MBA951 Should You Sell Premium Support?

Hey O. Welcome to the Hundred Dollar MBA Show Business building lessons you've been looking for with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar MBA, a complete business training and community online over at 100mba.net in today's episode Learn should you sell Premium support? We're going to be talking about what kinds of businesses, what kind of products will lend itself to great premium support that you could charge for. Whether you're selling content, whether you're selling a commercial software, a white label software, or you're a developer or designer. Some people need extra support and it depends on many factors. Not just the type of product but also what kind of information or kind of work does the client need to put into your product to make it work so they can get a return on investment. We'll also touch on pricing how you can price Premium support to make it a win win for you and your clients. Alright, let's get into it. Let's get down to business. Today's episode is supported by Birch. If you're like me, you use credit cards for pretty much everything. But did you know the average person misses out on $300 worth of rewards every year simply because they're not using the right cards? A new app called Birch helps you get the most out of your cards and earn the rewards you deserve. Just connect your debit and credit cards securely and Birch will actively track your reward programs and show you how to use them the right way, even in real time, before you even buy. It also analyzes transactions and recommends cards that will earn you the most based on the way you spend. Download Birch in the App Store and sign up for free today. Again, that's Birch B I R C H. Premium support has become one of those add ons that you see on a lot of different products and services these days. And it's for good reason. Yes, it's a good way to add a extra revenue stream to your business, but it's actually helpful for customers. Some people need more help than others. Your product might be reaching people of different levels and different needs, especially when it comes to software. Now even if you don't sell software, let's say for example, you sell an online course. A form of Premium support would be a mastermind group or a coaching session where you would sit down and you would meet with your actual students to show them how to implement the things they learn in your course. And often this quote unquote premium support is packaged in a deal. So you would sell your course with the basic model, which is the course material, the videos, the workbooks and everything. But somewhere in package two or package three, you would include some coaching or some premium support. And these packages would be more expensive. And if you'd like, you can also have add ons. Like 5 hours of coaching would cost X amount of money and 10 would cost this much. So even if you have a content business, premium support, premium coaching is definitely something you may want to explore. Again, some people are going to take your course and run with it. But many people need more guidance. They're new to all this, especially when you need to implement something technical. For example, let's say you're doing an SEO course, search engine optimization. You can learn a lot through the course, but people want to know what they exactly have to do, what's the step by step implementation for their needs for their website. And that's when the coaching would come into play. But what about software where premium support is pretty prevalent? Well, personally I believe you should have a two tiered system. If you're going to offer premium support where you have standard support for free, it's included with the software. When you're a member, if it's a SaaS program or when you buy the software itself outright, there's got to be some sort of free support that people can reach out to and get some answers, whether that's chat and email or something like that. Now many software will offer free support only for the first year because support costs money. You know, it costs money to hire people to support your customers and then when they want to renew their support, they get that with every renewal of that software. Now if it's a type of software where you don't pay every month or every year where it's like one off software like let's say a WordPress plugin or something like that, then you'd have to just pay for support for an additional year and every year after that. But you should also consider having a premium level of support, whether that's faster response time. So, so I see a lot of like free email support and the response time is within 48 hours. Or you can have a premium support where the response time is within six hours. Or premium support can include phone service or phone support. So these are all examples of premium support. It also depends on the type of software you're selling. If you're selling, let's say email marketing software, there's a lot of work involved for the user to migrate to your system. So some companies like email marketing systems or marketing companies will actually charge premium support rates for that migration. So that's a big headache. You have to migrate all your contacts and all your lists and all your automations, they can charge for that service. So you don't have to worry about that. A lot of people will pay for that because hey, time is money. I mentioned at the top of the episode that some people sell white labeled software, meaning that they sell software where the person who buys it can use that software to sell to other people so they can make their own company using your technology. In this case, you definitely need some sort of premium support level because if their customers have a problem with your technology, they need a fast response. Now you might be saying, well, why don't I just offer free premium support to everybody? That would be great in an ideal world, especially if you're in a business where experience is everything, like Zappos or Amazon, where their support has to be on point because that's really why people are using them for the service, for the experience. But most companies, especially, you know, startups, tech companies, or even people that sell courses online, you know, you just can't afford to give everybody premium support. You know, the margins are just not there. A lot of people think that it costs nothing to create software and to sell. It is so simple and the margins are super high. Well, there's a lot of money being spent on salaries. When it comes to businesses like software businesses, server costs, maintenance costs, there's a lot of costs involved that a lot of people don't see. So offering premium to everybody is often not a sustainable solution or sustainable offering. You're going to have to tier it down and charge for it so you can be sustainable, so you can be profitable. If you're getting started and maybe you want to offer great support to everybody, that's great. But if you want to take it to another level and