Technology and End User Contract Arrangements

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Every technologist who sells technology knows that an non technology end user must use.

Now there are two sides to the coin, I have seen many cases where the technologist blatantly tells the end user bullshit. No different than a car mechanic who rips off somebody by telling them a lie. Worst is a technology sales person who says it will do anything. (What is the difference between a software salesperson and a used car salesperson? The used car salesperson knows when they are lying)

This hurts the rest of us, it is pissing in the well as I say. But the other case is the end user does something so stupid, doesn’t do something, or expects some sort of unimaginable product and then doesn’t pay.

The traditional model was charge upfront. This causes a big issue. Say anything to get the sale, pay for something and be unsatisfied. Fret over terms to prevent the client from not paying and the vendor from not delivering


I have actually come to the point of view, I don’t care about long term contracts. I am fine with 90 day terms lined up the the end of each quarter. Have for fifteen years. I charge a cost recovery setup fee and then a pro-rated quarter and then each quarter. Understand I can fire you as well as you can fire me 90 days notice important point. You agree if you don’t pay by the end of the quarter which puts you 90 days late you therefore find useless and agree I simply turn off.

So you can “beat” me for either the setup fee and that quarter or a quarterly fee. Max damages are past 4 quarters fees in binding arbitration.

It really focuses everybody’s mind on one thing: the customer.

Now yes there are some customers that shouldn’t be a customer, no use “forcing” them.

Salespeople get paid 1/12 of each quarterly fee for the first year and 1/12 of any net increase for the upcoming years (you can add simple kickers like a 50% increase for any amounts over quota, and a discount before quota (actually easier just to fire somebody not making quota) Same base amount is put into bonus pool for implementation and support people. ONLY upon payment. Then a very small residual.

All setup for ease of accounting, ease of legal, ease of employee alignment. Pay people by the month. Expenses by the month, setup all leases and contracts by the month. Total close time? Noon of the first day after the month. Recap and review by COB.

Massive forecasting needed? Nope. Collections? Nope just send notices at the end of each month, 60 day salesperson has to call, ast one Fedex notice of termination. Simple DB program to calculate commissions, and bonuses.

I find that for other than esoteric things like IP and taxes, you can simplify them out of your business, but you have to be willing to take the simplicity.