General Consultant Discussion

I know many of you offer prepaid support and many perform other work on a fixed fee basis. How do you handle what appears to be a routine support issue that turns out to involve file repair, transaction analysis, etc. How and when do you draw the line?

Is this for a customer or for someone who contacted you for a one-off question? If it is for a customer, is this customer signed up for any type of service agreement with your firm?

I'm curious about how one handles existing customers with service agreements. Here's my concern. If you perform work based on a quoted fee (upgrades, new reports, etc) with service agreements to cover the occasional telephone call or need for quick remote access, how do you determine and how do you bill for that issue that goes beyond ""support""? Do you draw the line with the client and give them a quote to complete the resolution or is this a case where you would bill it hourly, or do you just suck it up.

If this is a standard software client, such as Sage 100 with no major third party enhancements, then I have been successfully recommending Gold Plans, since Sage should be able to work on these types of issues. I sell them on Gold Plans based on access to Anytime Learning and discounts on additional users and standard modules, and then mention unlimited support, but I don't lead with the support aspect. We also have a detailed document providing guidelines on when the client should call Sage and when they should call us. We have a number of clients on service agreements with defined levels of service, but they are all identical in relation to errors and file issues. Many of these are JobOps users, where file issues are more complex, so support under a Gold Plan is many times not applicable. Our philosophy on file issues is to take preventive actions, so major issues are minimized. To this end, the common element of our agreements is file and log review on a weekly basis. We fix issues found and point out errors that start occurring in order to identify something which may have changed - new user, new procedure, hardware changes - so that element may be changed to avoid the error. We also are proactive regarding network, infrastructure and workstation status, since we have a network support group. Even when we are not the primary network support vendor, we review and make recommendations on what we see as potential network issues that could cause software issues. This includes confirmation that backups are valid. Although this is included in our service agreements, it many times has resulted in taking over all network support with a separate agreement. There are going to be cases where something catastrophic occurs that was unpredictable. This is where having a valid backup is key. I have no problem telling a client to restore, because downtime is minimized and the integrity of data may be more certain. Also I hope we have the type of relationship where if they or their network support group caused this, they will take responsibility and pay for it. Otherwise, yes, you just suck it up and fix the issue. You can't have exceptions to this type of service agreement, unless they are specifically defined, as in the above examples.

What exactly are you reviewing on a weekly basis @JohnHoyt ? Looking at the Activity Log or something further?

This primarily relates to JobOps, where there is a validation report. Some errors are minor, but others are not. It is much more detailed than what is included in the Activity Log, but we also review that.

We offer annual agreements. It covers almost everything. If files are damaged or customer does not have a backup we advise them that there is a separate fee for recovery related work. If you have to use DFDM on a record or two then that's part of support. Using DFDM on 20,000 records is a separate project. This is the agreement we use. http://goo.gl/f0fOv Hourly is not an option - we provide a price for any additional services. Did this recently on a customer who had no backup. If you're unsure about the scope break it into stages.

Wayne, thanks for sharing your agreement. In the ""exclusions"" area: ""Assistance with reconciliation or accounting issues (Ex. General Ledger doesn't balance, closing procedures, payables report doesn't balance to G/L, cleanup of open credits, etc)"". This is my first concern. When one of these issues are raised, do you remind the customer of the exclusion and then provide a quote to resolve? The second concern deals with inside or outside IT wanting instructions. Do you notifiy client and provide a quote? How in the world do you factor in the value of knowledge transfer? The last concern is with supporting interfaces with third party systems. I have one client were I spend 6 - 8 hours a month (or lots more sometimes) dealing with data issues not related to MAS but to the third pary system. I've alway been able to resolve it as each issue is unique, I would have no idea how to quote this upfront. I'm trying my best to get away from hourly billing, but issues like this have me stumped.

