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Customer Success and Charging Setup Fees
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0;text-align:center;-webkit-text-decoration:none;text-decoration:none}#amp-mobile-version-switcher>a:active,#amp-mobile-version-switcher>a:focus,#amp-mobile-version-switcher>a:hover{-webkit-text-decoration:underline;text-decoration:underline}</style> <style type="text/css" id="wp-custom-css"> /* You can add your own CSS here. Click the help icon above to learn more. */ </style> </head> <body class="post-template-default single single-post postid-7115 single-format-standard custom-background custom-header header-full-width content-sidebar"><div id="wrap"><div id="header"><div class="wrap"><div id="title-area"><p id="title"><a href="https://sixteenventures.com/">Customer-centric Growth by Lincoln Murphy</a></p><p id="description">Growth-oriented Customer Success</p></div></div></div><div id="subnav"><div class="wrap"><ul id="menu-page-menu" class="menu genesis-nav-menu menu-secondary"><li id="menu-item-2604" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-home menu-item-2604"><a href="http://sixteenventures.com">Customer Success Articles</a></li> <li id="menu-item-8249" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-8249"><a target="_blank" href="https://www.impactdemy.com/collections?ref=58b2b0">2024 CSM and Head of CS Training</a></li> <li id="menu-item-55" class="menu-item menu-item-type-post_type menu-item-object-page menu-item-55"><a rel="author" href="https://sixteenventures.com/lincoln-murphy-strategic-consultant">Customer Success Consulting</a></li> <li id="menu-item-8433" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-8433"><a target="_blank" href="https://www.impactdemy.com/pages/impact-weekly-podcast">Customer Success Podcast</a></li> <li id="menu-item-8900" class="menu-item menu-item-type-custom menu-item-object-custom menu-item-8900"><a target="_blank" href="https://www.impactdemy.com/courses/fundamentals?ref=58b2b0">Free CS Fundamentals Course</a></li> </ul></div></div><div id="inner"><div class="wrap"><div id="content-sidebar-wrap"><div id="content" class="hfeed"><div class="post-7115 post type-post status-publish format-standard has-post-thumbnail hentry category-business-model category-cohort-analysis category-customer-acquisition category-customer-development category-customer-segmentation category-customer-success category-distribution-2 category-free-trials category-growth-hacking category-marketing category-pricing-strategy category-retention-churn-management tag-accounting tag-apps tag-b2b tag-b2c tag-business-model-2 tag-churn tag-cloud tag-cloud-computing tag-clv tag-conversion-rate-optimization tag-copywriting tag-cro tag-cta tag-free-trial tag-free-trials-2 tag-funnel tag-marketing-2 tag-metrics tag-pricing tag-pricing-page tag-pricing-strategy-2 tag-psychology tag-retain tag-retention tag-saas tag-sales tag-sales-process tag-software-as-a-service tag-transparent-pricing tag-value-pricing tag-web-app tag-webapp entry"><h1 class="entry-title">Customer Success and Charging Setup Fees</h1> <div class="post-info"><span class="date published time" title="2017-05-05T18:41:32-05:00">May 5, 2017</span> Article by <strong><a href="https://sixteenventures.com/lincoln-murphy-strategic-consultant" target="_blank">Lincoln Murphy</a></strong> </div><div class="entry-content"><p><img decoding="async" class="alignright wp-image-7116" src="http://sixteenventures.com/wp-content/uploads/2017/07/pablo-22-1024x512.png" alt="" width="400" height="200" srcset="https://sixteenventures.com/wp-content/uploads/2017/07/pablo-22.png 1024w, https://sixteenventures.com/wp-content/uploads/2017/07/pablo-22-300x150.png 300w, https://sixteenventures.com/wp-content/uploads/2017/07/pablo-22-768x384.png 768w" sizes="(max-width: 400px) 100vw, 400px" />So, do Setup Fees jibe with <a href="http://sixteenventures.com/customer-success-definition" target="_blank" rel="noopener noreferrer">Customer Success</a>?</p> <p>Are they mutually exclusive? Can they play well together?</p> <p>Is there a time or place where they’re more appropriate?