the manufacturer's PM time instead of your measured time.
- Forgetting travel, locating and reporting hours.
- Including parts without a cap or an exclusions list.
- No mechanism for devices added during the term.
- Never comparing actual hours with the estimate, so next year's price repeats this year's mistake.
The last one is the most expensive. Log labour and parts against each work order, and at renewal compare the hours and parts the contract actually consumed with what you priced.
How Bravio helps
In Bravio a contract records the facility, the covered equipment, the term, and its commercial terms: whether parts are included or billed with a markup, labour rate, travel rate, overtime rate, emergency call-out fee and minimum billing per visit. A Renewals panel lists contracts ending in the next 90 days, and renewing copies the equipment, rates and documents into a new contract while keeping the old one in the history. Because labour and parts are logged on every work order, the actual cost of a contract is there when you renew it. See Bravio for biomed shops or get started free.
Frequently asked questions
How do you price a biomedical service contract?
From the bottom up: for each device type, multiply units by PMs per year and the measured hours per PM, add expected repair hours, travel, locating and reporting time, multiply the hours by your fully loaded hourly cost, add a parts allowance if parts are included, and add your margin. Then compare the result with what the same year would cost on time and materials.
Should parts be included in a biomed service contract?
It depends on how much risk you want to carry. Including parts makes the contract more attractive but needs a cap and an exclusions list (batteries, probes, accessories, physical damage). Many shops bill parts at cost plus a stated markup instead, or include parts up to a limit.
What is a loaded hourly cost for a biomed technician?
Everything a technician hour costs the business: wages, payroll taxes and benefits, vehicle, test equipment and calibration, insurance, software, training and the unbilled hours every technician has, divided by the hours you can realistically bill in a year.
What terms should a biomed service contract include?
The covered devices by asset tag and serial number, response times and coverage hours, how parts are handled, rates for out-of-scope work (labour, travel, overtime, emergency call-out, minimum per visit), where PM intervals come from, the reporting the customer receives, and the term, renewal and price-change rules.