The Management of Service Business - New Edition

Christian M. Wegner

Still dedicated to the Business of Industrial and Logistics Technical Services

Published Aug 7, 2024

Contrary to physical technical assets, the service associated with keeping these items in good technical condition is immaterial, and therefore its value is harder to define. Customers usually know precisely how much they are ready to spend for a product or an installation. On the other hand, the only thing they often know about the pertaining service is that they want to spend as little as possible for it. Actually, exemplifying the value of good service and explaining why good service has a certain price was, in my experience, one of the most difficult tasks during the negotiation of large service contracts.

In this second extended edition of my book “The Management of Service Business”, I am including three additional chapters:

In the first one, I am addressing the above mentioned topic by introducing a new methodology for determining the Value of Service along its three main goals: (1) ensuring the safe and reliable operation of the installation; (2) preserving the installation in good technical condition; and (3) adapting the installation to changing operational and technical requirements. To my knowledge, this is a unique approach for expressing the value of service in monetary terms.

The second one is dedicated at the Business Valuation of a service company and provides two concrete examples: (1) the valuation of the service business of an installations company, and (2) the valuation of a generic service provider. It not only presents the methodology for such a valuation but also addresses in detail the risks linked to the acquisition of a service business.

The third additional chapter introduces a practical methodology for implementing an Incentive Scheme in performance based service contracts which translates service performance into a monetary value.