This article is a Part 2 on how to Save Money on BI Purchase.
4. Support Renewal– Software Maintenance/Support renew fees are recurring, so when you negotiate your contract consider the support renewal. Software providers often state it’s a set percentage of the price. Remember that the savings you negotiate upfront on support/maintenance will result in savings every year.
Secret 5: Support Maintenance a percentage of the purchase price. Some companies make the support renewal a percentage of the list price. However, ask for it to be X% of the purchase price after the discount and make sure it’s written in the contract.
Secret 6: You can cap the increase of Support Maintenance. Put language in the contract that says the annual maintenance fees can not increase by more than Consumer Price Index + 3%. This will protect you years down the road if the software company is sold to a huge company that wants to jack the prices by 10%.
Secret 7: Often times the first year maintenance is bundled in the purchase price. So if they are charging you 20% of the purchase price for support, guess what – you are paying twice as much. If you bought it for X, this includes the license + 1st year Maintenance. In year two, you will receive a maintenance bill for 20% of X – this is equal to 20% of (License +1st year maintenance). You might not be able to get this changed, but just knowing it helps your negotiating power.
5. Lock in Pricing – When you negotiate a large purchase, you may underestimate the number of licenses. Yes, you can always buy more, but shelf-ware is expensive. In the initial purchase contract, ask for price protection for one year. They rarely go over a year or past their fiscal year end. By asking for language in the contract stating for one year you can buy licenses at X, you make sure you protect yourself when your project is successful and you need more licenses.
6. Put everything in the contract – I am surprised that people don’t request the descriptions of the licenses to be included in the contract. Software companies regularly change their license mix and pricing. So make sure the contract clearly states what functionality is included in the Administrator license. Years from now, when you can’t recall your license mix and the names have all changed, you will appreciate this detail in the contract.
7. You have what they need – Software sales representatives have needs too. Besides selling licenses, they need good references, presenters and clients willing to do press releases. While you are beating up your sales representative because now you are an educated consumer, offer him/her a bone. Instead, suggest that after a successfully completed project you would be willing to be a reference, do a press release or present at the annual user group in Vegas. Maybe you’ll even get a free trip out of it.
Keep these tips in mind the next time you or your company is about to make a major software purchases.
See Part 1 of Save Money on BI Purchase HERE