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Business Advice: How to Negotiate the Best Deal on Software Licensing




Software is the lifeblood of many businesses, having effective software is essential for a number of business-related tasks. However, the cost of software can be a major expense for businesses of all sizes. Fortunately, software licenses are often negotiable. Here are a few tips for getting the best price for your company’s software licenses.

Consider Alternatives

One of the most effective ways to negotiate prices is to find alternatives. Most pieces of software have comparable competitors, and knowing what these programs are and knowing information about them can give you leverage in negotiations. If the alternative software is more expensive than the software for which you are negotiating, highlight its advantages during negotiations. If the main selling point for the new software is its low cost, suggest that you are willing to deal with the cost of transitioning in order to pay less. Competition is fierce in the software industry, and those who are willing to switch to other software packages will gain considerable leverage in negotiations.

Highlight Your History

If you have used a particular piece of software for years, mention this fact during negotiations. Software companies love repeat customers, and much of their money comes from those who have used their software for years. Because of this, companies will go to great lengths to please customers who will remain with them in the future. If you have no intention of switching to another software package, you may want to mention this during negotiations as it implies that you are not willing to switch as long as your prices are satisfactory.

 

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Discuss Growth Potential

If your company is in a position to grow significantly in the coming years, you may wish to mention this during negotiations. Even though individual license prices drop as companies grow, the total profit for the developer will rise. Because of this, software companies are likely to offer better deals for companies that will grow significantly in the future. Software companies hate losing out on potential growth, and they may be willing to offer license costs and far lower rates for companies that will bring them more money in the future.

Upgrade Costs

Upgrades are often great times to negotiate for better prices. If none of the new features offered in the newest version of the software are especially useful, you may be able to bring down the cost of upgraded software significantly. Software companies that offer support will often offer significant discounts for upgrades as the cost of supporting older software is higher than the cost of supporting new software. Some software companies have even been known to offer free upgrades for loyal clients.

Unlike most other products sold, there is almost no inherent cost to software licenses. Software costs money to develop, but an individual software license costs the software developer nothing. Because of this, companies will often offer significant discounts that cannot be offered in other industries. Take your time during negotiations, and do not be afraid to play a bit of hardball. Doing so may save your company a significant amount of money.

Peter Wendt is a writer and researcher living in Austin, Texas. He recommends that readers who wish to learn more about software licensing go to vendorlogix.com.




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