Posts Tagged ‘maintenance’

Are Your Service Revenues Under Pressure?

November 11, 2012

As IT spending tightens one of the first budget line items many look at is the annual fees they pay for maintenance and support contracts. Indeed, numerous IT consultants offer to help enterprise buyers negotiate these fees down. One analyst told us he advises his clients to only pay 12% per year. That’s a far cry from the 18%-22% that most vendors are used to.
To address this challenge, we invite you to attend a unique training program, which is designed specifically for personnel with responsibility for selling maintenance & support – either as part of the upfront sale or at the point of renewal. (more…)

Defending Maintence and Support Pricing Workshop

May 28, 2012

With Europe in turmoil and economic growth moderating in North America, IT departments are likely to face continued pressure on operating budgets.

Unfortunately, one of the first budget line items many look at is the annual fees they pay for maintenance and support contracts. Indeed, numerous IT consultants offer to help enterprise buyers negotiate these fees down.  One analyst told us he advises his clients to only pay 12% per year. That’s a far cry from the 18%-22% that most vendors are used to. (more…)

Could Your Customers Survive Without a Maintenance Agreement?

June 21, 2011

In a recent workshop focused on Defending Maintenance & Support Pricing we had a great discussion about the value of the maintenance agreement for technology services. The consensus was that customers are putting pressure on technology suppliers to lower their service prices and are threatening to drop their maintenance agreements all together. If this happened it would have a major impact to the finances of all tech companies. But, will it ever happen? Will customers decide to “self insure” and not pay the service fees just to reduce their total operating expenses? I don’t think so! If they do it could have catastrophic results! (more…)

Your Service Revenues are at Risk!

June 5, 2011

If you are in the enterprise software business you know all about the maintenance contract for services and just how profitable it is to your company. In fact, profit margins from maintenance typically range from 75% to 95% and have been extremely stable over the past 20 years. During this time, customers just paid the annual renewal fees and life was good. Today, things are changing! Your customers are pressing hard to understand exactly what they are paying for in a maintenance agreement and want the price to be lowered.

A typical maintenance agreement has 3 components; upgrades, bug fixes, and tech support. These are all rolled together so that the customer never really knows the exact portion of money allocated to any one component. Hey, most times even we don’t know! Over the years we just created maintenance invoices and customers blindly sent us money that fell straight to the bottom line. Not a bad gig if you can get it. In the past few years we have seen more customers applying all types of pressure to reduce their overall IT costs. They have reduced headcount and curtailed new systems spending but the large amount of money that the CIO is paying for maintenance fees is really sticking out. It is one of the few places left where your customers are questioning the value they receive for the price paid. If you are not being asked to discount your annual maintenance fees, then you soon will be.

When this pressure from customers comes you have 2 choices. First you can roll over and give them a discount (which will probably last forever) or you can stand strong and defend the prices that you are charging. You are either a “fee defender” or a “fee discounter”. So, which one are you? What position has your company taken on the value of the services you offer customers and the fees associated with them? You need to make a decision pretty quickly because it will have a major impact on your overall company financials and your overall customer satisfaction (CSAT). Surprisingly, Fee Defenders have higher CSAT than those companies that simply give a discount when asked.

To really understand all of the complexities of this entire maintenance pressure issue I am taking my show on the road for 1-day workshops. Together with the Kotler Marketing Group, we have developed a series of tools to help you defend your maintenance pricing. Over the next couple of months we will be in Dallas, Chicago, Toronto, and Boston working with dozens of companies that are all trying to figure out the best approach to defend their maintenance dollars. These sessions are highly interactive, reasonably priced, and full of practical concepts that really work. If you are responsible for maintenance revenues then you really need to attend one of these workshops.

If you don’t have responsibility for maintenance revenues, service marketing, or service sales please pass this link on to the person in your company who does. If you want to discuss anything about the maintenance pressure issue, just email me at BillRose@BillRoseINC.com

Want more info about the workshops?