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IS IT ILLEGAL TO WAIVE MAINTENANCE FEE??

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dmiller327

New member
We have been told by both ptc and ug that they can not waive first years maintenance on new licenses. I have received this information second hand so I do not know the details but the jist of it is that doing so would violate some federal law. Maybe the Sarsbane-Oxley Act.


We have no details as to exactly why this is the case. I have tried to find answers on the web but have come up empty handed. I would like to get to the bottom of this statement to see if its has any merit and if so why.


Has anyone else had this experience or knows the details behind such a position?


Thanks
 
Well if they say it's illegal... it must be ;)

Here is what I would do if I were you.

If they want $1500 mantenance for a $5000 package, tell them you want a
discount on the purchse price to cover it. My experience leads me
to believe that how ptc quotes and sells the software determines which
internal group gets funding.

The maintenance group are real sticklers and usually don't
cooperate. The "New sales" group will most of the time do
anything for a sale. In the past I always purchased new seats
with a 20% discount which covers most of the first years
maintenance. In the end my budget is met and thier accountants
are happy.



Does anyone else have any input?
 
Have not bought new licenses for many years but in the past the purchase price always included 1 year maintenance.
 
I don't know about it being a federal law but when I was with a sales consultantselling Pro/E the salesman would always come down on the price of the software by (sometimes) thousands but would never budge on the maintenance.


They always told me they couldn't do anything with maintenance because it paid for the educational part of the company.
 
<DIV>It certainly is not illegal, in that there is no US law requiring such.</DIV>
<DIV>On a pratcical note, PTC can sell their software anyway they want.</DIV>
<DIV>If they refuse to sell it without maintenance, that is their right.</DIV>
<DIV>It is also your right to not purchase anything.</DIV>
<DIV></DIV>
<DIV>This is the first time I've ever heard thatPTC requires forced maintenance.</DIV>
<DIV>I've also never heard of maintenance being included with the purchase price.</DIV>
<DIV></DIV>
 
If you were new to Pro/E and purchasing a new seat you would be an
absolute mug to not get maintenance for the first year while you were
getting to grips with it. Also you would not be able to get any
software updates during that period which again would be baaaaaad
decision.



Once you get more familiar with it the need for help greatly reduces
but new versions over the years had added incredibly to the capability
if you can overlook the occasional major hiccups PTC have had.



I know in some cases that companies have only paid the first year's
maintenance. Then in three or four years time, rather than pay back
maintenance, they simply purchased new "equivalent" licenses with more
functionality for less than the original purchase.





DB
 
If memory servers, everytime I've purchased Pro/E in the past, it came with 90 days worth of maintenance included (not a full year)... but the clock starts ticking on your purchase date, not when you install it.
Edited by: Brian_Adkins
 
You are correct that 90 days used to be included for Free.The maintenance period would begin at the end of this waiting period, but that changed about6 years ago.


There are 2 different things to look at - 1. new maintenance with new software purchase and 2. maintenance renewal on existing software. Both these "buckets" are important for analysts who follow PTC stock.


1. I know of no requirement (definitely no law) to get maintenance with your new software purchase. (Granted PTC has had Time Limited Offers in the past that required maintenance purchase, but they had huge discounts on the entire package.) Since you don't get "90 days free" anymore, your maintenance "clock" starts when the new software order is delivered. If you didn't buy maintenance and decide to buyit at a later date, you will have to pay for some or all of the back maintenance time period (there are rules they have to follow because of GAAP and "throw your CFO in jail" laws).


dmiller sounds likethey areinvolved in a new software purchase. If PTC gives you the maintenance for "free", then they actually have to take money from the software bucket and put it into the maintenance bucket to stay with GAAP. Getting new software maintenance for free is really just a bigger software discount.I would suggest focusing on the total package price and not necessarily on "maintenance for free". Also try to add value bynegotiating terms, web based training options, 0% financing charges...etc.


2. In most cases, maintenance renewal on existing software no longer requires voodoo.:) There are required discounts that tie to the dollar value of your maintenance quote, and if you choose a 1,2, or 3 year term. Make sure your line item quote isaccurate and request quotes for multi-year terms as well. Where some neogotiating still exists is in the terms you can request- net 30 & quarterly...etc.


GAAP and SOX laws have pulled the reins in on how maintenance programs operate for all software companies. In the "old" days many companies would recognize 100% of the revenue on day 1. This was not very good GAAP, but they could get away with it because they were consistant and had convinced themselves this was appropriate. Enron...etc changed all this for everyone. This is good because now Wallstreet gets more accurate numbers as far as what really makes uprenewal maintenance and whatreally makes upnew software revenue. They want to see good numbers in both buckets - ie people are continuing to renew and people are continuing to buy new stuff.


Regards, Rick
 
We have been using ProE for 8 or 9 years. The last4 or 5 years we have paid no maintenance and have stayed with version 2001. We have functioned fine w/o maintenance but have reached the point where we need to decide whether tobuy new seats of Pro E Wildfire or go with a different CAD system such as UG.


It seems that purchasing CAD seats w/o maintenance or with maintenance at a discount is not possible. Some vague reference to Federal law that now prohibits discounts on maintenance is sited.


As has been mentioned in this thread, both software companies are willing to discount the price on the application but not the maintenance. All I am looking for is aclearer explanation how "federal law" impacts discounting of of software maintenance.


Thanks for the input of all those who have responded.
 
You can find some various stuff though google...etc. Most of this deals with policy and GAAP.Basically maintenance is considered more of a "service" thana "product". This service is delivered over time, which is where revenue recognition comes into play. Software companiesneed to be consistantwith their policy so they don't violatelaws. Some of these laws deal withrevenue recognition which then leads to you to SOX (throw your CFO in jail laws). With this said, I don't know of anythingstoppinga software companyfrom giving you a 100% discount for theNEW software andNEW maintenance purchase...except for trying to make a profit :).


