Question

Topic: Strategy

How To Sell Software Maintenance

Posted by miketorrettinni on 8/27/2015 at 5:26 PM ET 250 Points
Hi

I have a small software company that sells software only online. Up till now I had no maintenance contracts, fees, just when user was ready to upgrade to the latest version, I would give discount based on time passed since original purchase, like:
1st year: free upgrades;
2nd year: 15% of full price (85 % discount);
3rd year: 30% of full price (70% discount);
4th year: 45% of full price (55 % discount);
5th year: 60% of full prices (40 % discount);
...

so, upgrade discounts were instead of maintenance. It works good, but I would prefer yearly maintenance fees, 15%, which would allow access to all upgrades, as long as they are on maintenance - basic practice in software for decades, right?

And I don't know how to 'signup/commit' customers for maintenance, so that i would just send reminder before it expires to pay for maintenance. If I would be there in person, I assume they would just sign little paper to commit to yearly maintenance, but how to achieve this online, I don't know.

I release upgrades (minor versions) every month, and usually new major version every 8-10 months.

So, here are a couple of questions that I'm dealing with right now:

1) How to make them aware that there is an option (not mandatory) of yearly maintenance -
a) maybe to include maintenance page in Quote/Offer/Invoice pdf?
b) give them 'checkbox' on website to 'commit' to maintenance, when they purchase software?


2) Some customers told me that if there was maintenance, it would be easier to sign of budget to pay for every year, than yearly upgrades to new versions. Is it easier for purchasing departments/persons to agree on maintenance when included in original license purchase?

3) When maintenance is due, how to make them pay for it? Since they don't deal with me in person, it's very easy to disregard email with maintenance reminder. Is this just my fear that could happen, or is this a fact in software world?

4) How to sell new maintenance system to existing customers, what could be best selling point/approach?
a) Those who just purchased software
b) Those who purchased years ago and never upgraded

I hope somebody can give me some guidance here and steer me into the right direction how to proceed.

Thank you

Mike T.
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RESPONSES

  • Posted by mgoodman on 8/27/2015 at 6:10 PM Accepted
    There are several issues in your question, and I'll deal with one right now:

    How to handle (mechanically) on the purchase page: You can price three different "products" -- software only (no maintenance or upgrades), software with 1 year of maintenance/upgrades, software with 3 years of upgrades. People would choose which of these they want when they order.

    A twist on this would be to include the first year's upgrade fee in the basic price, so at the end of the year you can notify them of the complimentary upgrade they get ... and suggest signing up for another year (or 2 or 3) of upgrades. (This would let you offer a 5-year maintenance package and still limit the order page to 3 product options.)
  • Posted by miketorrettinni on 8/27/2015 at 7:42 PM Author
    Thank you, good ideas!
    I think these are minor changes to the website, no need for costly changes.
  • Posted by Jay Hamilton-Roth on 8/28/2015 at 8:37 AM Accepted
    Why not add update/maintenance feature into the software itself? If the software was on a maintenance license, then perhaps the only notice people would get would be when the software was automatically updated to current version (or depending on complexity/corporate policy - a message is displayed indicating how to install the new FREE version).

    For everyone else, when there's an update and they are in the free update period, do same as above. If they're not in free update period, tell briefly why the new version/update is so much better, and encourage the purchase/maintenance contract.
  • Posted by miketorrettinni on 8/28/2015 at 8:49 AM Author
    @KSA @Jay Hamilton-Roth: this is what I'm actually doing right now, offering free upgrades within 1 year, and notify of new versions and discounts for upgrade. Works good, but I would like to find a maintenance plan that would bring constant income. For users it would not change a lot, free upgrades, version until they are on maintenance. I would like to have a plan for users to understand and commit without being reminded every year.
    @mgoodman suggested changes on website how to not confuse users with too many options - very good! Now I have to have overall picture of how to approach maintenance offer - especially general overview/understanding of issues in questions 2 and 3.
  • Posted by Mike Steffes on 8/28/2015 at 9:20 AM Member
    It would most likely bring more money into your life if you could stop thinking about it as maintenance.
    For one example, internalize this response- "Now I have to have overall picture of how to approach the upgrade offer - especially general overview/understanding of issues in questions 2 and 3."

    I don't want to buy maintenance, especially since it doesn't seem broke. And that's true, it's NOT broke...but you DO have an upgrade for it. Upgrades good.
  • Posted by miketorrettinni on 8/28/2015 at 3:47 PM Author
    @Mike Steffes: Well, current system works, but not that well. Yearly maintenance would allow more focus on upgrades, instead of promoting upgrades. But I agree, I do not have experience with small software being under maintenance contracts - my prices are around $250 per license.
    @KSA: I couldn't really find software developers forums where management or sales people are members, mostly developers who don't deal with this matter.
  • Posted by miketorrettinni on 8/28/2015 at 9:28 PM Author
    Thank you, will look into them!
  • Posted by miketorrettinni on 9/1/2015 at 8:56 PM Author
    Thank you for suggestions! I decided that current upgrade system is sufficient, as any other would be too much of trial and error.
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