ARKEN RESEARCH

Contract comparison

When the cheaper contract costs more

Compare annual fees, included support and usage charges in a worked example with a calculator.

Worked example · Invented offers · All amounts in USD

A $6,000 discount can disappear in usage charges

Suppose you are comparing two annual support contracts. The services and response commitments are assumed equivalent for this example. Taxes and other fees are excluded.

Offer A$48,000 /year

120 support hours included

Cost within the illustrated range: $48,000

Offer B$42,000 /year

60 support hours included

Additional hours: $150 each

The lower annual fee saves $6,000 before overages. At $150 per extra hour, that saving covers 40 additional hours. The two offers therefore cost the same at 100 hours of annual use.

Compare the cost at your usage estimate

Move the slider within the range covered by Offer A. The calculation changes only the expected number of support hours.

60 hours120 hours
Offer A$48,000
Offer B$48,750

At 105 hours, Offer A costs $750 less per year.

Offer B = $42,000 + $150 × hours above 60. Offer A stays at $48,000 up to 120 hours. This calculator does not model use above 120 hours.

Selected usage scenarios
Annual hoursOffer AOffer BLower annual cost
60$48,000$42,000B by $6,000
80$48,000$45,000B by $3,000
100$48,000$48,000Equal
105$48,000$48,750A by $750
120$48,000$51,000A by $3,000

At 105 hours, Offer B has 45 chargeable hours: 45 × $150 = $6,750. Added to the annual fee, the total is $48,750.

What to verify before choosing

The arithmetic is simple. The difficult part is establishing that the inputs describe the same service.

Usage
Use recorded support hours where available. Check for seasonal peaks and whether the next year will differ from the last.
What counts as an hour
Check minimum billing increments, project work, emergency support, travel and exclusions. One supplier’s “hour” may buy different work.
Service commitments
Compare response times, service hours, escalation rights and remedies. Equal hours do not make the offers equivalent.
Unused allowance and overages
Confirm whether unused hours expire, can be carried forward or can be exchanged for other work. Obtain the price above 120 hours before extending this comparison.
Payment and exit terms
Review when payment is due, renewal notice, cancellation charges and price changes. These obligations are not included in the totals above.

A useful request for comparable quotes

“Please quote the annual total at 80, 100 and 120 support hours, including overage rates, billing increments and exclusions. Confirm the response commitments and whether unused hours carry forward.”

This requests the missing inputs without assuming either supplier will change its offer. Once those inputs are confirmed, you can compare total cost and service terms on the same basis.

This is an arithmetic example, not a customer result or an Arken performance claim. No private case data or internal evaluation method is used.