If you plan to charge a fixed price - under no circumstances offer an hourly rate or you are quoting a not to exceed. I've never seen a customer not take advantage of this. When they have been quoted a rate and a fixed price they do the math and expect the lower of the two.

I'm determined to dump my time and billing methods! I've drafted a support agreement. Now I need to develop my menu of services and fee schedule so that quoting work doesn't take longer than doing the work.

There's the rub - figuring out how much to quote vs. actually doing the work!! (Sorry, John S.!)

Reach out to Wayne. He is the guru of quoting templates. John Shaver has incredible experience in this area also. Don't be afraid to fire the deadbeats. You'll have more time the make your good clients even happier. Support agreements are like insurance policies. Sometimes you win, sometimes you lose. But you learn to improve in either case.

Oops, looks like Wayne is offering his many great ideas already.

Thanks again for these ideas. Y'all are great.

@ThereseLogeais you've hit the nail on the head. I think even @JohnShaver will agree.

I've basically adopted Wayne's agreement, except find that there are instances where I bill hourly. However, I never quote hourly. If customer wants fixed fee, they get it, but in cases where I need to analyze something, such as slow performance (which can take 1 hour or 10 hours), I submit fixed fee quote and provide the option of hourly billing. Either way, customer decides and must live with consequences of decision. Some opt to roll the dice while others prefer a fixed fee. They can change from hourly to fixed fee mid-project, but don't receive credit for time I've already spent. When customers need service beyond whats covered, I notify them and ask if they want a quote.

@KathrynScofield, I think it depends on the nature of your customer base. In my case, I elected to only have First and Business class sections on my ""plane"". By doing that, I have all customers on custom-tailored KTAs. Yes, price discrimination comes into play here. It's a wonderful thing. @WayneSchulz developed a menu-based approach for his customer base which works extremely well for him. That system makes it easy to filter out the tire kickers and certainly speeds up the process of creating pricing proposals. A blended approach may work well for you too. For example, the top 10 or 20% of your customers would have custom-tailored agreements and the rest are ordering from the menu. Those ""top"" customers are not necessarily the top revenue producers but would include high quality customers (the ones you really enjoy working with). Wayne may be doing this already. @ThereseLogeais and @RobertWood I would agree that it takes longer when you first start doing it. However, the more you do, the easier it gets. To answer your original question, it comes down to a judgement call on your part. Wayne is exactly right about telling customers up front about what is not included. That avoids misunderstandings later. It really depends on the customer and the nature of your relationship with them. Here are a couple of articles about how Chris Marston approaches scope and pricing at his law firm. http://chrismarston.blogspot.com/2007/01/scope-its-not-just-mouthwash-its-what.html http://www.verasage.com/index.php/community/how_should_professionals_scope_complex_jobs/

To Kathryn's conundrum about the stuff that comes up. We've found it very useful to have the medical problem analogy: you go to Dr. and he/she charges a diagnosis + tests. Then the treatment is defined later at different charge. For those one-offs, charge a flat diagnosis fee of $75, $150 or more. Maybe different prices for different classes problems (data analysis one of the more expensive). With that, you will outline to them how to approach fixing it it (generally reference to KB or Sage tech support). Then offer 2 more levels, where you are fixing it. Generally we use the level of interaction and length of support after the fix to define the difference in price. You definitely want to define the highest one as ""fixed with lest bother to you."" Price it so they middle one looks economical for the results. Responding really fast is priced high. Thinking these through is really hard until you have practice. They are different for each customer. You might have to talk to the customer some more about what the problem really is; that is a good thing.

