Making the most of software opportunities

Software has long been touted as an effective opportunity for resellers to increase revenues. While forming generalizations can be a bit delicate, when it comes to software sales, opportunities definitely exist to strengthen customer relationships.

Info-Tech Research Group released a technology insight note recently, entitled Microsoft Licensing Basics: What you need to know. In this paper, insights are presented with respect to Microsoft products, but they can also be extended to other software vendors. As a reseller, it is important to differentiate between the software product forms in order to most accurately service your clients. The three main forms within this paper are: shrink-wrapped packaging, OEM channel product, and volume licensing agreements.

Shrink-wrapped product is commonly referred to as “full packaged product” or FPP. It comes in a boxed, shrink-wrapped form, and is most commonly sold through retail channels. It often carries a higher price point than other forms, largely due to the extra costs associated with its packaging.

OEM channel product, or original equipment manufacturer product, requires an end-user license agreement for pre-installation of the software. It is commonly shipped to the end-user already pre-installed on the hardware. This form is commonly used and sold by system integrators.

The third most-common manner in which end-users can purchase software is via volume licensing. By signing a volume licensing agreement with the software vendor, the end-user is them entitled to receive discounts depending on how much of the software they promise to license over a set period of time.

Shrink-wrapped software caters to the consumer purchaser. Small organizations are the only users who should consider it. Larger companies should opt for a different packaging. Corporate resellers tend not to offer this form of product.

OEM licensing is a common format for operating system software. For example, Microsoft’s Vista operating system, due to its hardware requirements, it is often purchased with new hardware. The license is often tied to the hardware, and not transferable to a different PC. Ways to workaround this restriction include purchasing additional copies of OEM-licensed software (in this case, an extra copy or signing a volume-licensing agreement).

For large enterprises, and for medium-sized organizations, it is most common to negotiate a volume-licensing agreement for software. In the case of Microsoft, sometimes the volume commitment can result in a discount of up to 60 per cent off manufacturer’s suggested list price. Aside from volume discounting, the benefits of volume-licensing agreements can include perpetual use rights, reassignment rights, and re-imaging rights.

Your client might come to you looking for one copy of one specific software program, and in that case, a shrink-wrapped copy might be the best option. However, if they are looking for multiple copies, then consider offering some of the other possibilities for your clients. Providing the most appropriate product will help improve customer service, ensure strong referrals, and increase your bottom line.

Michelle Warren is a senior analyst in the Indaba Division of the Info-Tech Research Group based in London, Ont.

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