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maintenance pricing model is win win
March 29, 2006
I've really learned alot about pricing since starting UserScape and after this next big HelpSpot release I plan on writing it up, but for right now I just want to share this little nugget.
One of the things I'm most happy about with the pricing of HelpSpot is the decision to use a maintenance model. How the HelpSpot pricing works is that customers pay the license fee only once when they first purchase. After that they pay $49/year per user to continue receiving updates and support. This entitles them to all updates so even when HelpSpot moves to version 2 they owe nothing as long as their maintenance is in good standing.
The reason I love this model is that it's win win for everyone. The benefits to me are assurance of a reliable stream of income from maintenance, less expense publicizing and pushing for major version upgrades and more freedom to innovate (more on this below).
My customers win because their budgeting is much easier since they know the yearly cost and won't be surprised by a new expense when the next version comes out, they only pay for the license once, and most importantly they never have to wait for new features.
Since I don't have to artificially hold back on new features in order to justify people moving to version 2 I can go ahead and add innovative new features right now. That means I have alot more fun building the product and they get to have the new features they want much sooner. No waiting a year for the next version, then getting budget approval and so on.
On top of all that I think it really puts my product at a competitive advantage. The pricing is much easier to understand since there are no variables. There's no version 2 coming out in an unknown timeframe with unknown features that they might want to upgrade to. It's all very clear right from the beginning.
And finally the last big win win is support. Since everyone who has a current maintenance agreement is entitled to the latest version it makes support much easier. If there's a bug that's been fixed and they haven't upgraded, they simply upgrade. No fighting with them over purchasing the next version to get the fix. It also means most customers are running the same version (the current one) since there's no back versions to support.