How Much Should You Charge for Support?

How Much Should You Charge for Support?

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How Much Should You Charge for Support?

How much should you charge for Support?  It’s a driving question as your organization seeks to drive recurring revenue growth. And it’s a balancing act. Setting the correct price for your Support programs begins with a baseline understanding of what your market will bear. Ultimately, though, you must base your pricing on the type and level and entitlements you offer. Let’s explore a Support pricing model that’s been shown to work equally well for businesses and their customers.

Calculating Average Support Program Price

The average prices for Support programs range from 15.6 percent for a basic level of support to more than 26 percent for a high-end premium program.  Prices vary based on the entitlements offered and the ways that pricing is structured.  Here are a few considerations:

Net vs. List

Pricing may be based on a percentage of either a product’s list price or its net price after discounts.

Add-ons and Fixed Fees

Some Support programs consists of a fee tied to a percentage of either product list or net price plus add-ons.  Add-ons are often associated with optional entitlements such as named support resources (i.e., designated support engineers and/or account managers).

Adjustment Fees

The price of support in the first year is often not the price a customer will pay in subsequent years.  Support prices typically include annual adjustment fees to account for inflationary factors.

Pricing by Support Program Tiers

Support pricing is typically established by program level or tier.  It is not uncommon for support portfolios to consist of two or more tiers with names like Silver, Gold and Platinum.  Although support programs may sound alike, they often vary from vendor to vendor.  For the purposes of establishing baseline pricing benchmarks ServiceXRG has normalized support programs into the four distinct tiers described below.  Classification is based on the underlying program entitlements and not on the program names.

Support Program Tier Classifications

Average Support Program Price

Establishing Support Prices

The price of Support must be set at a level sufficient to cover delivery costs, yet not too high to discourage customers from buying.   Customers are likely to have preconceived ideas about how much (or how little) Support should cost based on their experiences with other technology vendors.  If your “gold” support is priced at 23% of product list price but other vendors price that level at 18%, customers may perceive that your prices are too high — even if you offer more for the price.

It is imperative that you price Support reasonably so that you can make a compelling case that the benefits outweigh the costs to the customer.

Making the Case for Services

Selling services demands that you establish a credible and compelling value proposition built upon the entitlements customers want and need from services balanced with a reasonable and justifiable price level.

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Reach out anytime to start your own conversation about Support pricing, recurring revenue and customer relationship value. Use the chat button at bottom right, send an e-mail, or click on my calendar to schedule a specific time.

 

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Support Transformation: The Guide to Essential Practices and Metrics

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Treat Your Service Portfolio as a Product Line

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Support Pricing Benchmarks

Setting the correct price for your support programs begins with a baseline understanding of what your market will bear but ultimately the price must be based on the type and level and entitlements offered. The average prices for support programs range from 15.6 percent for a basic level of support to more than 26 percent for a high-end premium offer.

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GUEST POST: Sell Services Faster and More Accurately

GUEST POST: Sell Services Faster and More Accurately

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GUEST POST: Sell Services Faster and More Accurately

Company executives understand that selling services alongside core product offerings leads to greater alignment and customer value, while subsequently decreasing the likelihood of customer churn and loss of recurring revenue. 

While products form the basis of a customer-vendor relationship, services are the foundation from which post-sales customer relationships are built and sustained.  Services are a natural extension to core product features and offer access to the expertise, skills, and resources that drive customer value.

By Steve Schneider – Co-Founder, WorkRails

Why selling services can be difficult

Well-defined services and the means to sell them are imperative. so why is selling services so difficult?

The ability of Sales to sell services is often complicated by inadequate systems and manual processes that reduce the speed and accuracy of service discovery, configuration, and quoting. Inhibitors to service sales are often systemic and arise from programs that are disproportionately focused on selling strictly new products.

Services revenue is more important than ever, and companies must make concerted efforts to help their Sales teams sell services more efficiently.

10 ways to help Sales teams sell services

  1. Make Sales aware of available services.

Sales teams may not be familiar with the extent of services available to customers or recent modifications and enhancements to the catalog of available services. Actively promote the availability and value of services to Sales.

Develop a comprehensive catalog of service programs with up-to-date program descriptions and critical details. Make the service program catalog available digitally in a single, easy-to-find location like a CRM.  Keep Sales up-to-date about enhancements to the service catalog.

  1. Make it easy for Sales to align customer needs with available programs.

The existence of a service catalog does not mean that Sales will know how to align customer needs to available services. Help Sales recognize service opportunities and provide the tools to match needs to available services.