</p> <p>The answer is, of course, yes. And no.</p> <p>Don’t worry… I unconfuse it all below.</p> <p>For context, on Friday, May 5, 2017, I did a <a href="http://sixteenventures.com/customer-success-ama-05052017" target="_blank" rel="noopener noreferrer">Customer Success Ask Me Anything (AMA)</a> on <a href="https://www.facebook.com/LincolnMurphyShares/" target="_blank" rel="noopener noreferrer">Facebook live</a>. It was awesome. The video (audio only… sorry) is embedded below and below that is the transcript (edited for better readability) that answers the question.</p> <p><span id="more-7115"></span></p> <p><iframe src="https://www.youtube.com/embed/1-xfF5p9Fxk?rel=0" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe></p> <h2>What is your thought on setup fees?</h2> <p><em>The first question is from Tim, “What is your thought on setup fees? We charge a few hundred bucks to customers of a certain size, but realistically, we care far more about the recurring plan revenue than any upfront fees.”</em></p> <p>Tim, thank you for your question. It’s interesting. Setup fees, there’s certainly some psychology to getting people to make a commitment early on, but a lot of times, it doesn’t do what we think it does.</p> <p>I’ve seen it a lot where customers will pay something and we think, “That’s going to lock them in.”</p> <p>Very often, we have an actual cost associated with setting up customers, and that’s cool. We have a cost so we need to cover it. Sometimes we think it’s going to be the thing that locks customers in. I think that’s where we need to get real.</p> <p>That doesn’t lock customers in. As long as we’re doing it as a way to cover our costs or because it’s what our customers expect, or even as a way to simply increase revenue… As long as it’s within the confines of an appropriate experience for the customer, I think we’re fine.</p> <p>It’s not going to cause people to stay. It’s not going to cause anybody to be successful. When you care more about your recurring revenue, what you should be focused on is making sure that your customers are successful.</p> <p>If what goes into the setup that you’re charging a fee for is going to set up your customers for success later on, then cool.</p> <p>If charging a fee is going to keep people from being successful, then that’s a problem. It isn’t good. It isn’t bad. It just is. The main thing is are you actually setting your customers up for success? If that’s the case, then I’m all for it.</p> <figure class="wp-block-image size-full"><a href="https://www.impactdemy.com/collections?ref=58b2b0" target="_blank" rel="noopener"><img loading="lazy" decoding="async" width="800" height="800" src="https://sixteenventures.com/wp-content/uploads/2023/02/Impact-Academy-Johan-and-Lincoln.png" alt="" class="wp-image-8479" srcset="https://sixteenventures.com/wp-content/uploads/2023/02/Impact-Academy-Johan-and-Lincoln.png 800w, https://sixteenventures.com/wp-content/uploads/2023/02/Impact-Academy-Johan-and-Lincoln-300x300.png 300w, https://sixteenventures.com/wp-content/uploads/2023/02/Impact-Academy-Johan-and-Lincoln-150x150.png 150w, https://sixteenventures.com/wp-content/uploads/2023/02/Impact-Academy-Johan-and-Lincoln-768x768.png 768w" sizes="auto, (max-width: 800px) 100vw, 800px" /></a></figure> </div><div class="author-box"><div><img alt='' src='https://secure.gravatar.com/avatar/3334de1f544b64f1d1b3383098d14892?s=80&d=mm&r=g' srcset='https://secure.gravatar.com/avatar/3334de1f544b64f1d1b3383098d14892?s=160&d=mm&r=g 2x' class='avatar avatar-80 photo' height='80' width='80' loading='lazy' decoding='async'/> <strong>About Lincoln Murphy</strong><br /><p>I invented Customer Success. I focus primarily on Customer Engagement. <a href="https://sixteenventures.com/lincoln-murphy-strategic-consultant">Learn more about me here.