atcomsystems.ca/forum Forums VOIP Phones & IP PBX VoIP & Cloud Phones, Hosted PBX, General IP Phones Software Licensing Fees and VOIP Systems

OK, I'll be honest. Someone awoke a sleeping bear with me regarding software licensing fees for VOIP systems. Sorry for another drag-on post.

A former employee at a former customer's site called today seeking a price for a phone system at her new company. She shared the horror stories about how badly the VOIP system's cutover went from day one. She did this "through the grapevine". They never received training as part of the deal, since their IT guy admitted that he really didn't know how to do this. He was just trying to save the company money on hardware and that they should be able to receive training assistance on-line. He got into his 1994 Isuzu with his $5,000.00 laptop and left the company within two months after "the sale".

I might also add that we were never offered the opportunity to bid on a new system, despite the fact that the system we had sold them was only three years old. IT man says "bad" and they jumped. We were the bad guys, since they didn't know how to program speed dials (24/7 phone support was there, but never consulted).

He was right, the manufacturer offered on-line training for end users at the rate of $450.00. She said that she absolutely snapped and eventually quit when she received an invoice from the new system's vendor to renew their software license. They are a tiny company, maybe 20 phones maximum. Their renewal fees were nearly $1,800.00 to keep using the system that they had purchased less than a year ago. This was assuming that they took advantage of the 25% discount by purchasing three months prior to their warranty expiration. If they waited, it would be almost $2,400.00.

The phones themselves were warranted for five years, "just like everyone else", but the license that they purchased for the system was for only one.

My company only sells TDM, or at least TDM/hybrid systems. The manufacturer offers a five-year warranty on hardware, which we extend to the customer. We only warrant the labor portion for one year. Most failures under warranty result in our having to ship them a replacement phone every now and then or some remote diagnostics. No big deal.

Why shouldn't we be able to force these customers into purchasing service contracts in order to receive the manufacturer's five-year warranty? As it sits now, our service contracts are not mandatory and customers are free to pay as they go should they desire to do so.

Maybe we should start telling customers who purchase new systems that they will be required to purchase service contracts for years 2-5 if they want to receive the manufacturer's warranty. I don't like it, and won't feel comfortable in enforcing it, but it seems to becoming the way of the times. It would still cost the customer less than renewal fees, not to mention the fact that we wouldn't have the right to cut their system off like IP-based systems can legally do.

They don't realize that they are buying a licensed computer program and some plastic things that resemble telephones. The software producer holds the keys to their system and they call the shots.

I am lost here. IT guys are stealing customers away from us left and right by forgetting to mention the license renewal fees in their sales pitch. The customers, as usual, are too busy looking at the bottom line price tag on the proposal to stop and read the fine print. End result: We lose a customer that won't ever come back out of embarrassment for another system purchase. It's only the "grapevine" contacts who will even share such information.

Hey Ed, it will take a while to filter down to the customer, to what they are doing. if you add on more money and tell them it just looks worse for you on paper.
Eircom here sell systems and in small print on back of their purchase contract, they have a 3 year maintenance contract at x per year. One customer saw this before signing and kicked them out.
People don't know anything about systems and are afraid to ask the one that looked after them for years, because they think its is the way to go and you will try to talk them out of it for your gain and not in their interest.
There is a lot of hidden costs with VOIP like POE switches...
What can we do but ride it out, it will get around.

I might also add that we were never offered the opportunity to bid on a new system, despite the fact that the system we had sold them was only three years old. IT man says "bad" and they jumped.

I'm glad you agree with me. When I said the same thing a few days ago some here said baloney, it's "because of my attitude". No, we are losing business because customers won't even consider us. VoIP is an IT product so that's where they go.

Sure, we can push VoIP like the CGs do but I honestly can't think of one customer we have that would benefit from it. And for sure, being the honest person I am, I would have to mention recurring licensing fees up front. Then we would never make a sale.

-Hal

Interesting Ed.
At the other end of the fence the license issue is taking another form.
I get calls from businesses that have a system they want to sell and they have the license...but I have to tell them I'm not interested..and it's because of license..they immediately tell me they have the licenses...I then explain that it's only good if I sell the whole system as one to one person..In other words I can't sell the phones unless the systems goes with it or there's a license problem...So there's not much of a market for these high end systems when they come out of service.
The poor customers...getting it at both ends.

Ask this awhile ago and no one responded. I would like to know what systems are requiring annual license renewals in order for them to operate year to year. Again please don't mention any hosted systems.

I saw that. I would like to see a list also and include the cost too. Maybe we could put it up somewhere in the public areas for all to see.

-Hal

VoIP is here and will grow not shrink. Most of us here sell hybrid systems TDM/VoIP that give customers flexibility they want or need.
On the other hand we have company's like the one Ed is talking about above who are sticking it to all who get suckered in.
It's our sale staffs job to convince their client everything Ed stated above. Here In St.Louis we have some pretty good examples, one is a school district, Cisco just about gave the equipment away, the next year they busted the districts communications budget when they had to renew and purchase new licenses.

cisco fees

Cisco,Vertical, Altigen, Zultys, etc etc etc.

Just Google the IP manufacturers name plus license fees and enjoy.

Update to link above. Apparently Cisco now has graduated convoluted 1-6 seat licenses for different handsets appliances.

more cisco license info

After reading that, I still don't understand the fees. Good grief!