How to Negotiate the Best Deal on New Software?

Why not ask them who their competition is and where there value proposition lies vis a vis the competition.

Now you have a) more potential systems to look at and b) a price comparison.

If they say they have no competition, then that tells you alot either about the salesperson and/or the company and could be a 'tell' of issues down the road.

Thanks Wayne - that's good advice.

The purchase price is not as important to the software company as the annual maintenance fee. If you are going to pay a 20% annual maintenance fee for upgrades, you will have paid for the software twice in 5 years. Offer the company 40% of the list price as a starting point.

Working at a SaaS company, you might also see where their marketing is going. If you are in our target market, it isn't uncommon to offer deals in exchange for a video testimonial. Or if you are very visible to an industry or partner that would yield a benefit, that might be a good ROI on a discount.

Timing is another important factor. End of month, somewhat, but end of quarter/end of fiscal year are times when we are more likely to discount to get numbers in.

As Patrick said, one of the two largest costs for software is the annual maintenance cost. The other is the software installation. Most larger software packages are not designed to work EXACTLY the way you do business; so they build flexibility through customization into their packages.

When installing the software, you need someone who understands your business and at the same time knows the software. You need to be as thorough as possible in revealing everything your company does to the software installer/developer. If you have trade secrets, the most secure way to prevent that information becoming public knowledge is to have different developers design those secretive items and have them interface with the main design. (This is done by figuring out what data input and output from and to the main design goes into and out of the secret area and then have the second designer make that module, making sure the input and output is as expected.)

Do not be penny-wise/pound-foolish when getting (an) installer(s). A high-quality software engineer is going to be high cost. What you get for that extra money is a high quality job, limiting mistakes, and it will get done faster since you are dealing with someone who is familiar with your desired results, as opposed to someone re-inventing the wheel.

By limiting the mistakes, you will save money in that the installer won't need to come back out to make more changes, possibly breaking code further.

Something I experienced while working as a contractor to federal agencies is, there are contractors who drag their feet and purposefully make mistakes that they can blame on the client (the usual blame is, "You never told us about X, and that changes the way things function." It usually is true, but a higher quality professional with integrity will anticipate those issues and prepare for them and investigate them before starting.). One project, where I was database administrator...someone who made sure the database kept up and running...I worked there from 2008 to 2010, during which time a software design company was writing the next version of the database. By the time they got the first version done,18 months, the build would not work with the computer server...it needed a new OS, which after installed, was found to not work on the underpowered server...and so forth.

I went on to a new project after refusing to work with these guys because it felt like the whole project was make work, and when they ran out of fingers to point, I did not want to be the next target of blame. It is 2015, and they still haven't installed the new version, and I was told their intrusions into the old package has made it unstable. I refused to come back, no matter how much they paid because I am not in the business of being a scapegoat.