Provide Sales with digital customer journeys, use case examples, and service configuration guidance (configurators). Consider creating predefined service-outcome-based journeys that package multiple service programs to deliver specific customer outcomes, but also support custom SOWs.

  1. Justify service value.

Every service program and service bundle will have an associated price, even if it is discounted. Customers will want to understand the benefits of service offers for the price paid. Be prepared to help Sales justify service value. Establish guidance to suggest the tangible benefits customers can expect, including faster time to benefit; lower costs to implement and maintain; and the attainment of business performance objectives.

Provide Sales with cases studies and quantification tools to help justify the cost of services.

  1. Simplify service configuration.

Some service programs will provide standard deliverables and resources, other services must be customized to meet specific customer needs. Make it possible for Sales to customize and configure services to meet the specific scale and scope of customer needs. Integrate configuration tools with the ability to create customized service quotes.

Provide Sales with access to easy-to-use sales enablement and on-line configuration tools to capture required information needed to customize service quotes.

  1. Streamline proposal creation.

Creating a service proposal should not be complicated. To simplify service proposal creation, use configured services information to automatically build proposals with up-to-date program descriptions, terms, and conditions. Provide the means to pull information from existing systems and integrate customer-specific configuration inputs to create customized service proposals.

Provide Sales with the proposal-generating tools necessary to generate customer-ready documentation quickly and easily.

  1. Digitize pricing, discounting, and Sales policies.

Pricing should not be a mystery and Sales should not have to hunt for quotes. Provide a digital experience for Sales and Service team members to dynamically create quotes based on customer needs. Add pricing and sales policies to your services catalog and keep all data up to date and relevant in one central repository. Assure that pricing and sales policies are clearly delineated by regions.

Provide Sales with a digital platform to generate quotes on demand based on customer requirements.

  1. Automate approval workflows.

Take the guesswork out of pricing and discounting by establishing clear sales policies and approval guidelines. Automated, end-to-end service sales workflows and approvals assure that proposals are aligned with current sales policies.

Provide Sales with clearly defined sales policies related to pricing discount and approvals. Provide digitally enabled processes for creating and routing new proposals to the appropriate internal resources for approval—deal desks or executives— with the ability to capture customer approvals digitally.

  1. Seamless system integration

Selling services should not require extraordinary efforts by Sales. Disparate systems that require time and effort to keep up to date can increase the time to close new service deals and lead to errors and inaccuracies.  implify the service sales process by integrating Customer Relationship Management (CRM),  Enterprise Resource Planning (ERP), Professional Services Automation (PSA), and other back-end systems that enable service sales actions such as configuration, pricing, quoting, booking, and scheduling new services.

Remove the burden on Sales teams to update multiple disparate systems by providing seamless system integration across the end-to-end service sales process.

  1. Incent action.

Streamlining and simplifying the end-to-end service sales process will help Sales sell services, but it may not be enough. If you want Sales to take an interest and commit time and efforts to selling services recognize and incent action. Structure compensation, goals and KPIs to properly align products and services.

Incent Sales to sell the right services to the right customers and adhere to established service sales policies and guidelines.

  1. Measure and improve.

Monitor the effectiveness of service sales actions to identify which service programs are most often purchased and w messaging and sales resources are most useful for closing service deals. Evaluate the effectiveness of selling platforms and processes to further streamline the service sales process.

Continually monitor service sales performance and engage with Sales teams to assure that service offers are aligned with current customer needs; sales resources are effective; and that systems and processes are streamlined.

Help your Sales team sell services.

Services and the means to sell them are imperative. With the right resources Sales can quickly and accurately discover, understand, configure, price, and quote services. Effective service sales capabilities create opportunities for recurring revenue retention and growth. Help your Sales team sell services by providing the information, systems, and processes they need.

Service sales can be complex and time consuming, but it doesn’t have to be.

 

About WorkRails

WorkRails has reinvented how software companies sell services to their customers.  With over $700 billion a year spent on technology services, we were shocked to see the most advanced companies relying on old documents, spreadsheets and predominantly manual processes to drive such an important part of their business.

Through automation, WorkRails makes selling services easy, fast and more accurate for our clients, saving them time and money.  Our SaaS solution powers an e-commerce experience for services employees, clients and partners that increases adoption and reduces errors.  Our clients include some of the top software companies in the world.

Learn More about WorkRails at https://www.workrails.com/

 

Match Customers with the right services.
Close more deals faster.

