Subject: Re: payment aggregator service?
From: Phil Hughes <fyl@FYLZ.COM>
Date: Tue, 8 Feb 1994 09:00:13 -0800 (PST)

adam@ADAM.YGGDRASIL.COM (Adam J. Richter) says:

> Russ,
> 
> 	I would like to see some sort of conduit for connecting
> linux (and other free OS) developers to commercial outfits that would
> like to be confident in their ability to exchange money for tech support
> at a reasonable rate.
> 
> 	I have considered schemes similar to yours in the past, but
> the devil is in the details.
> 
> 	$5 of revenue for the typical tech support call will not be
> profitable under the scenario you propose.  Everybody's transaction
...

> 	We have a 900 number at Yggdrasil.  We charge $2.95/minute, of
> which, we get $1.50/minute.  The industry standard for payment in the
> 900 business seems to be net 90.  That's right.  Three months after
...

I was going to comment on this thread earlier but now I have a few more
comments.  I agree there is a problem but I think it can be solved.

First, the 900 number.  You have obviously gone to a 3rd party market for
the number.  Going directly to the real service provider means a charge
more like $.50 total.  (Actually, when I checked here a year or so ago it
was, as I remember, $.35 per call).  I expect you may be somewhere where
getting a 976 number means a foreign exchange line but, with decent
volume, getting your own FX fees instead of having someone make a profit
on them will help a lot.

Now, on to what I was originally going to follow up about.  
Intro for those who don't know about SSC:
  SSC publishes pocket-sized reference cards and books for Unix, etc.
  SSC has been doing that since 1983.  I was one of the founders and
  the business was originally in my basement.  We also sold some
  inexpensive applications when applications and Unix didn't generally
  appear in the same sentence.

We had (and still have) one local customer who would call up, tell us
how nice our VI card was (that he had bought a year ago for $3) and then
ask us a technical question.  Sometimes on vi, sometimes on how to
re-partition his disk, ... We quickly realized that we had a problem.

After much head scratching we came up with a service we call
"Dial-a-Guru". People would contract for a chunk of support.
The next time he called we told him about it.  He loved it.  Said he
didn't have to feel guilty calling.

Although this certainly isn't the secret formula, here is what we set up:
  - $75 fee to start support
  - good for 10 calls or 1 hour
  - "expires" at the end of a month (in other words, must use it up
    during a month)
  - additional calls at same $75/hour or 10 call rate

For us it created an entity big enough to bill for.  For him it meant that
he knew he could get support if he needed it and that his secretary could
get help when he wasn't there.

The next "secret" to make this work is taking credit cards.  With our
established customers we would just bill monthly but we also would get
calls where someone bought one of those $3 references in a bookstore and
then decided we had all the answers.  As our phone is generally answered
by a clerk/order taker who isn't going to answer technical questions (but,
in some cases the questions are things like "how do you get out of VI and
the clerk did answer the question :-) ) she could screen easily screen the
call.  If they wanted technical support she would ask for their
dial-a-guru ID and look them up in the database.  If they didn't have one
she could sell them over the phone with a credit card.

The final problem is credit card laundering.  Banks have become fairly
nasty about setting up Visa/MC merchant accounts.  Particularly if you
are mail-order or phone-order.  The reason is that they have been burned
bigtime.  If you have previously accepted these cards you are in pretty
good shape.  When I was setting up Linux Journal locally (before we ended
up working with the publisher of NY Unix) I talked to U.S. Bank.  In
order to set up a merchant account all they wanted was info on SSC's
merchant account.  Totally different company but they wanted something
that showed I had been involved in a company that had a merchant account
(even through another bank) that didn't have black marks on the record.

Credit card fees vary with whether you have electronic data capture (a
program that I still intend to write someday), transaction volume and
average transaction amount.  Numbers vary from about 2.5% to 7% at U.S.
Bank.  Expect much larger numbers if you get involved with a third party.
And do shop around.  There is a lot of competition and talking face to
face with a human at the bank can make a big difference.

One final point.  SSC has pretty much dropped dial-a-guru.  Not because it
didn't work but because we were attempting to know everything about every
Unix platform.  But this plan should work very well if you specialize.
We still do consulting: both with employees and with outside consultants.
For short jobs with outside consultants we help them a lot because the
customer has a place to call and we handle billing.  As we don't restrict
what the consultant does in the future it has the potential of getting
them some bigger contracts without our overhead.  For us it makes our
customers happy and we sell more reference cards.

-- 
Phil Hughes -- fyl@fylz.com -- (206)526-2919 -- FAX: (206)526-0803
FYL -- 8315 Lake City Way NE -- Suite 207 -- Seattle, WA 98115