Making a software purchase can feel like you’re navigating a maze blindfolded. There are a dizzying number of options available, many look-alike software vendors, and even more unknowns.
It’s no wonder that 60% of technology decision-makers express regret after they purchase software.
In this guide, we’ll share tips on evaluating software options, decoding pricing models, and picking reliable vendors without getting lost. Plus, we’ll highlight common traps to avoid, ensuring you make a savvy software choice that supports business growth rather than adding to your stress.
The Software Purchase Roadmap for SMBs
Let’s start by breaking down the entire software purchase process from start to finish. This will give you a clear idea of the steps you need to take and where you currently are in the timeline.
- Identify Needs: Assess pain points, inefficiencies, and goals (e.g., streamline operations, improve marketing), and define must-have features and desired outcomes.
- Set a Budget: Determine a realistic budget, including potential hidden costs (e.g., user additions, training).
- Research Options: Explore available software tools and compare features, pricing, and reviews. Shortlist software solutions that align with your needs.
- Request Demos/Trials: Test usability and compatibility through free trials or live demos. Gather feedback from team members who will use the software.
- Evaluate Scalability: Consider whether the software can grow with your business. Assess pricing structure for scalability (e.g., per-user costs, feature upgrades).
- Check Integration: Ensure compatibility with existing tools and systems (e.g., your CRM, accounting software, etc.).
- Negotiate and Purchase: Discuss terms, request discounts, or negotiate flexible contracts.
- Onboard and Train: Set up accounts and customize settings. Provide training for team members to ensure smooth adoption.
- Monitor Usage: Track how the software is used and whether it delivers expected benefits. Adjust processes or add features as necessary.
- Review and Reassess: Periodically review the software’s ROI and relevance. Upgrade, renew, or switch tools based on evolving business needs.
What are the Risks of Purchasing Software?
Buying business software is a significant investment for any business. It usually takes months to complete and costs thousands in fees and training.
Let’s look at the most common risks associated with purchasing software so you can be prepared to tackle any obstacles.
Hidden costs
Sticker prices look great when purchasing software but don’t always convey the true cost involved. From service fees and licensing costs to add-ons for extra users, hidden costs are the number one reason purchasers experience software purchase regret.
The best way to avoid this pitfall is to negotiate price caps with vendors. Let them know the maximum you’re willing to pay and ensure all costs and fees fit within that budget. This should include future increments and additional costs for extra users.
Demand planning
If you experience spikes in demand at certain times of year, this should be highlighted when purchasing software. For example, if you have abnormally high demand during the festive period, ensure you don’t exceed agreement boundaries and overpay for your software.
Talk to software vendors about any anticipated heightened demand and work those periods into your software purchase contract.
Failed Implementations
One of the most costly risks of purchasing software is implementation failure. StackPlans research found that 33% of self-implemented software fails, and those failures mean that businesses have to revert to old systems.
A proactive approach to software upgrades helps reduce the risk of implementation failure. That means careful research, in-depth software demos, and seeking advice from a software consultant to ensure you’re investing in the best solutions.
What are the Different Software Pricing Models?
Perpetual pricing
Subscription-Based Pricing
Freemium Model
Other Software Pricing Models
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Pay-as-you-go:Pricing is based on actual usage (e.g., number of transactions, API calls, or data volume).
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Per-user pricing:Cost is determined by the number of users with access to the software.
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Tiered pricing:Multiple pricing tiers based on features, usage limits, or user count.
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Flat-rate pricing:A single price for unlimited use of features and users.
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Feature-based pricing:Costs depend on the specific features or modules selected.
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Hybrid pricing:A combination of two or more pricing models (e.g., subscription plus usage-based).
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Open source with paid support:The software is free, but support, customization, or advanced features cost extra.
What is a Software Purchase Contract?
A software purchase contract is an agreement with a software vendor or SaaS provider. It includes all the terms and conditions that regulate and restrict how you use the software.
It’s tempting to skim over a software purchase contract, but they include vital details about what’s included in your subscription, including:
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The monthly subscription costs, set-up costs, fees, and future increments.
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The length of the subscription and fees associated with continued use.
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A detailed walkthrough of how the software can be used, its limitations, and the level of service provided.
Why Negotiate Your Software Purchase?
Software contracts are standard, right? So, what’s the point in negotiating the terms included?
