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Consignment Software Financing - Big Cost Disguised?

Payments over time do not reduce actual cost!

Most providers of consignment software and hardware offer payment plans. 'No interest' and 'low monthly payments' are not exclusive to any one vendor, and are not reasons to chose one vendor over another, so let's get past the sales hype and see what the motivation is for vendors offering 'financing'.

Don't mind the elephant in the room.
Just focus on the small first payment!

Think of the mouse in the illustration as the (misleading) advertised 'starting price', and the elephant as the total cost of software/hardware costing thousands of dollars over time:

  • "Lowest Startup Costs"       
  • "$85 to Get Started"           
  • "Starting at $99 a Month"

What Are You Getting Locked Into?

The motivation for offering 'financing' (or monthly payments) is to get us locked into their software. Locked? Yes! Once we've paid $1,000+ for software and another bundle for hardware, once we've spent a significant amount of time learning how to use the software, we are extremely unlikely to start the whole process over again with another program.

Don't be fooled by sales ploys and slogans like "No interest!", or "Low payment to start". Focus you attention on:

  1. What is the total first-year cost?
    • The 3 programs represented above (and several others) cost well over $1,000 in the first year alone to "get started".
  2. What is the total cost for the time that I expect to be in business? Extremely important!
    • If you'd like to remain in business for at least 10 years, for those "only $99 to get started offerings, multiply 10 x 12 months x $99 = $11,880!
    • For financing plans, total the cost of payments plus other add-on costs like support, hardware markups, shipping, service not included in the 'support plan' like training!
  3. Do I own the software and can I resell it later?
    • Very few consignment-software vendors grant ownership of the copy of the program. In some cases you might be told that you would be able to resell the software sometime down the road, for whatever reason, but there are 'catches' so you'll need to know to ask for details.
  4. Who's behind the software?
    • Who wrote the program? One person? Is 'he' going to be around in years to come to fix bugs and keep the software up to date with changes in technology?

Another way of masking over-pricing of software and hardware is to offer a lease. Bottom line, 'lease', 'financing' and 'rental' are all part and parcel of the same objective of getting us to look away from total cost and focus on the first payment only.

The Programmer's Dream: "I'll write a software program, sell it online, get 100 people to pay me $99 per month every month forever, and retire early on their shop earnings!!"

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