General points
- Sales teams should report on all key calls/meetings on the CRM system – even if they are short and brief updates
- Partner margins must reflect the work done and who sourced the deal (e.g. if the partner did very little work to find the opportunity or win the deal, it should be much lower than standard margins)
- POCs can't be free. It can be for a nominal sum but not free. POCs need to be agreed with a clear success criteria upfront with a view to a full PO on success.
- Change Requests need to be strategic and part of our roadmap. If not, we should either not do them or charge the full price without discounts
- Sell Change Requests as software modules where possible. This attracts maintenance but standard consultancy doesn’t
- No work commences until we have a signed contract and PO from customers
- Don't waste SAs/pre-sales/management time until the opportunity is well qualified
- Define clear specification documents for strategic projects (e.g. Contact Centres) and agree with customers
- Commercial terms
- Maximise licensing price
- All licenses should be annual. Support and upgrades are built into the annual license price. No more perpetual licenses.
- Press release
- Case studies
- Customer agreement to do speaking events for us
Customer terms
Description | Terms |
Payment terms | 30 days |
Invoicing milestones - Recurring | Recurring revenue start date
- Hosted SaaS solutions - annual license fee kicks in on contract signature as customers
- On-prem solutions - annual license fee kicks in when software is delivered to customer’s servers (not when the software goes live or whether the customer has passed UAT). If it is only a license key, start date is based on when the license keys are delivered to the customer.
Invoicing based on recurring revenue start date. |
Invoicing milestones - Non recurring | Implementation or setup fees if order value is > 2% of annual revenue (invoiced 100% upfront if < 2%)
- 50% on purchase order or contract
- 50% on delivery of software (”Deemed Delivery”)
If we need to concede, leave the last 10% payment milestone based on this condition:
- 10% on earlier of ‘go live’ or 30 days from Deemed Delivery
Non recurring fees should include one-off implementation/setup costs, training, any post-implementation handover period, etc. Only after the solution has fully gone live should the handover go to Support. |
Payment terms | 30 days from invoice
Late payments incur Bank of England Base Rate + 2% |
Currency risk | Borne by the customer (especially if the customer is based in Emerging Markets). If absolutely necessary, we can only take currency risk in USD and EUR (outside of GBP)
Depending on the cost of the sales on a particular customer, we might ask for the payment terms to be a mix of different currencies e.g.
If our Cost of Sales is the following:
- £200
- €100
And we are aiming for a 50% gross margin, our contractual billing to the customer would be:
- £400 + €100 converted to GBP at the point of invoicing to GBP
If the above is too complicated for the customer, we would propose billing in GBP for a “worst case” FX rate say 1 GBP = 1 EUR with the caveat in the terms that if the FX rate for the GBP/EUR drops below 1 or goes above 1.3, we will revisit prices. In the above example, the customer pricing would be £600 flat. |
IPR ownership | Belongs to us |
RR Renewal | - Automatic annual renewal unless either party cancels 90 days prior to the renewal date.
- Higher maintenance costs for legacy products
- Software license falls away if maintenance falls away (if the maintenance revenue is based on a % the perpetual licensing)
- For maintenance renewal customers who don't provide a PO on time, we should notify the customer promptly and stop support when the contract runs out.
- Don’t offer sub-1 year renewals. If absolutely must, charge a premium on standard pricing and collect upfront for sub 1-year maintenance renewal deals:
—> 33% premium - 3 month maintenance
—> 17% premium - 6 month maintenance
—> 11% premium – 9 month maintenance |
RR Renewal price increases | Automatic RPI + 3% (not CPI). RPI will be measured based on UK Gov’t ONS website. Rationale:
- Wage costs increase much faster than RPI
- We have to continue to invest in our R&D |
PS day rates | £1,250+VAT per day |
Software updates/minor upgrades | - Hosted solution - Vendor can do upgrades at any time as long there is no downtime to the customer.
- On prem solution or client side applications - Vendor will give you four weeks’ notice to upgrade the solution on the Client side. If the client is not able to provide a window during within eight weeks of our notification to upgrade the solution, there may be additional charge for supporting legacy versions. |
Software major upgrades | This should be sold as a separate module rather than part of the support contract |
Support | Only via email; NO telephone support |
Assignment | Vendor should be able to assign to another party (not just an affiliate) by providing 30 days notice. |
Escrow fees | Avoid where possible.
Borne by the customer; process to drop code should be automated and simplified |
Guarantee | Categorically NO |
Damages | No indemnities or liquidated damages or even requirement to hold any insurance cover |