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    ASPonline.com  >  Reports  >  Trends in Fee-Based Support (2008)
 

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Trends in Fee-Based Support
Publication date: 7/08


Executive summary

Over the past decade, product support and support-related services have evolved from being an annoying drag on profits to one of the largest sources of revenue for most technology companies. In fact, maintenance alone generates almost 40% of total sales for larger software companies, according to the ASP’s annual Maintenance & Services Ratios report. In most market segments, companies that still treat support as a cost center are clearly outside the mainstream.

But there is still no mainstream consensus about how fee-based support should be delivered. Although many support managers talk about “standard” maintenance plans and “levels” of services, reality is quite different. Some companies have highly structured programs; others create customized plans for almost every customer (often assembled out of a portfolio of individual add-on services). The Web further complicates the picture: For many companies, a basic self-service support elements—knowledgebase access, online training, various downloads, and perhaps some diagnostic tools—are completely free to the public at large. For other companies, access to any kind of support is restricted to paying customers. And still others bundle support with software-as-a-service subscriptions, or give away professional services and training as part of maintenance contracts, or sell support and upgrades separately.

This diversity of approaches creates real problems for anyone who wants to identify basic market trends. What’s the most common approach to support for obsolete products? How often do companies give maintenance customers a named account manager? What’s a typical price delta between basic and premium support plans? Without knowing something about each company’s basic support business model, any statistical data about these trends is largely meaningless.

Still, we know that it would be helpful to have at least a general picture of current industry trends. To get a sense of those trends, the ASP recently conducted a survey that asked support managers to describe the business model they use to provide post-sale support for “the majority of your customers.” In addition, we asked open-ended questions about their plans “for increasing your current fee-based support revenues” and “for making your current programs more attractive to customers.” Finally, we asked for the “approximate price of your best-selling product or configuration.”

As we expected, a fair number of our survey respondents didn’t fit perfectly into the business model categories we suggested. Nevertheless, we found that the categories did define important differences in priorities and concerns. For instance, we found a great deal of concern about pricing and margin pressure among respondents who say they offer “one standard maintenance plan, customized for individual accounts”—and remarkably little urgency about pricing among respondents who offer more configurations and add-ons (instead, a common concern for this group is finding ways to grow total revenues, not to defend prices). This observation doesn’t qualify as a solid statistical trend, of course, but it certainly suggests that there’s a connection between business models and some key industry trends.

This report summarizes the results of the survey and what our respondents told us about their fee-based support plans in the following categories:
  • "Mostly Free"
  • "One Standard Plan"
  • "Multi-Level Maintenance"
  • "Basic Plus Add-ons"
  • "Segment-Specific Plans"
  • "Software as a Service"
In addition, the report analyzes the relative popularity of these models in terms of each company's product prices and includes discussions of related topics:
  • "The Product Price Variable"
  • "How to Collect Better Customer Feedback"
  • "Pruning the Plan"
  • "How to Migrate from Free to Fee-Based Support"
  • "What Does Your Support Plan Cost to Deliver?"


Copies of the survey are free to ASP members in the members-only area.

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