Howdy all. With the holiday season upon us and everyone getting inundated with offers of bargain flat screen TVs at your favorite big box store and 10 spatulas for the price of 9 down at Spatula City, your friends at Function1 hope you'll save some of your hard-earned budget with this cost-saving tip: Make your software purchases at the end of a vendor's fiscal quarter.
Here's a not-so-well-kept secret about the software business: software and maintenance is a high-margin business for vendors. This means that there is no list price on that shiny new piece of software X that you're thinking of buying..."list price" is just a starting point for negotiating, alot like the tag in the window of a used car. What's more, most software sales folks have a sales target each and every quarter. The difference to a salesman between beating and missing their quarterly number is pretty significant. Beat their number and they:
- Likely get a trip on the company to some exotic resort where they sip on delicious fruity drinks.
- Buy that new convertible weekend car that they've been eying.
Miss their number and they can expect:
- Lot's of yelling from angry VPs
- Lot's of meetings and "planning sessions" with aforementioned VPs on how they're going to make their number next quarter
- Perhaps start looking for a new job
The upshot here is that, come end of the quarter, if a vendor isn't meeting their financial targets, it's firesale time. In short, you have leverage to negotiate a much better price for your software. Say, for instance, you've received a quote to buy a site license for some software at $500K + 20% annual maintenance. Let's also say that, come end of the quarter, your favorite salesman is $300K short of meeting his sales target. Let's also say that the economy is currently in the toilet, and the vendor you're working with is in danger of missing the financial target they've given to Wall Street. All these factors add up to a perfect storm of you saving a bunch of cash. If you're not afraid to say, "No" to a price, there's a good chance you get the $500K software for $300K...if you buy before the end of the quarter. So, not only have you saved $200K from your budget immediately, but you're also realizing an annual maintenance savings of $40K...that's real money. Money you can use to:
- Take your team on a trip to some exotic resort where you sip on delicious fruity drinks.
- Throw a kick-ass holiday party
- Hire your favorite consultants at Function1 to give you a hand in getting the most out of your new software purchase
That's about all for now. Hope you find this tip helpful, and that it saves your some $$$. If you're really in the holiday spirit, feel free to send us a check for 10% of any money you save :)
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