</a></p> </div></div><div class="after-post widget-area"> <div id="recent-posts-3" class="widget widget_recent_entries"><div class="widget-wrap"> <h4 class="widget-title widgettitle">You should read these articles, too…</h4> <ul> <li> <a href="https://sixteenventures.com/true-cost-of-meetings">The True Cost of Meetings in Customer Success Management</a> </li> <li> <a href="https://sixteenventures.com/meetings-as-a-metric">Meetings as a Customer Success Metric: The Misguided Path</a> </li> <li> <a href="https://sixteenventures.com/no-goals-no-customer-success">No Goals, No Customer Success: Unlocking the Power of the Goal Discovery Framework</a> </li> <li> <a href="https://sixteenventures.com/revenue-roadblocks">Revenue Roadblocks: How We’re Sabotaging Our Own Growth</a> </li> <li> <a href="https://sixteenventures.com/bad-fit-vs-good-fit-customers">Good Fit vs. Bad Fit vs. Ideal Customers: The Key to Unlocking Sustainable Growth</a> </li> </ul> </div></div></div></div></div><div id="sidebar" class="sidebar widget-area"><div id="custom_html-2" class="widget_text widget widget_custom_html"><div class="widget_text widget-wrap"><div class="textwidget custom-html-widget"><div id="enews-ext-2" class="widget enews-widget"> <div class="widget-wrap"> <div class="enews"> <h4 class="widget-title widgettitle">Join the other 53,897 folks who get my emails and…</h4> <div style="text-align:left"> <ul> <li>Get the latest on <strong>ChatGPT, AI, & Prompt Engineering</strong></li> <li>Stay updated on <strong>Customer Success</strong> & <strong>RevOps</strong></li> <li>Take your <strong>Growth Strategy</strong> to the next level</li> <li>Learn about <strong>Psychology, Engagement, and More</strong>!</li> </ul> </div> <!-- Form starts here --> <form id="ck_subscribe_form" class="ck_subscribe_form" action="https://app.convertkit.com/landing_pages/256863/subscribe" data-remote="true"> <input type="hidden" value="{"form_style":"naked","embed_style":"inline","embed_trigger":"scroll_percentage","scroll_percentage":"70","delay_seconds":"10","display_position":"br","display_devices":"all","days_no_show":"15","converted_behavior":"show"}" id="ck_form_options"> <input type="hidden" name="id" value="256863" id="landing_page_id"> <input type="hidden" name="ck_form_recaptcha" value="" id="ck_form_recaptcha"> <div class="ck_errorArea"> <div id="ck_error_msg" style="display:none"> <p>There was an error submitting your subscription. 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https://sixteenventures.com/wp-content/uploads/2022/12/Impact-Weekly-with-New-Episodes-Text-150x150.jpg 150w, https://sixteenventures.com/wp-content/uploads/2022/12/Impact-Weekly-with-New-Episodes-Text-768x768.jpg 768w, https://sixteenventures.com/wp-content/uploads/2022/12/Impact-Weekly-with-New-Episodes-Text-1536x1536.jpg 1536w, https://sixteenventures.com/wp-content/uploads/2022/12/Impact-Weekly-with-New-Episodes-Text-2048x2048.jpg 2048w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></a></figure> </div></div> <div id="recent-posts-4" class="widget widget_recent_entries"><div class="widget-wrap"> <h4 class="widget-title widgettitle">Customer Success & Growth Articles</h4> <ul> <li> <a href="https://sixteenventures.com/true-cost-of-meetings">The True Cost of Meetings in Customer Success Management</a> </li> <li> <a href="https://sixteenventures.com/meetings-as-a-metric">Meetings as a Customer Success Metric: The Misguided Path</a> </li> <li> <a href="https://sixteenventures.com/no-goals-no-customer-success">No Goals, No Customer Success: Unlocking the Power of the Goal Discovery Framework</a> </li> <li> <a href="https://sixteenventures.com/revenue-roadblocks">Revenue Roadblocks: How We’re Sabotaging Our Own Growth</a> </li> <li> <a href="https://sixteenventures.com/bad-fit-vs-good-fit-customers">Good Fit vs. Bad Fit vs. Ideal Customers: The Key to Unlocking Sustainable Growth</a> </li> <li> <a href="https://sixteenventures.com/opt-in-vs-opt-out-trials">Opt-In vs. Opt-Out Trials: The Hidden Impact on Customer Retention and Success</a> </li> <li> <a href="https://sixteenventures.com/beyond-transactions">From Transactions to Relationships: Unleashing Customer Potential with AX</a> </li> <li> <a href="https://sixteenventures.com/renewal-psychology">Renewal Psychology: From an Adversarial Process to a Celebration of Success</a> </li> <li> <a href="https://sixteenventures.com/pods-customer-success-sales">Pods in Customer Success 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