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On negotiating site licenses.

ON NEGOTIATING SITE LICENSES As Peter Norton Computing's outside counsel, Michael Krieger has found himself involved in a growing number of site license negotiations. "The inquiries used to trickle in about one a month," he says. "Then last summer the calls just started pouring in."

So far, Krieger says he's concluded about 20 deals ranging in value from "a few thousand dollars" to "six figures"; another dozen or so "are in the pipeline somewhere." Typically, the Norton contracts give customers the right to duplicate software and licenses for a specified number of machines. The price ranges from 75% to 85% of list price--"very nice money when there's no cost of goods and not much support obligation."

As a result of his experience with Norton, Krieger says he's learned a fair amount about the fine points of negotiating site license contracts with corporate customers. His advice:

* Standardize the sales process. The dealer channel has shown almost no interest in selling site licenses, Krieger points out, so companies have to develop their own internal systems for handling direct sales negotiations. "If you really have to negotiate every clause with every customer, that's going to be a terrible burden," he says. To simplify the sales process, Norton now gives customers a standard site license price list ("that way, it's up to buyer to explain why he deserves a better price") and a general-purpose contract that Krieger has developed.

* Be flexible about defining the site. Krieger argues that it's important to "get away from the whole notion that a site is a piece of geography." He prefers to work out deals based on the total number of machines in a business unit (such as a department or division) or, sometimes, on the number of employees in a specific job category. In one deal, Krieger found that the customer wanted a Norton Utilities license for field technicians repairing PCs under a service contract. "The technicians were going to load the software onto the customer's equipment, make their fixes, and then take if off. The 'site' wasn't even a bunch of computers owned by our license."

* Sell convenience, not price. For most large corporations, the attraction of a site license isn't a deep discount--it's the freedom to use a product more freely throughout the organization, without having to track individual copies, monitor piracy, and support isolated users. "The ideal product for site licensing is a program like the Norton Utilities, that sooner or later will be used on every machine in the company, but isn't used by the same people every day."

* Make it easy. One guaranteed way to kill a site license deal, Krieger says, is to impose unnecessary red tape on the customer. "Most corporations are just not prepared to keep track of the serial numbers of every machine. A lot of the time they don't even know how many computers they have." Krieger's suggestion: If a site license gives the customer the right to make a limited number of copies, supply a set of disk labels. "Otherwise, just trust the customer to do the right thing."
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Title Annotation:advice from Peter Norton attorney
Date:Oct 24, 1989
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