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Should Software Companies Charge for Technical Support?

Greedy Person

I personally believe that technical support for most software should be free, especially if it’s the result of poor software, of buggy software, or even just badly designed software. There are a few exceptions of course, but overall I don’t believe software companies should charge for technical support. To be quite frank, in a lot of cases it’s a conflict of interest, plain and simple. Especially if the the technical support is a profit stream for the company!

Let me give you an example. I’m going to compare my company LandlordMax which sells property management software (also known as real estate rental property software). Most of my competitors (without naming names) charge hourly for technical support (upwards of $200/hour). My company absolutely does NOT charge for any technical support. So why do most of my competitors do? Because this is a big source of revenues and profits for them.

To be quite frank, none charge a an understandable amount like $20-$50 an incident, where the goal is really just to recover the costs of offering the support. Rather most of my competitors will charge per the hour or require a minimum yearly support contract. The worse one I know of requires a minimum support contract can be up to 75% of the purchase price – in other words, you almost pay double the listed price for the software in support, and it’s required (you cannot purchase the software without the support contract). I don’t know why it’s like that in my industry, or how it got that way, but it seems to be pretty common. And I absolutely don’t agree with it!

So why is this bad in the first place? Why is this a conflict of interest? Well if charging for technical support is a profit stream for them, wouldn’t resolving ongoing issues, improving the usability of the software, fixing bugs, etc. be against their best interest. Sure they have to achieve a minimal level of sales, but after a certain point it can quickly become much more profitable to charge people to help them use your software than to acquire new customers. Especially if their data is locked in. You see in my industry, changing software solutions often means either re-entering all your data or starting from a clean slate, which is not what you want for managing real estate (your history is very important).

It’s so rampant in the real estate rental software industry (charging for support) that many companies have gone so far as to also charge significant amounts for training. Now I can appreciate that for some software solutions you will require training, but I can’t see how managing properties is one of them. At least not for all classes of your customers. I can see why some assistance may be required for a networked office with a team of people using it. But a small property management company or an individual real estate investor probably shouldn’t require extensive training. But that’s just my opinion. After all, what do I know about the industry, I just run one of the top property management software companies.

Without naming names again, I can tell you that for one solution I tested I couldn’t even figure out how to create a building and tenant to setup them up with a rent. I had to revert to reading the user manual, and even then it wasn’t perfectly clear, I had to fiddle around a bit. And this was a bigger player at the time (some years ago). Incidentally, they’re pretty much on their way out now.

But it’s not just support and training, what about documentation? Something to remember is that writing documentation such as a user manual, online help, FAQ’s, etc. does cost money. I’ll be the first to attest that our online documentation isn’t perfect, and we’re definitely working to improve it. Nonetheless, it’s better than most of our competitors right now.

And to be quite honest, as a company you provide documentation for several reasons, not all of them altruistic. Firstly to help your customers learn your software. Secondly to help them discover things it can do that they weren’t aware of. But you also leverage your documenation to reduce your support costs. That is to say, that for every person that can find the solution on their own on your website, that’s one less support request you have to handle. That’s one less support request you have to pay for. So it’s to your advantage to improve your documentation.

Now if you charge for technical support, where you not only just make your costs back, but where you actively make a nice profit, where is the motivation to improve the usability of your product? Where is your motivation to improve your documentation? It’s partially there, so much as you can get sales. But to truly maximize your profits you would probably want to make your documentation just good enough to get the sale but not good enough for the customer to figure things out on their own later so that they have to pay for support. That would be the optimal setting in such a setup.

Everything said, please bear in mind that I’m not advocating that all companies who charge for support are out to make money from you. In most cases they aren’t. What I’m against is companies that make bigger profits from charging for technical support. As soon as you turn your technical support into a profit stream, you’re basically setting yourself up for a conflict of interest. It’s unfortunate, but that’s just the way it is.

