I think Haim has given pretty good advice about structuring an offering.

As far as transitioning customers, I think you need to do just that... Let them make the transition (DOH!) by not surprising them and giving them a chance to change.

For example, you could say you are phasing out one support plan in two years. People who convert now get a better deal than people who wait (e.g. they get 3 free months).

If there is a good reason for making a change, most customers will accept a good reason and won't defect.

No one likes to get jerked around -- especially on maintenance and support (which is a lifeline or insurance policy).

HTH

Jim Geisman

[COLOR=DarkRed][B][URL="http://www.softwarepricing.com"]Software Pricing Partners, Inc.[/URL] [COLOR=Black]+508-647-0330[/COLOR][/B][/COLOR]

Ted,

A. It is hard for me to understand the sequence of events, on one hand you say the change to the policy and release of new product were concurrent, on the other you say that the policy was changed before they were released.

B. I'd be careful of counting paying customers as 'having voted positively', they may feel like they have been cornered and had no choice but to extend the contract. Potentially, some goodwill have ben lost with those customers who may be looking for a way out.

C. I can see why the old model is not sustainable, and the new pricing model is not outrageous either. Therefore it seems to me that your biggest failure is in lack of proper change management with your customers.

Now to answer your questions:
1. Usually if you charge for support and maintenance you include a combination of the features I listed for you earlier, including release upgrades, especially as you charge 20% of license fee for support and maintenance. At some point in time you may develop new features that you feel justify extra cost, then you have several options such as announcing a 'pro', 'turbo' or whatever version, selling an add on package to the existing product or bundling it in, giving it for free or low cost to your existing customers (possibly in return for a multi-year renewal contract) and then selling it at full cost in the market.

2. Remember that customers do not like to be surprised, do not like to feel being taken for granted and do not like to feel cornered. On the other hand, they love feeling appreciated and rewarded. Therefore some pointers for you can be: (a) announce changes early enough so that customers can plan and adjust to them, (b) offer loyal customers the opportunity to extend (for 1 or more years) at the old price, (c) make a gradual change (though I can't see how you do that with a low amount increase like in this case) or (d) let old customers enjoy a 'discount' keeping them at the old price as long as they keep renewing on time.

There is no single 'best practice' for policy changes or support offerings, they vary across a huge range and depend on numerous variables. I tried to list for you the common grounds for many mid-market support offerings, you have now to figure out what works in your market and geography and with your specific customers.

Ted,

My experience with maintenance plans is based on software that costs $5,000 to $30,000 per installation, so you need to decide if this is scaleable.

Users are normally offered an option of a plan that includes updates and limited tech support versus one that included updates, upgrades and unlimited tech support.

Typically the less expensive plan is 10-15% and the more inclusive plan is 18-25% of the retail price of the entire software package including user licenses.

However, the company needs to recognize that there are three tiers of customers: two tiers on maintenance plans and one group without maintenance. Giving the group with no maintenance a small upgrade discount off list (10-15%) makes it easier for them to justify an upgrade decision instead of looking outside for alternatives. At the same time a client who is under the less expensive maintenance plan should see a discount of 25-30%. The users on the most expensive plan don't pay additional for upgrades.

Part of the justification of the most expensive plan is the period that they break even by avoiding the expense of paying for multiple upgrades. This is a fairly simple matrix based on how long they plan on having the software installed and the number of upgrades in that period. It also guarantees that they can plan their maintenance expenses in advance instead of being surprised when an upgrade is offered.

Hope this helps.

David R.