Kath Pelletti
KP at sdsonline.net
Mon Apr 25 18:38:17 CDT 2005
Thanks Dan - I don't contract to them - I just write each system for a fee - I always work on the basis that I own them and so far no client has wanted to challenge that stance. (I know from previous discussions on the list that ownership is no simple matter..)
Thanks for the details -
Kath
----- Original Message -----
From: Dan Waters
To: 'Access Developers discussion and problem solving'
Sent: Tuesday, April 26, 2005 12:48 AM
Subject: RE: [AccessD] Client Payment Methods
Hi Kath,
I talked with an accountant this morning. He said that a capitalized
software purchase is depreciated over 3 years (straight-line). This 'seems'
to indicate that asking them to pay 1/36th of the 'purchase' amount every
month from now on would be OK. A $10,000 purchase would equate to a $278
monthly payment. The $278 is regular income to you, and does not end.
Instead of some fraction of the purchase price, you could try to calculate
the monthly value they get, and then charge a portion of that. This is a
pretty reasonable approach - the customer pays for less than the value they
get for as long as they are getting it.
They could drop out at any time after 6 (or 12?) months - so the risk is on
you to provide something that is worth more to them each month than they pay
each month. There will need to be a mechanism (or good contract) to turn
off the software if they decide to discontinue.
What I think I'll do is offer continuing Tech Support and Warranty for as
long as they use the software. So I'll offer a Purchase License and a TSW
License - customer's choice. And, they can convert a TSW License to a
Purchase License whenever they like.
However - do you license your software or are you contracting with them to
provide software that they will own? If they will own it, then you'll have
to come up with some additional service to make it worth their money.
** On my website there is a spreadsheet intended for prospective customers
to enable them to calculate for themselves the productivity increase they
will experience by using my software to automate a business process. Go to
www.promationsystems.com/download.htm. Download the compressed file that
has an instruction document, an instructional video, and the spreadsheet.
If you are a member of the AccessD list you have my permission to modify the
spreadsheet for your business. (I used Windows Media Encoder 9.0 to create
the screen capture video.)
Dan Waters
-----Original Message-----
From: accessd-bounces at databaseadvisors.com
[mailto:accessd-bounces at databaseadvisors.com] On Behalf Of Kath Pelletti
Sent: Sunday, April 24, 2005 8:14 PM
To: Access Developers discussion and problem solving
Subject: Re: [AccessD] Client Payment Methods
Gregg / Dan - Can you tell me how this works? I also only do fully
customised systems - my normal process is to provide a written quote on a
job and ask for half as deposit and the other half on completion.
Additional work quoted separately.
So if I was to quote a job which worked out to $10,000 - how would I convert
that to an ongoing monthly payment? My accountant has also suggested that I
get some monthly payments happening - but I have no idea really how to do
that....How much should they pay? What do I promise in return? How long does
the arrangement run for???
Kath
----- Original Message -----
From: Gregg
To: Access Developers discussion and problem solving
Sent: Sunday, April 24, 2005 2:31 AM
Subject: Re: [AccessD] Client Payment Methods
It's a very good idea. Removes most of the sales objections. Allows the
customer to kind of try before they spend a lot. Makes the purchasing
decision nearly a no-brainer.
The only downside I can see is if their expectations are far different
that what your software delivers, you will either have to make modifications
quickly and essentially for free or they will be tempted to shop around for
another solution.
I have done something similar. Our software is totally custom for each
customer so our end product is almost all programming by the hour. This
year I was able to convert 4 long-term customers to a regular monthly
billing. We still track hours and make adjustments when necessary but now I
can count on a regular monthly check. It's been good.
Also, I have noticed a change in their mindset about asking for additions
and enhancements. In the past there were mini approval processes where they
would get an estimate of our labor before proceeding. Now, I guess because
of the monthly payments, they tend to think of it as a maintenance contract
(where requests are seemingly free) even though I have been very clear that
it is not. Now, from their perspective its a budgeted, yearly commitment
(once-a-year decision) even though they are free to get out at any time.
----- Original Message -----
From: Dan Waters<mailto:dwaters at usinternet.com>
To: Database Advisors<mailto:accessd at databaseadvisors.com>
Sent: Saturday, April 23, 2005 10:18 AM
Subject: [AccessD] Client Payment Methods
To All,
Yesterday I had a business planning meeting with an advisor. He brought
up
the idea of asking my clients to pay me on a monthly basis - the concept
is
that they would pay me a portion of the ongoing value they get from my
services. (By the way, this is not a maintenance fee.)
This sounds quite attractive. My customers might skip a major budget
discussion (often lasting several months) and quickly get started. They
have a low risk because they could discontinue whenever they want, which
is
actually a good business position. On my side I would be a little
shocked
if they did discontinue because no one would really want to go back to
the
old way of doing business.
I'm thinking that I would ask for a monthly amount of 1/36 of what I
would
have asked for to 'sell' a module. The monthly payment would of course
continue after the 3-year period. This gives me a long-term regular
income
stream, and allows my customer to make small monthly payments which
might be
easier to get into.
Does anyone provide software under similar terms? Or, does anyone use
software under similar terms? What are your thoughts on this payment
method?
Dan Waters
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