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By Gene Marks
My company resells business software. So here’s secret that I’d like to share with my fellow penny pinching business owners: Big software companies really only care about two things: How many licenses they can sell and how to make sure their customers are roped into annual support agreements. Do they care about your long term profitability? Naah. As long as you’re paying maintenance that’s all that matters.
Now before I get hate mail from furious software companies let me make the usual disclaimer about how there really are lots of great companies out there who care about their customers and who provide great software at a great price. They’re really just great.
OK? So now that I’ve got that out of the way let’s go to the issue at hand. You’re buying a new accounting, database, inventory, order entry, inventory or system for your company. You don’t want to overpay. You haven’t done this a lot. You’re inexperienced with this business. You’re uncomfortable buying something you can’t really see. Here’s a few ways to save some big bucks. And you’re not going to hear this from the software companies either.
For starters, never believe list price. It’s a lie. If you’re spending more than $5,000 for a piece of software, you’ll get a lower price just by asking. It’s a jungle out there. The competition is fierce. Software vendors want so desperately to sell more licenses that they’ll shave off a few points or even sell their sisters into slavery to make sure a deal doesn’t go away.
Find out the vendor’s fiscal year end. Like any used car salesman, a software company will always play let’s make a deal when a period end is coming. Target your negotiations for the end of a month, quarter or (ideally) the end of the fiscal year. Software companies have regional representatives who get a paid a commission on every license sold. They become ravenous for a deal as a period end approaches. Encounter a “problem” near the end of a period. Blame it on “cash flow” or “budget issues." Ask for a bigger discount or some other throw-in. Watch (and enjoy) as the software company squirms, then caves.
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