Looking for help...

Posted by Leo Mennitt on May 6, 2008 at 10:58am

I am looking for information on how software companies, particularly manufacturing-related ones, handle the start dates for their maintenance agreements. My understanding is most companies start the maintenance contract when they ship their software. However what if there is a long lead time before the software actually goes into production? Do companies wait until the production date before starting to charge for maintenance? Is there any kind of industry-wide data? Insights that anyone could share would be appreciated.

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Permalink Reply by Joseph Roman on May 6, 2008 at 5:23pm: Leo,
Hi. The way we have done it is as follows:
1) Propose the Deal
2) Collect 50% up front at time of order
3) Install the software
4) Customer pays remainder of 50% of software at this time
5) Then maintenance starts after software. We also leave an option for a 2 month discount if a year is pre paid ahead of time (for maintenance).

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Permalink Reply by Leo Mennitt on May 7, 2008 at 9:10am: Thanks Joe.; ▶ Reply to This

Permalink Reply by John Bloomer on May 7, 2008 at 8:21pm: Leo - I've always negotiated to push maintenance costs off until the deployment is satisfied - up and successfully running as defined in the contract. Some SW companies would claim maintenance efforts (their costs) begin when the SW arrives. I take the position that any development or deployment costs need to be covered elsewhere as maintenance doesn't beginss until users are up and running. I've seen several ways to structure license payments tied to deliverables as well.; ▶ Reply to This

Permalink Reply by Erwin A. Racimo on May 8, 2008 at 10:03am: Maintenance typically starts when the licenses are issued/purchased.; ▶ Reply to This