Captain’s log, stardate 20170314

Monthly support contract vs unconditional bug-fix guarantee

Sent by Jonathan Stark on March 14th, 2017

One more email about guarantees and I’ll drop it for a while :)

Imagine these two scenarios:

A client asks you for a quote on a custom software project. You give them a price of $10,000 and plan to try to sell them a monthly support contract for $300/mo once the project is complete. If they accept both, you’ll gross $13,600 in the first year.
A client asks you for a quote on a custom software project. You quote them a price of $25,000 for the project, backed by your 12 month unconditional bug-fix guarantee. If they accept, you’ll gross $25,000 in the first year.

Questions:

Which scenario do you think would be easier to sell?
Which scenario would be more profitable for you?
Which scenario would be less work for you?
Which scenario would be easier to administer for both parties?
Which scenario would better differentiate you from your competition?
Which scenario would be more likely to deepen your relationship with the client?

My answer to each of these questions is 2.

What’s yours?

—J