Why Pay for Maintenance?

I've also been getting some great calls from customers that would like to talk about their maintenance contracts, and it brings to light several points that we take for granted that our customers may not.

Some of those conversations go something like this:

"I already paid $3,495 and know how to use my software, why should I be on maintenance?"

Well, there are a few reasons. First-and-foremost is that about 85% of your $595 maintenance contract goes toward product development, *not* tech support! Commonly, people believe that their maintenance contract covers things like late-night emergency calls. However, there are currently 87,678 lines of very complicated code in SmartCAT. Each time we make changes to that code, it requires extensive unit testing, load testing, functional overview and certification testing, documentation, the creation of support mechanisms as well as guru-level training for tech support people as well as introductory-, intermediate- and advanced-level trainings for customers.

Additionally, in terms of pricing, the actual total cost of SmartCAT is not $3,495, but more toward the $8,000 to $10,000 range. We actually spread that cost out as $3,495 up-front and then $595 per year for 8 years or so, meaning that until we recoup closer to ~$10,000, we have actually lost money.

From another context, we are getting lots of confirmation that we are adding a heck of a lot of value to our customers via SmartCAT(TM). Funnily enough, one reason we know this is that we'll occasionally offer to take 2% of the total reporting, editing and scoping revenues that SmartCAT(TM) allows reporters to earn in lieu of $595 maintenance. Not surprisingly, our suspicions have been confirmed time and time again that the $595 is significantly less than even the 2% of the annual revenues that SmartCAT(TM) aids in creating!

When I first started at Cheetah, I thought, "goodness, $3,495 is a fair bit more than Windows costs, yet Microsoft is making money hand-over-fist, yet Cheetah is a small, mom-and-pop-type company, why is that?". The answer is primarily in the industry. Microsoft defrays its development, testing, training and support costs over TENS OF MILLIONS of customers.
To contrast, the total court reporting industry is about 60,000 people, which is then divided up between the major software providers.

Remarkably, however, by being in very close contact with our customers (did you know we place approximately 3,000 proactive phone calls per month to extend help to our customers?), we've essentially been able to deliver nearly customized, million-dollar software for a third-of-a-percentage of that cost!

Consider it in these terms: SmartCAT(TM) allows you to create, edit and print transcripts in a very short amount of time. Our customers tell us that one medium-sized job can easily net $400 to $500. To this, our customers tell us they can totally pay for the software outright in a mere 7 or 8 jobs. From then on out, their annual maintenance contracts are only 1 to 2 jobs per year.

All the best,

- Greg L. Richardson
VP of Operations and Director of Marketing