Support contracts

Discussions
#1

Hello all,

I was wondering if anyone might have any advice about selling support contracts for software? I’m in the process of turning my open source project ( http://datatables.net ) into a “proper” business, slowly weaning myself away from contracting to a more product based business structure.

One of the areas I’m interested in exploring is selling support contracts, for this software. I realise this in and of itself isn’t going to be what makes the business (at least I think it is unlikely!) but it would be another component that adds to the sum.

What I’m thinking of doing is offering support contracts, targeted more toward businesses that want to be reassured that DataTables, and its plug-ins, will be supported (with the contract term on a yearly basis) with bugs that are found fixed within a given time frame. There are two specific areas I thought of as being able to use as the different support tiers:

  • Time to resolve issues (1 week, 48 hours etc)
  • Which versions are supported - current major release, current + 1, all etc

Does anyone have experience in setting this kind of thing up? At the moment I don’t even know what such a contract might look like, or what I should be asking for from a lawyer to get one set up.

The other thing that I’m slightly concerned about is if a client purchases a support contract, is it typical for them to be limited by the number of issues they are raise over the contract’s term, so they don’t just require support 8 hours a day every day!?

Many thanks for any thoughts or insights you might have!

Regards,
Allan

2 Likes
#2

bump - Nothing to add, but I’d like to learn about this as well. :slight_smile:

#3

Nice looking component. Providing support on an open source library is definitely gaining traction. Depending on your customer base side it might be enough to be a business on it’s own.

I wouldn’t worry too much about limiting the amount of support requests its very rarely (ie: never in 10 years have I had a customer who truly needed support too often) an issue. Response speed is a decent way to break it up or though as I assume a solo shop it can be hard to guarantee 1hr response, etc.

You might want to consider dual-licensing though. In some ways I wonder if that’s an easier sell to companies as they’re used to buying software. We’ve been paying Highcharts for years with this kind of model (http://shop.highsoft.com/highcharts.html) and usually lets you justify a higher price.

#4

Well, count us at SERPs.com in for a contract. We love datatables, and use it extensively. What about a support/consulting type contract for X hours in a year? For example, I’d pay to have a datatables expert look at our setup and provide some specific improvements we could make. Great plugin.

#5

I’m in the same boat with you – one man shop, a tool for enterprise for which I need to define the support conditions.

First, there is SLA (service-level agreement, “time to resolve issues”, as you put it). In the support contracts I dealt with though the “time to resolve” is not specified (how do you even know you can resolve it?). They specify the time before someone will be assigned to the issue. I’m not a lawyer, but “time to resolve” seems a risky thing to promise.

There is also a question how much support you can provide a year. You cannot promise an unlimited attention. One client with a dumb employee could claim all your time - and make a legal threat if the demands are not met. One support contract I deal with now defines something called “tokens”. Each support incident costs some token (email cost less, phone call cost more). This is rather a big company, with large support stuff and their tool is in large demand, so this system works for them. Not sure it would do for a one man shop.

I plan to set a specific amount of hours a support contract guarantees. I plan my support contract at ~$300/year, so I would put “3 hours of support” into my support terms and conditions. If the buyer wants more – I suggest them to buy another support contract. It is close to that “tokens” plan, but IMHO simpler.

So, these folks offer 10 hours of free support. Essentially the same “tokens” model I’m talking about.

What puzzles me is “Emergency hot fixes”. This could be read as “my particular system on this particular hardware and software doesn’t work - fix it for me!”. This could be a very expensive promise.

Ian, since you’re using Highcharts, do they explain this point somewhere in their support document?

#6

guys I find myself in the same situation.

I quoted a license fee for the software for the entire year + setup fees.

However, I completely left out the SLA component for this enterprise client.

I’m a little lost as to what should go in the SLA. Obviously I CANNOT have this project end up using up all my time and resources.

As a heads up I did mention that I will bill for extra fixes, support and maintenance, actually any work that I do outside of what the software provides and what they are able to get out of it, I charge say 40 bucks an hour?

Now I’m not sure how I am going to charge for this. How many hours do I charge without incurring any?

On top of that the client wants to do a trial period to make sure that the software works and they are able to assess the value. I would be doing labor for that portion as well!

All in all, I’m just super anxious as I’ve never done this kind of enterprise deal and I’m a one man shop. I’m a sole proprietor too which worries me.

#7

Why would you be doing the labour for the trial? Do they require you to install it and configure it for them? (I’m afraid I don’t know what your software is, so difficult to know exactly what might be involved).

Perhaps you could charge them your $40/h (seems low :slight_smile: ) for the setup if that is needed.

Also what is your business setup? If your business is a separate legal entity from yourself that might save you a few worries. It can be a bit more paper work to setup up depending where you are though.

Allan

#8

I’ve never once contacted their support. This is the beauty of selling B2B :smile:

@curios I can’t imagine ever charging less than $500 for setup, with thousands much more common.

#9

Hey Allan,

Good question. Yes, the trial requires setting up and configuration. It won’t work without extensive labor that needs to go in to it which they are not willing to pay for.

$40/hr is low but this is based on what their ‘budget’, but seems like I’m being shafted here.

it is a sole proprietorship.

I sent you a message if you want to have a look at my site and get an idea of what I’m talking about.

#10

So guys a little update.

The software license part was actually very low.

But when I did the calculation for the managed service of the contract, it ballooned nicely.

I’m surprised how quickly a dedicated support adds up (40 hours of dedicated phone, email) every month even at a low low rate of $40/hr.

On top of that they want to make sure that shit doesn’t break, so that requires monitoring. More hours spent every week.

And for worst case scenario, the costs ballooon , including higher hourly rate for working on weekends.

So all in all I’m pretty happy with the new quote as it reflects the amount of man hours that will be needed to deliver quality service and product. On top of that, I’m covered in the case of a worst case scenarios. I’m just surprised how much of a support and dedicated management costs compared to the software by itself.

For this occassion I observe that software for enterprises is very little of the actual deal, most of the overhead comes from human labor associated with delivering at the high level of availability and quality.

If they come back and say it’s out of budget then I’m walking for sure.

#11

$1600/m for what is basically 1/4 of your time (assuming they use it all). Works out to be not too bad a salary, but that is a lot of time on a single contract for a one person SaaS business.

Personally I would be tempted to break it into separate costs:

  • One off setup fee. Price dependent on how much time it will take you to set it up and also how long they guarantee to use the service (knock a few $ off if they sign up for 12 months)
  • Product baseline - $x/m to use the product
  • Support / monitoring contract - $y/m for z hours of priority support.

Gives you flexibility to alter costs in future (if your time becomes more scarce charge more for support) and also shows exactly how much each component costs. Furthermore if the setup is included in the 40 hours / month in the first month, then they would probably expect every month.

Allan

#12

I don’t know, with HelpSpot we’ve had very few customers in 10 years that we’ve spent 40 hours with in total even in an entire year. And that’s a help desk software app where every user uses it every day all day long. 40 hours of potential phone support/moth seems like A) way too much B) way too small amount of money for such a commitment.

#13

would 10 hours a month of dedicated support make better sense?

The monitoring and maintenance part will be an ongoing, regular work every week so it can’t be reduced.

good points, I will keep in mind next time I quote on a large project.