How Support is different from the Car Insurance

When I was working for MySQL some people liked to compare MySQL Support to insurance, say car insurance to be specific.  This makes a very good sales pitch because we all know you need to buy insurance in advance and you can’t buy it when you need it the most – hence then incident have already happened.

However things are different, a lot different, and let us see how.     Why we do ensurance on the first place ?   Mainly to protect from something catastophic happening.  For example paying $1000 a year for a car ensurance so you do not end up with $20.000 liability for more or less serious incident.    The fee in this case assumes such incident is not going to happen for many years and if it does not revenue from many years will be needed to cover expenses for such incident.  When we’re speaking about MySQL Support  (or Enterprise Subscription)   you get $5000 per server price tag for best support offering while most support incidents will take just few hours to resolve.  Unlike with car insurance there is no catastrophic loss potential in this case –  typically you will have no problem paying for the help when you just need it.

Another interesting difference is what company does. Car Insurance company just pays  for the incident, it does not provides the services.  This makes competition healthy and keeps insurance company margins under control.  In case of MySQL Support   you get the same company to insure and to provide service so you never really now how fairly are you charged.  It may be out of $5000 you pay per year  just $1000 is the cost of services you end up needing while rest is profit.  If there would be different companies servicing and insuring competition would drive prices down to something like $1500 a year.

This also keeps motivations unbalanced – with car insurance the body shop fixing your car  have incentives to  charge more (fix more stuff) while insurance company wants to spend less money so it validates everything actually had to be fixed, with single company there is just one incentive – charge more and provide less services  – look for quick fixes etc.  It does not mean any company in particular does dishonest job – I’m simply stating incentives.

Another difference with insurance is motivation.  With car insurance or equipment warranty I have the motivation not to use it at all.  Even with best insurance company it is not fun to deal with the incident so I would try to be careful and avoid needing insurance if possible.  With Support there will be people looking for  handholding or just lazy to read the docs asking questions. And well… they have purchased support so why should not they use it.  What this mean is  increasing service delivery cost which are spread upon everyone, even people who really looking at Support as an insurance – to provide help in critical situation.     But in any case  people and companies are different and some may need more support and some less.  With car insurance your history defines how high your premium would be with support – it is the same meaning if you’re good with your systems and using little support you’re being overcharged.

It is frequent for people to think about Support and Insurance as budget control vehicles  –  support and insurance have fixed cost, so whatever happens you are covered. Right ?  Well not exactly.  With insurance you would normally have coverage limits and exceptions so you should be fine in “normal” problem case but may find yourself not covered or not covered enough in certain circumstances.   The same happens with support  – there are various conditions and fineprints which limits what exactly is covered and how far support provider can go.

At Percona we did not think this is the best way to do the business so we have different pricing structure.   We base our charges on the hour as in the end this is how employee doing the job will be paid.  If you charge differently like per “incident” you just obfuscate things or average them being unfair ether to people with complex incidents or with simple ones.   We also allow to purchase services just when you need it – even if you’re not currently the customer and have emergency we will help.

We also allow budget control with purchasing bulk of hours to be used within a year.  It may sound like there is more chance to run out of budget this way but it is not necesarry so.  We do not draw the line between Support and Consulting meaning no matter what services you will need they can come up from the same budget.   With traditional unlimited support agreement you would have other limits, like what is covered and what is not making you to seek help via other services which needs another budget.

Really I do not expect everybody will embrace such approach at once.  As with everything new people may be cautios about it at first but we belive this is a truly more valuable and “better” way to buy services so it will earn its adoption.  As a small company we do not need everyone, and honestly we love smart and innovative clients which move ahead of the crowds.

2 thoughts on “How Support is different from the Car Insurance

  1. Pingback: Migrating US Government applications from Oracle to MySQL at Xaprb

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