Two Payment Options, Which One is Best?

When buying Software as a Service (SaaS), there are a number of options for buying and continuing usage. Some turn out to be an incredible deal – and others an albatross around your neck. With all of the options available to you, how do you choose the best deal for your business?

There has never been so much choice, especially when it comes to software. Paying for it also brings up a number of options as well. There are low cost entry points and frequent offers of affordable payment plans and sometimes funding opportunities from the government.

The days of buying software for tens of thousands of pounds that comes in a CD pack is dead and gone. Cloud solutions or SaaS is the way forward and inevitably cheaper to buy.

The biggest benefit to buying a cloud based solution is that you get all of the updates as and when they happen. There’s no spending years limping along with a program that is losing compatibility with operating systems and browsers, it’s always there and always new.

This model is here to stay. You need to accept that you need to pay for ongoing usage whether you use it or not – or face the system being switched off! With anything licenced like this, you’re paying to use the system, not to own the system.

It’s everywhere you look. Maybe you’re using it at home without even thinking about it: Amazon Prime, Netflix, Spotify. It is certainly convenient!

However, with any cloud based software, there is an ongoing cost of usage, to ensure that you get those updates. But what happens if the software you purchase is unsustainable for the vendor because you’re using the system too much or too little?

Weighing the Software Pricing Models Up

Transactional software works well to get you going, coining the term pay as you grow. However if this model is not revisited at different points throughout your growth, then this could become a limitless tax on your business. The cost starts to become prohibitive, as perhaps you’re doing the work and putting through the clicks and paying for them before you are paid by your client – causing a cash flow issue if you’re not careful. For small businesses with small amounts of usage, it is a cheap and easy way to use the software you buy.

Turning your attention to a licence model – you pay a set amount per month. It’s always going to be the same (as long as you are using it fairly). However, if your usage drops or there is a policy in place to charge you more if you go over the agreed amount, it then starts to become an expensive liability. If you are on the right tariff for you and you have a proactive account manager and you are engaging with them on a regular basis, then you will always be paying the amount that is right for your usage.

The key to getting the right deal is negotiating. Be upfront, tell them your concerns about being on either package. There could be the opportunity to reduce the cost per transaction depending on usage – but depending on the provider, this may not even be negotiable! You don’t know until you ask – most software sales people are reasonable after all!

How You Can Be a Winner

Whether it’s a cop out or not – the winner in this context is whichever model actually works for you. If you can balance the low cost entry point and monthly charges that is truly representative of your use, then you are the winner. Whichever software allows you the flexibility to change depending on your usage, that is adaptable and proactive and protecting you from being someone’s cash cow – that’s the winner for you!

 

Written by Kelvin Bell

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