On-Demand Webinar:

Sell Services Faster and More Accurately

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How to Sell Services Faster and More Accurately, from ServiceXRG and WorkRails

Customer Success Marketing and Portfolio Management

Customer Success Marketing and Portfolio Management

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Customer Success Marketing and Portfolio Management

Technology service programs are evolving to offer new value and benefits such as use and adoption assistance and resources to help attain successful outcomes. As technology service programs change, service, support, and success marketing must evolve beyond selling the initial service engagement and focus on sustaining and growing relationship value.

Success Marketing and Portfolio Management

Technology service programs and offerings must evolve, and companies need to look beyond service marketing to focus on Success Marketing and Portfolio Management.

Success Marketing and Portfolio Management consists of the practices and activities necessary to create end-to-end, integrated success-focused programs capable of delivering a value-based message to promote adoption and attainment of tangible customer outcomes that sustain customer relationships and promote opportunities for growth.

The Subscription Impact on Service Programs

The very definition of technology service offerings is evolving.  Service entitlements that were once included as foundational elements of a service program may now be included as part of a product or subscription purchase. 

Standalone service programs delivered by siloed services departments such as Professional Services, Training and Support are increasingly offered through integrated success-focused service portfolios.  Success-focused service programs may complement or fully displace legacy service and support offerings. The nature of how customers purchase services is evolving too. Support programs attached to license sales and professionals service engagements sold as custom time and materials engagement are displaced by integrated a-la-carte success services that may be purchased as add-ons or obtained by service credits.

Success Marketing and Portfolio Management Defined

Success Marketing and Portfolio Management consists of the practices and activities necessary to create end-to-end, integrated success-focused programs capable of delivering a value-based message to promote adoption and attainment of tangible customer outcomes that sustain customer relationships and promote opportunities for growth.

There are eight fundamental success marketing practices.  Several of these practices extend the focus and scope of traditional service marketing responsibilities.  The expanded scope of Success Marketing must include the following:

  1. Customer Segmentation Strategy
  2. Ongoing Customer Needs Assessments
  3. Service Program Design Methods
  4. Portfolio Management
  5. Value Quantification
  6. Sales Enablement
  7. Marketing Tools and Resource Development
  8. Retention and Growth Planning

Treat Your Service Portfolio as a Product Line

Treat Your Service Portfolio as a Product Line

Treat Your Service Portfolio as a Product Line

Service and success programs are a significant source of revenue. To assure that they yield their maximum revenue potential they must keep pace with customer needs and expectations.

Formal Product Management of Service Portfolios

Treat service portfolios as valuable offerings by assigning dedicated program management resources to keep offerings up to date and relevant. Consider the following:

Develop service and success portfolios that span delivery silos (Support, Success, Education, Professional Services, etc.).

 

Assign a full-time dedicated product manager to lead program management activities for the service / success portfolios across service disciplines and related product families.

 

Establish goals and objectives for the service program manager based on performance and revenues directly associated with sale and renewal of service and success offerings.

 

Grow the team of portfolio product managers to keep pace with the size, complexity, and financial performance of the service portfolio.

 

To assure that your service and success portfolio remains relevant to customer needs review and update offerings on an ongoing basis.  Consider adding new offerings and enhancements as customer needs evolve.  Be certain to define and articulate the value of all offerings and reinforce service benefits to help sustain customer relationships.

Featured: Success Marketing and Portfolio Management

The eight fundamental Success Marketing and Portfolio Management practices are defined and described within this report.

Log-in to get your copy.

Related Articles

How Much Should You Charge for Support?

How much should you charge for Support?  It’s a driving question as your organization seeks to drive recurring revenue growth. And it’s a balancing act. Let’s explore a Support pricing model that’s been shown to work equally well for businesses and their customers.

read more

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Company executives understand that selling services alongside core product offerings leads to greater alignment and customer value, while subsequently decreasing the likelihood of customer churn and loss of recurring revenue. Well-defined services and the means to sell them are imperative. so why is selling services so difficult? This article introduces 10 ways to help Sales teams sell services.

read more

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Modern, well-defined post-sales service portfolios that combine elements of Customer Support and Customer Success can significantly increase your ability to help customers use and apply products; reduce churn; and expand revenue growth. This article will help you to determine the type of post sales service portfolio you need.

read more

How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

Customer Success Marketing and Portfolio Management

Technology service programs are evolving to offer new value and benefits such as use and adoption assistance and resources to help attain successful outcomes. As technology service programs change service marketing must evolve beyond selling the initial service engagement and focus on sustaining and growing relationship value.

read more

Stop Selling Support and Start Selling Success

Stop Selling Support and Start Selling Success

Stop Selling Support and Start Selling Success

It is no longer enough to attach a support program to a product sale. Effective Success Sales teams must be able to establish long term service relationships that last and grow well beyond the initial sale.