Like a proud parent (and as a disclaimer), I also have to take a second to brag about my company LandlordMax. So if you’re not interested in our metrics please do skip to the last paragraph. With a lot of hard work, we’ve been able to almost eliminate our support costs for existing customers. What this means is that almost all our support requests are pre-sales. Questions asking if the software can do this or that, which in most cases the answer turns out to be yes.

Generally once someone has purchased LandlordMax, they don’t contact us for further support, they’re completely self-sufficient. I’d say that 90+% of our support requests from existing customers can be categorized into two groups. They’ve either bought a new computer and want to transfer their data from one computer to the other, or they’ve lost their license information and need us to re-send it. Rarely do we get support requests otherwise. It’s all pre-sales, people asking for more information on what the software is capable of. Which tells me where we need to improve the most (yes, the website – which by the way we’re on the verge of releasing a major website update in response to this).

And just in case you’re wondering which types of solutions I would recommend charging a minimal cost for, to at least cover your own expenses of running support, would be software offerings such as an operating systems (you can’t control the crazy stuff people do to their computers), a system that requires a high level of technical skills (like setting up a server, a network system, a database, etc.), a system were the users can script part of the program, etc. Basically where it’s no longer self-contained. Where it could no longer be classified as shrinkwrap software.



 
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Comments:

  •     LuckyU Properties
    · October 20th, 2010  · 10:45 pm  · Permalink

    Excellent post. I currently work for a software company (I’ve only been in RE for about a year) and we do not charge for support outside the cost of the software.

    However, we do offer classes both physical and via webex at a cost but they are optional and benefitiary. I wouldn’t even mind if a company offered free forums, KB, and email support and required I pay for a phone call to lower support costs and software costs.

    Keep up the great work Steph and please improve the training on workflow to help me understand step-by-step. Perhaps even some screenshot and text (videos are cool in addition) that takes me through start to finish and daily tasks.

  •     Casey Strouse
    · July 24th, 2011  · 4:18 am  · Permalink

    I don’t think charging for premium/priority support is wrong or charging for support when the product is given away for free but companies that charge you a fortune to buy the software and then also charge for support get under my skin.

  •     Charge For Tech Support
    · July 29th, 2011  · 4:43 pm  · Permalink

    Charging for support is a good idea today since companies are often bombarded with support requests for many basic questions. Customers don’t visit faq pages or forums and prefer to expedite the process by talking to someone by phone. Free support should be given online to those who don’t want to pay. If the person requires a more immediate support request – a premium paid support option should be available. Customers are generally happier knowing they can get a live person to speak to and personal attention, as long as you’re reasonable on your pricing options.

  •     christchurch real estate
    · September 21st, 2011  · 2:00 am  · Permalink

    Great Post! There are many good points of free technical supports. I was searching these technical support points for many many days. I am very happy to find this blog.

  •     Holiday Rentals Cyprus
    · November 5th, 2011  · 1:07 pm  · Permalink

    If we really want good clients for long term , then it is necessary to provide free customer support.

  •     Charge for Phone Support
    · November 9th, 2011  · 2:26 pm  · Permalink

    Phone Support can be a large revenue stream and not a money losing proposition for companies. Companies should start to realize that giving support to customers is expensive. Many customers are willing to pay for premium phone support today.

  •     Florida Beach Vacation Rentals
    · November 17th, 2011  · 6:34 am  · Permalink

    I think that technical support for most software should be free because they have to pay many extra charges already.

  •     William Beard
    · April 13th, 2012  · 10:55 am  · Permalink

    It definitely depends on the industry the software is intended for. I’d say the amount charged and the likelihood of charging for support and training is in direct proportion with the amount of specialization of the software.

  •     rental agents Williamstown
    · May 24th, 2012  · 4:14 am  · Permalink

    I don’t think so that software companies should charge for technical support because they are already very costly.

  •     Rental Agents Bacchus Marsh
    · June 6th, 2012  · 12:50 pm  · Permalink

    The software companies are already charging very huge prices. Thanks for sharing this informative post.

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