How Much Should You Charge for Support?
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.
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 the percent of a products’ list price or the net price after discounts.
Add-on’s and Fixed Fees
Some support programs consists of a fee tied to the percent of product list or net price plus add-ons. Add-ons are often associated with optional entitlements such as named support resources such as designated support engineers and/or account managers.
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 what support should cost based on experiences they have with working with other technology vendors. If your “gold” support is priced at 23% of product list price but other vendors are priced at 18%, customers may perceive that your prices are too high even though 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.
Support program design and pricing is challenging. Contact me to learn how ServiceXRG can help you determine if your service portfolio is up to date and aligned with customer needs.
- Do you offer the right programs?
- Is your portfolio Customer Success-Ready?
- Do customers need more or less than what you offer?
- How well is your pricing aligned with customer expectations?
- What do your competitors offer and what do they charge?
Contact us now to learn how we can help develop and optimize support and services portfolio offers.
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Featured: Selling Service Value
Selling services demands that you establish a credible and compelling value proposition. To be compelling, the benefits must exceed the cost. This playbook describes the essential steps to develop a compelling value proposition to maximize support sales and renewal activities.
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