How to Prospect & Fill Pipeline Featuring John Barrows and Becc HollandWatch Now!
Maintenance Fees: What Are You Actually Paying For?
When it comes to business technologies, many of them have all kinds of unclear or hidden maintenance fees.
But what exactly are these maintenance fees, and what do they go towards? What happens if you don’t need maintenance? Do you still have to pay upfront? Here’s a quick rundown of the topic so you can have a clear understanding of how you can work with partners to maximize your investment.
Software costs can be broken out into three components: Software License, Software Maintenance, and Implementation Services.
Your software license cost will depend on the number of users, deployment method, and any special features or add-ons you’d like to tack on. You can pay upfront or via subscription billed on a monthly or annual basis. Simple enough.
Implementation services are typically paid to the Engineer or IT guru who will be in charge of setting up the system for your users as well as troubleshoot any bugs or technical issues in addition to helping to migrate relevant data into your new software. Implementation will typically occur after the software is purchased and is usually a one-time process.
The Software maintenance fee is the annual cost that you pay for upgrades and support of the software. The price is typically a percentage of the initial software license fee – which is usually between 16-25% of the license cost per year. There are two main items to pay attention to when it comes to the maintenance fee: the calculation, and when “maintenance” begins.
How Maintenance Cost is Calculated
Many vendors base maintenance costs off the “list price” of the software. While you may get a significant license price up-front discount, vendors typically charge maintenance based on the higher list price. While this is not always negotiable with the vendors, you should at least get clarification from the vendor as you may be able to negotiate this estimated cost.
When Maintenance Costs Begin
Most vendors start maintenance the moment you sign the contract or begin the implementation. Make sure that you have a good understanding of when this starts. Depending on the vendor and your company’s needs, you may be able to negotiate starting maintenance at a later date.
It’s important to note that cloud solutions such as SugarCRM, which bill monthly or annually, maintenance is a part of the service they provide. Because this is a recurring cost, it is essential to understand how they charge so you can buy the right number of licenses. Because if you overbuy licenses, your prices will be higher than necessary every year – which adds up significantly over the long term.
What Maintenance Fees Do
Maintenance fees typically go towards recurring bug fixes, investing in new products or solutions to add to the software portfolio, and Research and Development to continue innovating the product – meaning when new versions come out, you can upgrade your software for free.
For example, with Infor CRM, they require maintenance fees for the first year with their product. Afterward, it’s optional. So during that year, should any new versions come out, everyone who has adopted the software and has paid their maintenance fees can upgrade for free. But what happens if you don’t want to keep paying them?
After the first year, an Infor customer can elect to re-up their maintenance fee subscription or cancel maintenance at any time. If you have a seamless system that works great, it makes sense to cancel maintenance if it works flawlessly for your business. Many companies can use the same version of the software for years without needing any maintenance. However, should you change your mind down the line and decide you want to upgrade to the latest version, without maintenance, they can’t help you.
If You Didn’t Pay Your Maintenance Fees But Need Help
It happens…you didn’t pay your maintenance fees because your product was working correctly and then one day something goes wrong. You contact the software provider for help, but they say there’s nothing they can do as you have an older version, and maintenance is not a part of your contract anymore. There are two options: you can try and track down an engineer or developer to fix the problem – if possible. However, the Engineer would need to be familiar with your software, and that can be hard to find from a simple Google search.
The other option is to find a Value-added Reseller (VAR) like us! If the VAR works with your software, they can usually help you, or know of someone who can. It’s a bonus to licensing software through a VAR versus directly from the vendor itself. When you’re in a pinch, you’ll be glad you had them around in your moment of need.
Heather Mellinger joined BrainSell in 2019 as the digital marketing coordinator. With experience in public relations, marketing, and graphic design, Heather assists with content and further developing the BrainSell voice.View Posts
Stay in the Loop
Subscribe to get all our latest content sent directly to your inbox!