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As someone who sits on the other side of that equation, $9/month basically translates to "1 support request per month". I've been meaning to do a blog post on
by wheels 15y ago
As someone who sits on the other side of that equation, $9/month basically translates to "1 support request per month".
I've been meaning to do a blog post on such, but an average single support request costs us around $8. So if you've got a business where the average number of support requests per user are dramatically less than 1.0 per user per month, then it can work out, but I suspect there's a proportional support load to those SaaS systems that you're looking at where it's closer to, say, 0.5 per seat. If you lower the price beyond $9/month, then all of the sudden your profit evaporates.
It's non-obvious until you run the numbers, but it goes something like this:
Support Person Salary $60,000.00
Fully Loaded Employee Cost $90,000.00
Per Hour $46.88
Support Requests / Hour 6
Cost / Request $7.81
That's actually why we removed our $9/month plan. It was just hard to get excited about helping someone out when you realized after the first mail you were going into the hole for such.
The interesting thing for where Bushido fits into that is that in some ways it'd be pushing things towards utility pricing (the same way a lot of the cloud sort of stuff has done) -- i.e. the cost of supporting a software stack would be proportional to the cost you generate further up the chain, rather than based on some metric of an "average customer".
- biot 15y agoIf I built a product that allowed you to answer support requests 10% faster, then logically you'd be happy paying an additional $750/month per support person for the software?
- patio11 15y agoI once worked in the customer service division of a company which had, well, let me call it a hundred CSRs. We had an internal application to do everything. They didn't exactly show me the company budget, but I'm as capable of counting engineers as the next guy. Suffice it to say we paid way more than $75k a month for the productivity gains of that custom app. (It was my first encounter with Enterprise Software (TM) and I think I went into programming in part so that no one should ever again have to suffer like us CSRs suffered...)
- wheels 15y ago• No, you can't set your pricing to capture all of the theoretical value that your product creates. Otherwise it's a wash. Also, there's friction in any system, so you not only have to create value (that I get to keep), but do so enough to justify the switching costs. • No, not unless you have no competitors. And if you have a generic solution to lower support costs by 10%, if you don't have competitors now, you will soon. • No, software pricing isn't rational. Oh, how I wish it were at times. But in general, unless you're an amazing salesman, your prices have to be at a level that to the customer feel "about right".