Success Sales Effectiveness

Success sales effectiveness is optimized when Sales teams are knowledgeable of service programs and can articulate a compelling value proposition for long term service benefits.  To maximize sales effectiveness, companies must establish formal success training programs.  Consider the following:

Establish a formal success sales curriculum to instruct sales representatives responsible for selling services (direct and through partners).

Instruct sales teams in the identification of success opportunities.

Provide opportunities for instructor led classroom and virtual training.

Supplement core training with periodic updates delivered through self-paced instructional videos and/or periodic live webinars.

Include coverage of core offerings, value proposition, use cases and overcoming objections.

Supplement sales training with supporting tools and reference materials.

Establish competency-based testing to verify sales representative knowledge. (internal sales staff and partners).

Assure that all service sales staff have been full trained, and their knowledge tested.  Monitor sales effectiveness by measuring initial service contract sales (attach), renewal rates and the rate that service revenue grows from expansion selling.

For additional insights into how to effectively market and sell services, consider the following featured report:

Featured: Success Marketing and Portfolio Management

The eight fundamental Success Marketing and Portfolio Management practices are defined and described within this report.

Log-in to get your copy.

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How Much Should You Charge for Support?

How much should you charge for Support?  It’s a driving question as your organization seeks to drive recurring revenue growth. And it’s a balancing act. Let’s explore a Support pricing model that’s been shown to work equally well for businesses and their customers.

read more

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Company executives understand that selling services alongside core product offerings leads to greater alignment and customer value, while subsequently decreasing the likelihood of customer churn and loss of recurring revenue. Well-defined services and the means to sell them are imperative. so why is selling services so difficult? This article introduces 10 ways to help Sales teams sell services.

read more

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read more

How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

Customer Success Marketing and Portfolio Management

Technology service programs are evolving to offer new value and benefits such as use and adoption assistance and resources to help attain successful outcomes. As technology service programs change service marketing must evolve beyond selling the initial service engagement and focus on sustaining and growing relationship value.

read more

Treat Your Service Portfolio as a Product Line

Your Support Value Proposition is Out of Date

Your Support Value Proposition is Out of Date

Changes to product licensing – perpetual to subscription – will change the services and benefits customers need and expect from you. Make sure that your value proposition is up to date and relevant to the way you license products and deliver services.

From Product to Subscription-Centric Value

The benefits promised from post-sales services need to reflect the needs and expectations of customers.  Support and post-sales service benefits can be so much more than commitments to keep technology up to date or the speed that issues will be responded to.  Customers need and expect that your products will positively impact their business.

Consider how the elements of your service value proposition must change as you switch from product-centric perpetual licensing to subscription services.

Recommendations

 

  • Make sure that your value proposition is aligned with the way that you license products and deliver services.

  • Structure your value proposition to convey how your services will help customers use your products (onboarding and adoption) and apply them effectively (success services) to yield tangible business outcomes.

  • Evaluate your current service offers and consider what if any new services are required to meet customer needs and expectations.

  • Train and enable sales channels (direct and partners) to articulate your services value proposition.

  • Reinforce service value throughout the customer relationship – not just prior to renewal.

Featured: Success Marketing and Portfolio Management

The eight fundamental Success Marketing and Portfolio Management practices are defined and described within this report.

Log-in to get your copy.

Related Articles

How Much Should You Charge for Support?

How much should you charge for Support?  It’s a driving question as your organization seeks to drive recurring revenue growth. And it’s a balancing act. Let’s explore a Support pricing model that’s been shown to work equally well for businesses and their customers.

read more

GUEST POST: Sell Services Faster and More Accurately

Company executives understand that selling services alongside core product offerings leads to greater alignment and customer value, while subsequently decreasing the likelihood of customer churn and loss of recurring revenue. Well-defined services and the means to sell them are imperative. so why is selling services so difficult? This article introduces 10 ways to help Sales teams sell services.

read more

Is It Time to Modernize Your Service Portfolio?

Modern, well-defined post-sales service portfolios that combine elements of Customer Support and Customer Success can significantly increase your ability to help customers use and apply products; reduce churn; and expand revenue growth. This article will help you to determine the type of post sales service portfolio you need.

read more

How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

read more

Customer Success Marketing and Portfolio Management

Technology service programs are evolving to offer new value and benefits such as use and adoption assistance and resources to help attain successful outcomes. As technology service programs change service marketing must evolve beyond selling the initial service engagement and focus on sustaining and growing relationship value.

read more

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