offer, you know, some really super fast support or phone support or video chat support or whatever it is, you're, you're going to have to charge if you want to stay profitable because that's very hard to scale because again, you're dealing with a human being. Until AI is so great, where it's almost as good as dealing with a human, you're going to have to pay somebody to give that premium support. Now what about pricing? There's different ways to price premium support. One, you can have a separate premium support tier. Two, you can have an add on support. We talked a little bit about that you can also price it as a part of everything you do. So I'm going to give you different examples. Let's say, for example, you have an email marketing software and you have three tiers of pricing. You have the Starter, you have the plus and you have the Pro. Now, starter and plus will come with basic email support for free. It's a part of the price. But with the Pro the highest level, you might want to include premium support as well because they're paying more for the Pro package. So it's sort of a differentiator between the packages. You're going to get premium support if you're somebody who's paying the highest tier. So that's tiered pricing where you include the premium support in a tier, but you can also have it as an add on. Let's say, for example, somebody wants to go with the starter package. Well, wants to add on premium support. When they add it on, it's not as much as going with the highest tier, but it gives them that premium support. And they don't necessarily need all the other features that come with the highest package. Or you don't have any tiers at all. But you offer Premium, Premium support as an add on, an extra monthly expense, whether that's $10, $15 or $100. We'll talk about how to actually find that number in a moment. But lastly, you also have actually including it in the price. So some people, their whole claim to fame is great premium customer support. A good example of this is WP Engine. WP Engine is WordPress hosting. We use WP Engine for the $100 MBA. It's a great, great hosting solution. And one of the things that they're known for is incredible, incredible customer support. I mean, you get like a technician working on your site anytime you want. And for that, WP Engine is a little bit more expensive than the competition. You're going to pay more every month for WP Engine regardless of what level or what package you choose. But you go to WP Engine because you really, really love premium support. You wouldn't have it any other way. So that's a good example of having premium support as part of the price. But your prices in general are more expensive. Now, what about the price itself for premium support? How much do you price this for? How much do you charge regardless of how you package it? Well, I get into that in a moment, but first let me give love to today's sponsor. Today's episode of the $100 MBA show is brought to you by Microsoft Surface want power in your hands? You got it with the powerful new Surface Pro. This laptop has a long battery life that lasts all day, so you can run the programs you need. It's all so you can get more done when you're working on your passion projects around town. The Surface Pro goes wherever you go because at under £2, it's light and fits in your bag. It has a touch screen with great resolution, so you can work however you want. And it works with your iPhone. Plus its keyboard comes in a bunch of new colors. The new Surface Pro is the lightest, most powerful Surface Pro ever. So what do you charge for premium support? Well, instead of picking a random number, take a look at your cost. How much is it going to cost you to offer this premium support? How many users can you actually serve with this premium support? If you hire one premium technical minded person, somebody who actually can serve these people, how much will you have to pay this person every week, every month, every year? Break that down to a monthly price. So say for example, you have to pay somebody $4,000 a month to offer this premium support. How many people can they serve? Break down their hours, break down how long it takes to actually do what they have to do for premium support. You may have to do this premium support at the start. So you can get these numbers, get these hard facts. But let's say for example, they can serve 100 premium support customers a month. Just for the sake of round numbers, we're going to go with 100 and you pay this person $4,000. So you're going to have to charge minimum $40 a month for premium support. In this case, to break even right now. If you do want to make money on this, which you should because you're a business, you may want to charge more than $40. Plus there's other expenses. The software you use to supply this customer support, if you have any kind of teleco phone charges to actually call these people up and to support them, take a look at all your costs and I would at least double it to be safe. So if it's 40 bucks, say total cost per actual premium user, I would charge 80 for that service. Now, $80 a month may not be too much for somebody to get what they're looking for. Especially it's a highly technical kind of support you need. Again, you're hiring somebody and you're paying them a decent salary for high technical support. And serving 100 individual clients in a month for that one agent is pretty good. It's not too much of A load. So there you have it. Premium support is definitely an option you should explore regardless of what kind of offering you have. There's obviously exceptions where premium support is not a good fit, like we mentioned before in retail. But take a look at your business, your business model. Are you leaving money on the table? Are you leaving opportunities on the table? Maybe people need this support. They need premium support and it's something they would love to pay for. Alright, that wraps up today's lesson. Thank you so much for listening to the $100 MBA show. In business, we all have expenses, but we also have assets. And in tomorrow's episode, I want to explore the number one asset in your business. I want to identify that and explain to you why it's so important to cultivate this asset. Because without it, you really have no business. Alright, I'll check you guys in that episode tomorrow. Before that, I want to leave you with this. Sometimes offering something small like premium support to your customers is exactly what you need. It's just what you need to move from being at a loss to profitability. There's nothing wrong with offering higher levels of something and charging for it. This is something we're all used to, something we're accustomed to. When you buy an Apple product, what do they offer you? They offer you AppleCare, right? You don't get AppleCare for free, right? They actually charge for it because it's premium support. It's premium kind of insurance as well. So it might be an option for you and your business. All right, I'll check you in tomorrow's episode. Until then, take care. Sam.