Truckcom Blog

One of the first important questions for a business making a purchase – “how much is it?” – is quickly followed by another for any kind of service offer – “how do I pay?”.

Going back a bit in the Fleet Tracking industry the mainstream answer to the second question was lease finance. The customer signed a lease agreement and paid in regular instalments. The Tracking company then bought and installed the hardware using cash up-front obtained from the lease company. However, these arrangements could have a very nasty sting in the tail if the supplier went under, as a few have recently (remember DBS/GlobalLive?). The customer would be saddled with a lease, but no service – because the lease company was still alive and demanding payment, but the tracking supplier had got into problems.

As a result, these days, with simple tracking systems, Pay As You Go is taking hold as a better option. You still have to pay a bit up front – but then you’re in an arrangement with a one- month notice period and if the Tracking supplier ceases trading you’ve got no ongoing liabilities. So far, so good – but what sort of payment arrangements should you expect for a Software System? Truckcom is an interesting example because, yes, we do tracking – but Truckcom offers a lot more than that, and the main thing we provide to our users is actually our software package, which runs on their office computers and their mobile devices. How should you pay for that kind of system?

Many of our competitors have an easy answer – easy for them, that is. They ask for your money up front. You buy a licence, before you start using the software – and then you pay a maintenance subscription year by year after that to make sure you get support and updates. We don’t think this is the best approach – we prefer the idea of no licence charges up front. Instead, everything is paid in the form of a monthly subscription. This way, we only make our money once users are actively using the system, and when they are using it over a long period of time – which after all, is the test of success for a system like this.

And it actually makes us more secure as well. Our costs are mainly ongoing, regular monthly costs – for things like staff salaries, server rental, etc. So if our revenue is also coming in on a regular monthly basis, we can hold everything in balance. If instead we got a big cash kick at the beginning of a new contract, we might be tempted to spend too much of that up front, and we might then run out of money later. Also, it means that we don’t absolutely need to get new customers in through the door for our business to stay alive – as long as we can keep the existing ones, we can continue to run a stable business. All quite re-assuring for a new customer to know, we feel.