Even though the basic details of a software purchase contract come as standard, there are plenty of elements you might want to change, exclude, or add to ensure the contract matches your long-term business goals.
For example, a standard contract might only include five users, whereas you’ll need ten within the next 2-5 years. Before you buy business software, you can discuss this detail with the vendor to ensure your new software supports business growth.
You might also notice that a standard software purchase contract doesn’t include explicit cybersecurity and data protection information. So, you might decide to include a section to contractually obligate your software vendor to include regulatory services that make it easier for your business to remain compliant.
When you buy software, your contract is a powerful tool to help you get the most out of your software. Used correctly, it’s the first step in limiting risk, regret, and unforeseen costs when investing in new software.
Uncommon Questions to Ask During a Software Purchase
The more you know about a software product before you buy business software, the more confident you’ll be that you made the right purchase decision.
Here are some uncommon questions you might not have thought to ask your shortlist of software vendors:
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Can we add temporary users if and when we need to hire a subcontractor? What is the limit on this?
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If a short-term subcontractor puts us over the user limit, how will that impact our fees?
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Do you help with onboarding team members and training? How much does this cost?
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How does your software handle scalability for unexpected business growth?
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What is your company’s plan for future innovation and product development that could impact how we use the software?
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How are feature requests and product feedback handled and incorporated into development? Do you have any examples of user requests that were implemented?
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Can you describe a time when a user outgrew your software and how you handled it?
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What’s the typical customer lifecycle and what percentage of customers renew after their first contract ends?
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Do you have case studies of businesses in our industry using your software in a customized way?
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What’s your decommissioning process if we migrate away from your platform?
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What are your additional fees or hidden charges not included in the monthly subscription price?
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How do you ensure your software remains compatible with the latest hardware and operating systems?
Once you and the vendor are aligned on all points, get all answers in writing and incorporated in your software purchase contract.
Tips for Negotiating Your Software Purchase to Reduce Costs
Don’t get overwhelmed with the software negotiation process. Here are some quick tips to put you in control and help you get the best deal.
1. Don’t dive into negotiations without a clear strategy.
Preparing to invest in new software takes considerably longer than actually buying business software. The more prepared you are, the easier it will be to get the best deal possible.
Here are a few things to think about:
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How long does the contract need to be? Are you happy to lock into software for a full year or more?
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What kind of stakeholder buy-in do you need to get before you can start negotiations?
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What is your maximum budget for new software, and what do you need to achieve within that budget?
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What are the non-negotiables for your software purchase that you will walk away without?
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How will this software purchase fit into your broader budget technology roadmap?
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What ROI are you expecting from this investment and what metrics will you use to measure results?
The more information you have set out before you begin talking to vendors, the more in control you will feel during negotiations.
2. Get demos and price comparisons from at least three vendors.
Even if you’ve found a software that seems perfect, it’s important to get quotes from at last three vendors to compare features, pricing, and customer service.
You can also use competitor quotes to negotiate better pricing with your preferred software vendor.
Here are a few things you should compare when doing software demos and vendor interviews:
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The total cost of ownershipThis is the best statistic for comparing costs in full.
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Software featuresWhich software best aligns with your company’s need and future goals?
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Timelines for implementationDoes this fit with your expectations and tech roadmap?
3. Know what kind of leverage you have in your back pocket.
There are several key factors you might be able to use as leverage to get a better deal on a software purchase contract:
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The size of the dealIf you’re spending a considerable amount of money with a vendor, you’re in a better position to negotiate discounts.
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Number of models or features neededIf you require less modules than the standard plan includes, you may be able to negotiate a discount to have unnecessary features or modules removed.
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The influence of your companyDo you have a large, influential online presence? This could be used to negotiate discounts in exchange for promotions.
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The time the software vendor has been in the marketNewer vendors might be willing to offer discounts to secure long-term contracts.
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Technology advisor discounts.Some software consultants or technology advisors may have additional services they provide or discounts if you purchase your software through them.
Get Expert Advice for Your Software Purchase
Choosing the right software doesn’t have to be a headache. Knowing your needs, doing your homework, and negotiating with the right vendors can save money and dodge those pesky buyer’s regrets.
If you want to fast track the software purchase process and minimize costs, regret, and risk, talk to our vetted tech advisors! They’ll give you tailored advice on the best software for your company’s needs.
