Charging to renew lapsed support
Posted on 2009-04-07
This is not a programming question, but a business practices question. I have an application that we sell commercially. The first 90 days of support are included with the purchase. We then charge the client 15% of the original list price for a yearly support contract, which includes both phone support and updates to the software (we're putting out at least one update per year so the clients can see value received for their money). I know Oracle charges 22% yearly, but they're pricey in everything; I'm not trying to gouge.
Of course, not all clients buy the support. The application has been out for about 18 months, and we're about to release a new version with a number of new features that could potentially interest some users who aren't under support. I'm trying to decide how to price a renewal of support. I don't really want to make it the standard price for the update and a full year of support, as that might tend to encourage people not to automatically renew, but to wait for updates to come out. At the same time, I don't want to price it so high that people are discouraged from coming back.
Any thoughts? Any examples of what other companies are doing? How would you respond if you were the purchaser?