Since a 100% discount is unlikely, PTC will have to apply a portion of any NEW purchase price towards the NEW maintenance "bucket" and this percentage needs to be consistant. If you are renewing maintenance, then the rulesget trickybecause there's no NEWrevenue to juggle and apply towards discounts.


I only wish I had better info, but my dad is the accountant (and I usually fall asleep when he's explaing these things to me).


http://www.investopedia.com/terms/g/gaap.asp


[url]http://groups.haas.berkeley.edu/accounting/workshops/spring2 003/Zhang,%20Yuan%20paper.pdf[/url]
 
I just purchases wildfire 3.0 foundation xe w/out maintenance. They really wanted to sell it to me, but I told them I couldn't afford it at this point in time. I also got a nice discount on the software too.
 
Here's what I know about maintenance.


Let's say you don't pay maintenance for three years, and then you decide to upgrade to a new version.


You MUST pay for maintenance to receive upgrades. PTC will not only make you pay for your current maintenance, but they will also make you pay for all of your back maintenance - in other words, three years worth of maintenance payments.


I tried this once with a company that I worked for. I wanted to pay for maintenance for 1 year, and then if I didn't need upgrades, I would drop maintenance. Well, it was a good idea, but PTC showed me the path to "righteousness"...lol
 
It doesn't pay to not stay on maintenance. The back charges will kill you after about 3 years. In some cases, it may be cheaper to throw away the old licenses and just buy new ones.
 
I know of some companies that have just switched to a
different CAD software with lesser maintenance fees
(SolidWorks) If you used Wildfire 2.0 skipped 3.0 and 4.0 you
didn't use/need those licenses and so they should not
require maintenance. If a new user wants to purchase the
software, should they have to pay the cost that PTC put
into creating the software since their start?

NO

It's understandable to charge maintenance to be able to
download updates. But if you are perfectly happy with the
software at it's present state you should be allowed to
keep that version and then pay maintenance to cover a
year of updates. SolidWorks and other companies
3DSystems Alibre charge late fee penalties for updates.

PTC started requiring maintenance to be paid so they
could not loose money on updates. But if they are going
to charge per license per year that will drive many med-
small companies away Large Companies and Military
Design companies with huge file histories are reluctant to
change and the majority as I believe of the PTC customer
base is large companies like Caterpillar and otherS which
would have a very hard time switching softwares.
SolidWorks is more small-Medium size business minded and
do well in that market.

MichaelI know of some companies that have just switched
to a different CAD software with lesser maintenance fees
(SolidWorks) If you used Wildfire 2.0 skipped 3.0 and 4.0 you
didn't use/need those licenses and so they should not
require maintenance. If a new user wants to purchase the
software, should they have to pay the cost that PTC put
into creating the software since their start?

NO!

It's understandable to charge maintenance to be able to
download updates. But if you are perfectly happy with the
software at it's present state you should be allowed to
keep that version and then pay maintenance to cover a
year of updates. SolidWorks and other companies
3DSystems Alibre charge late fee penalties for updates.

PTC started requiring maintenance to be paid so they
could not loose money on updates. But if they are going
to charge per license per year that will drive many med-
small companies away Large Companies and Military
Design companies with huge file histories are reluctant to
change and the majority as I believe of the PTC customer
base is large companies like Caterpillar and otherS which
would have a very hard time switching softwares.
SolidWorks is more small-Medium size business minded and
do well in that market.

Most companies do as Looslib mentioned above wait till
buying it new is cheaper then the upgrade cost and Jump
back in the ring.

"Adriannn!" from - any Rocky movie

Michael
 
There are some CAD packages that simply will stop
functioning if you quit paying maintenance but Pro/E / Creo
isn't one. If you like the version you are on, you can
stop paying maintenance and it will keep working.

If you're off maintenance and you need / want to get back
on PTC will require you to pay back maintenance for 1 year.
You don't have to pay back to when you stopped, only 12
months.
Edited by: dgs
 
Now that makes a little more sense. It's easier to license solidworks
now because they don't force maintenance fees for first year but after
that yoyu need to pay to continue to update to Service Packs. They
typically offer a deal where they give you the Premium Edition for the
price of the Standard version, the only catch being you need to pay the
Premium renewal cost when it becomes time to renew which is an amazing
deal and you don't have the hassle of dealing with PTC Sales Goons.

Alibre
Design which I bought the expert edition of for $1,500 years back will
expirate. Forcibly expire your license. They do however have deals where
if you post a Tips and Tricks presentation which gets posted by them
they allow you to get back on maintenance either for free or without the
penalty cost. I stopped using their software although the 2012 version
is a Huge Improvement because Spaceball, Pilot or nany version motion
controllers are unsupported. There is a new CAD system in development
called FreeCAD which claims to have a new smart kernal that performs
better with large sketches than ProE can.




View attachment 5794
 
I have let some seat expire. Not granted I did maintain other seats on maintenance. The most I have ever paid for back maintenance is 180 days to reinstate the maintenance and upgrade.


Now, you may not be able to negotiate that if you don't maintain something for maintenance. Afterall, it is about profitiablility and you don't just get something for nothing.


That being said, I think maintenance, well negotiated, is well worth the price. You will inevitably run into issues. Every version has issues and it's just a matter of when you will run across it in your situation. It is also great for asking how to do things as well as access to the knowledgebase.


You simply have to look at it as part of the cost of the software. Maintenance in fact can be negotiated but it is definitely not as easy as it was 10-15 years ago. The better you can negotiate the deal, the better the return, obiously.
 
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