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Making the Switch: Understanding Your Software License Agreement

As with all things in life, change sometimes become a necessary component to ensure the continued success of your fitness business.

A club management software (CMS) investment isn’t any different.

Somewhere down the line, you might be faced with the decision to make a switch in your software investment in order to allow your business to reach its full potential.

In a perfect world, change would require nothing other than a click of a button or a quick snap of your fingers. We hate to break it to you, but at least as of the year 2020, that isn’t our reality!

As the first entry into our “Making the Switch” blog series, we’re leading off with, perhaps, THE most important aspect in your switch preparation: Your Software License Agreement.

The language in your software license agreement can quickly become murky or confusing at best, and fees you weren’t even aware of can begin to pile up in the blink of an eye!

When considering a switch, you need to understand what your current software license agreement means for your business as you initiate your transition.

Here are three things you need to consider in your software license agreement as you prepare to make a software switch:

1. Know the Terms of Your Contract

Every software license agreement vary, but sometimes, your software license agreement and payment agreements are split into two, separate agreements for a variety of reasons

As you prepare to switch, make a note of your contract end dates and confirm whether they’re aligned or offset. This will help you map out the best strategy to move forward with while helping you minimize potential fees that may come about (more on this below).

2. Extreme, Strong-Arm Fees To Force You to Stay

The standard for securing what is called your “exit file” (which contains your members’ information, credit card/billing data, etc) is that there is a one-time, standardized Professional Services fee that really just covers the ‘people cost’ for the time it’ll take the team to adequately fetch and deliver YOUR data – allowing for a successful CMS switch to your new vendor of choice.

In an effort to essentially force you to stay with their product, some vendors not only charge an exorbitant amount for your data, but will actually charge you a fee for EACH members’ credit card number and checking/savings account number(s).

This fee should be in the hundreds NOT thousands, and ,we’ll reiterate again, should be a ONE-TIME, flat fee without additional fees per credit card or ACH data on top of it. This should be the standard.

At times, this ends up in a potential exit cost that can climb into the tens of thousands of dollars, so you’ll want to be mindful of this.

If you’re locked into that type of software license agreement already, you’ll want to consult with your legal team to explore your legal options, while budgeting as best you can for this potential outcome.

3. High Percentage Increases in Fees vs Consumer Price Index

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.  (U.S. Bureau of Labor Statistics)

Basically, it’s a benchmark to how much should be paying for a service over time. Normal CPI standards for cost increases in the software space are about 5% to 10% annually.

Some CMS vendors have been known to hit your business with percentage cost increases that range from 100% to 300% when the company is acquired or they’re introducing a new flagship product.

When you’re in the market to shop software, be proactive and lookout for these 3 things within your software agreement to ensure a fair and flexible CMS partnership.

In an ever-evolving industry, the best software investment is the one that brings with it a partner you can count on.

We’d love to earn your business if you’re in the market.