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Benchmarking Maintenance Rates for a pure software company
Posted Fri, 06/11/2010 - 3:26pm by Jason Luehrs (Revenue & Finance Manage)
Details
I am trying to get a sense of where current maintenance rates are for a pure software company, and what that gets you.
For example my company offers 24/7 phone/internet support + all major/minor updates & upgrades for 20% of net license fees.
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- Software and Systems
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© 2012 Proformative, Inc.
Comments
Speaking as a customer of a
Speaking as a customer of a few pieces of licensed software, 20% is the typical maint fee and it covers what you note above: basic support and updates. I typically push back for 15% and settle for high teens, although companies have been sticking to their guns more on this due to 97-2 issues over the last few years.
1 out of 1 members found this useful
Software maintenance rates
The general trend seems to be 20% as you described which typically includes Level 1-3 phone support, maintenance patches, and rights to new releases. There is an ability to puch back on the rates depending upond the vendor and how their quarter is going. Often able to get a muli-year discount or cash payment discount, depending on industry practice.
There are other types of software which are more user centric and the maintenance is on a per user basis regardless of the license fee.
AMR usually has pretty good info on mainntenance rates.
Maintenance Rates
20% is reasonable. My former company set maintenance at 25% but offered 3 years of maintenance for 2 years' cost. That worked out to around 18% for anyone who took advantage of it. Most new customers these days do opt for 3 for 2. The big advantage is it pretty much locks end users into the technology for a long enough period to work out any peculiarities that might arise. Renewals are at 25%.
Maintenance Rates
At my last company we charged 18% for standard and 24% for premium maitenance with the difference being response times to different levels of problems. Very large companies may push back that they have ceilings on what they will pay and I did see that many companies pushed back hard or canceled maintenance during 2009 when things were very tough.