Pricing tiers based on COGS and support levels?

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PeterMF
PeterMF Member Posts: 1 Newcomer

Some context: We sell software that be completely self serve. We have really focused on increasing upfront training, knowledge bases, in-app tools, etc. so that people will actually self-serve, but we have a lot of customers who still rely on our very service-oritented CS team to do the activities for them. This creates really strong customer relationships but it's killing our efficiency and our margins. We're vertical SaaS for farms, so very low tech-savviness across our customer base.

Has anyone experimented with pricing based on how much a CSM is holding your hand? Is this better done with sticks or carrots? Any other ideas to push this self-service stuff?

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  • marienaq
    marienaq Member Posts: 1 Newcomer
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    If they can get someone else to do it for them for free today then that's what they're incentivized to do.

    Changing the pricing model to a more standard 3-tiers would better align their financial incentives (base with no dedicated support, general technical support; premium with faster technical support and perhaps 1-2 core/complex workflows done for them and then a much more expensive 3rd tier for them to outsource the onboarding work).

    It's not clear to me if the activities are a part of regular usage or related to onboarding, but hopefully that helps.

    It's hardest to figure out the messaging to existing customers who will feel like they've lost something if you increase price for them, but I've seen it done. If possible find ways to experiment and get data to support the change.

  • Ed Powers
    Ed Powers Member Posts: 180 Expert
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    edited August 2023
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    This sounds incredibly familiar. I worked for a software company bringing technology to technically unsophisticated buyers and users in SMB. I learned there are interesting dynamics with generational buyers and change management to deal with. 
  • richardconvery
    richardconvery Member, CS Leader Posts: 8 Navigator
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    Hi @PeterMF!

    Creating those relationships up front are going to be critical to onboarding the customer and getting them off the ground, right? One option you could offer is that the customer gets a CSM for a period of say 1 month when they become a customer, at which point they return to self service support. You could then offer a CSM for a premium thereafter.

    That's going to be beneficial to the customer as they have someone to hold their hand and guide them through the onboarding process and creates an urgency to maximise on the opportunity to work with a CSM upfront. Once the CSM is removed then they'll notice the impact the CSM has given and can opt for that premium service for a charge. It's great for you as the CSM can make sure the product is sticky with the customer early on, and then either move onto the next customer or continue working with them but you're charging properly for this.

    Richard

  • BenB
    BenB Member Posts: 76 Expert
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    Interesting subject @PeterMF

    My first thought was maybe based on your customers the platform isn't truly self-serve.

    My next thought was if the interaction is creating "really strong customer relationships" this may be having a bigger long-term impact on your revenue and sacrificing some margin and efficiency now is worth that impact. A strong sense of community is so valuable when talking about long-term partnerships.

    To answer your specific question I would start off simple.

    1. Create one paid option, not tiers.
    2. That paid option covers the exact same things. your team is doing now (don't worry about hrs, itemized activities etc...). Whatever you are doing now for free anyway - just lump that into the standard ways you help.
    3. Any price (even very low) will serve as an encouragement to start doing the work themselves. So with the remaining people who still want to get in-person help, I would keep the price affordable. You still want people coming to you to build community and get help if they need it. An affordable price will show them that the company is really just trying to find ways to cover the cost.

    Later I would then start looking into more tiers, and different pricing.

    Might be terrible ideas ... BUT hopefully that helps :)

  • Lovlyn Andawey
    Lovlyn Andawey Member Posts: 4 Navigator
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    Hiya @PeterMF, thank you for starting this thread. We can certainly learn tons from community members! I would like to echo what @richardconvery shared, especially when he suggested building the relationship with customers in the onboarding phase, but give them a set amount of time with a CSM. When you take something valuable to the customer experience away, customers will want to find ways of getting it back.

    It reminds me of the time when the company I worked for relaunched, rebranded, and focused on its up market strategy. We were once a company that offered a freemium platform. We were also a very lean success team. In order for us to focus on higher value customers, we decided to have three plans that offer 3 levels of resources (good, better, best).

    Good - onboard via one-to-many strategy, access to community, knowledge articles, zoom office hours with onboarding manager, mainly self service.

    Better - Resources from Good Plan, plus an assigned onboarding manager for the next 30 days. Afterwards, self service, access to community. Access to CSM after 30 days. No direct access to technical escalation (Onboarding manager acts as liaison)

    Best - Resources from Better Plan, plus assigned CSM from day one. Onboarding 30 days, CSM involved with project. Access to technical escalation personnel.

    Bonus Super Duper $$$ Plan - This plan included Best resources, plus Slack channel that went directly to developers and the appropriate Product Owners/founders. Some of the founders were the ones building the platform. In all honesty, I would caution implementing this type of service level because it is super expensive, not scalable, high expectations, and tough to take away from the customer.