Tuesday, 29 April 2008

How to Deal with Complicated Purchasing Procedures

Filed under: Business of Software — Jan Goyvaerts @ 10:28

The short answer is: don’t. Unless the order is for several thousand dollars or more.

Many large companies and government agencies have complicated purchase procedures. The idea is to provide checks and balances within the company to make sure their money is well spent. That’s a great idea for big ticket purchases, but not for a $39.95 RegexBuddy license that the company’s only webmaster wants.

I do recommend that you offer as many payment methods as you can cost-effectively offer for single user license purchases. We accept credit cards and PayPal worldwide, as well as check orders in the US (through SWREG) and bank transfers in the EU (I kept my business bank account in Belgium). We also offer Western Union outside the US and EU, though we’ve only received two orders: one from Bulgaria, and one from Nigeria. (Yes! A legitimate order from Nigeria!)

But dealing with corporate procedures just isn’t worth our time for small orders. That’s why I set up our order form to make it easy for purchasing agents and resellers to buy on somebody else’s behalf.

There are in fact companies out there that do nothing but act as a go-between for software purchases. They act as a single supplier for all of the corporation’s software purchases. Typically they’ll be a pre-approved or preferred supplier, making it much easier for employees to buy a piece of software from them. When the reseller company gets an order, they simply place an order on our online form with their credit card like any other customer would. Resellers that often buy from us are Software House International, Insight (formerly Software Spectrum) and PC-Ware.

We don’t give these resellers any discounts. The reseller bills their customer the price of the license plus service costs. The service fee might very well be a fixed monthly fee if the reseller has an exclusive contract. The reason we don’t give any discounts is because these resellers don’t promote our products. They simply wait for orders to come in from customers reached by our own marketing efforts. They do ask for discounts. It’s fair enough for the reseller to try to maximize their profit. But they’ve never complained after getting a reply saying we don’t do reseller discounts. I have a template reply for that in AceText.

If you’re working for a big organization and have given up on buying software from Micro-ISVs, please check with your purchasing department. Your company likely already has a software reseller in their purchasing system. We’re happy to sell to any reseller. Since we don’t do reseller discounts, we require nothing from resellers other than valid payment, just like we would from an individual placing an order.

If you’re a Micro-ISV and your customers tell you they can’t buy from you because you’re too small or too foreign, simply invite them to buy through a reseller. It may even be enough to point them to the order page you have with a registration service. If you have an account with RegNow or SWREG or any Digital River property, your customer is actually (from a legal point of view) buying your software from a US company traded on the Nasdaq. That’s big and close enough for most.


  1. Very interesting.

    Good article.

    Thank you.


    Comment by Richard Quadling — Tuesday, 29 April 2008 @ 17:07

  2. Jan, thank you for a useful post. But how do you usually find new resellers? I tried contacting multiple reseller companies but with no success (except of pc-ware and a couple of other companies). I think that maybe that’s enough to just provide my prospects with the contact information of those resellers or do I have to sign a contract with them before I can do so? Thanks again.

    Comment by Evgeny — Sunday, 4 May 2008 @ 2:12

  3. We don’t find new resellers. We don’t enter into any agreements with resellers. A sale to a reseller is just another sale.

    We get emails from customers asking if they can buy through reseller X, and I’ll tell them we’re happy to sell through any reseller. Or, the reseller contacts us saying they have a customer wanting to buy our product, and I’ll reply the same.

    In the days that software was sold in boxes, it was very important to have deals with distributers and resellers to get your product into stores and your customers’ hands. But with online distribution, I find it much more efficient to market directly to the customers instead of trying to get distributers resellers to do it for us. From our point of view, there’s no difference between an employee of General Electric asking Software House International to buy a copy of RegexBuddy on his behalf, or 14-year-old Johnny asking his father to do the same.

    Comment by Jan — Wednesday, 7 May 2008 @ 7:33

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