I think a lot depends upon how homogeneous your client base is. The more similar they are the easier it is to calculate a cost per customer or a cost per module, etc. and charge a flat fee accross the board. In our hosting practice we have determined that the average user takes approximately 1 hour per year for unbillable support time. We factor a cost into our monhtly hosting fee and make our infrastructure support all inclusive. Some get more (especially in the beginning) and some less, but in the whole it simplifies everyone's life. The only downside is we appear more expensive at times, but for customers who understand our value it is infinitely better. Other companies charge by the incident or by the hour or cannot support their customers systems beyond ""call your application vendor"" or finger pointing. By not lowering our prices we tend to attract the customers who want our premium service at a reasonable price. Although for application support, we have chosen to outsource the majority of ""break fix"" service to suppliers who charge a % of software as the cost. This works great for routine stuff but not for all third party applications, custom integration services and other custom work. We charge for ""enhancment"" support by the hour or in fixed fee buckets depending upon the nature of the service.

Not to get off track - here's an example of an inquiry coupled with a diagnosis fee. This is someone who found me on the web. Personally I don't need the practice in pointing someone in the right direction (virtually 99% of these types of inquiries go nowhere). Even if we validate that SWK/ACCUPOS are two for the prospect to review -- in my opinion that advice has value. ORIGINAL EMAIL: On Mon, Jan 28, 2013 at 5:15 PM, Jeff Ho <jeffho@chintz.com> wrote: Hello Wayne, We used to be a customer of MAS 90 up until 2000 and we're currently shopping around for POS options. Would you be the best contact to enquire with? Regards, Jeff Ho Operations Director CHINTZ & COMPANY Decorative Furnishings Inc 1720 Store St Victoria, BC, Canada V8W 1V5 250.388.0996 EXT 4268 250.381.4941 Fax jeffho@chintz.com www.chintz.com REPLY: Hi Jeff, Absolutely. We have different options for assisting with these types of selections. The initial phase is to review the status of your search (we call this a diagnosis) and learn a little more about your needs. For a POS integration to Sage 100 ERP - formerly Sage ERP MAS 90 or MAS 200 - you'd likely need to be current on the latest release of Sage as well as active in Sage maintenance (which entitles you to upgrades). When you're ready to begin this process simply select the level of service you're comfortable with from our website: http://www.s-consult.com/request-information/diagnosis/ --- Thanks Wayne

Hmm...Chintz& company, probably Chintzy and company...

As an aside - one of the things I've noticed about these ""we used to be on Sage years ago"" .... it takes lots of time to explain to them their reinstatement options, then provided there's no charge they'll ask you to coordinate quotes (usually multiple) with Sage, then once you get the pricing and have explained their myriad of options they go completely unresponsive. Do yourself a favor - let them go unresponsive right at the start. Money talks... anyone who is serious will be willing to re-engage for a fee.

@Wayne, you're right: ""money talks."" The trick is to get the prospect to see value in this initial work. One way is to construct a ""Re-implementation assessment"" event. this is a paid consulting session to walk through their needs, as if they are looking to switch to a new system (which they essentially are). The outcome of that meeting could be in several directions, and if Sage is the way, you get to then quote the project to re-implement, including the value of running the Sage Administration Gauntlet.

@JerryNorman the issue I've found with your ""get the prospect to see value"" is that most of these ""we're interviewing consultants"" type inquiries are all about finding the lowest possible cost. The inquirer is often these day an IT consultant whose value proposition is finding the lowest billable rate.

No argument. Getting them to flat out pay for dealing with Sage doesn't often work either in that case. I don't go very far with a new prospect until I get at least 20 minutes on the phone with the business manager (controller). If that doesn't happen, then the prospect looks at their ERP system in a way that doesn't align with the way we prefer to work.

It's getting to the point where it isn't fun anymore. The good customers have long ago either switched to different systems, or are happy enough with their current provider. The internet prospects are 95% price shopping folks who are too stupid to be our customers. Finding that remaining 5% is getting depressing and hence why I'm branching into non ERP areas.

It goes back to my partners funny video: http://www.youtube.com/watch?v=kxh7e5Tw39w

We have found very good success with selling internet customers new systems. We screen them quickly and if too small or without budget they have wasted 15-30 minutes of our time maximum. A small price to pay compared to the cost of a traditionally generated lead.