General Consultant Discussion

This is an interesting article on the economics of buffets. Summary: The higher the price - even for the exact same buffet -- the higher the rating of food quality. The economics of buffet are that the under eaters subsidize the overeaters This has some relevance to our annual support agreements - especially the overeaters being subsidized by light eaters. In practice I've thankfully found few overeaters (in your mind you envision way more) and those who overeat tend to focus on very specific menu items which can be separated out over time (workstation setup, FRX install, help with PU installs). No buffet has an unlimited menu -- what they offer is unlimited opportunity to eat from the selection that they present. They don't drive out and get something special because a guest wants to add it to their buffet dinner that night.... http://www.theatlantic.com/business/archive/2014/12/the-economists-who-studied-all-you-can-eat-buffets/384033/

Our annual agreements look completely different to a customer than they usually do to us. They don't usually want to get ""free stuff"". what they most often want is to insulate themselves from what they consider as BS forced on them by troublesome ""systems."" So, they don't object to paying extra for things under their control (new workstation installs). We must remember that our ""costs"" associated with annual agreements are truly opportunity costs, and not some hourly ""cost"". So, insurance thinking is good: we will spend more time on some agreement customers than others -- much like the buffet. Also remember that several studies have now shown that wine tasting is heavily influenced by the wine's price. While there is a limit, if you charge a higher price for a deliverable (not an hourly rate), your product will be seen as more valuable & better

I've heard some of our customers refer to our agreements as insurance (an analogy that I'm not complete comfortable perpetuating). While I like the AYCE analogy, I think this will be a reference we keep internally. @WayneSchulz makes a salient point: No buffet has an unlimited menu -- what they offer is unlimited opportunity to eat from the selection that they present. They don't drive out and get something special because a guest wants to add it to their buffet dinner that night. There are rules for both the customer and the vendor. The customer should expect everything within the scope of the buffet (agreement) and the vendor should expect to deliver the same.

About ""insurance"". My point is that WE have to partly consider our contracts as insurance companies view theirs. As for customers, we can't prevent them from thinking of it like that. HOWEVER it is a mistake to ever promote it as insurance. you must have features in the agreement that encourage the customer to get more from their system than they would otherwise.