Stopping the Predatory Trend of Unfair Subscriptions in Construction Technology
By Chad Pearson, Plexxis
As a former police officer I tend to be more sensitive to predatory behavior. An infallible truth you learn in police work is that wherever you find opportunity, you find honest people serving others, and dishonest people serving themselves (at the expense of others).
So that said, there is immense opportunity in construction technology and I’m noticing that underneath all the great people serving this opportunity, there is a dark predatory trend of ‘unfair subscriptions’. Thankfully, they are simple to see and stop.
Unfair subscriptions have an imbalance of rights and obligations that can include a lack of transparency of total cost to onboard, misrepresentation of products and services and/or no reasonable options for cancellation without penalty.
Subscriptions were designed for instant value products such as magazines, Netflix or amazon, where subscribers enjoy value as soon as they subscribe. Subscriptions were not meant for complex software that requires labor intensive set up, has no guarantee of adoption and does not provide instant value.
People would never pay subscription fees to magazines, Netflix or amazon if the content, entertainment and distribution centers we’re not already launched and ready to deliver value upon subscription. In construction technology however, subscriptions fees ARE being charged for complex software BEFORE it is set up, configured or performing as sold.
How did unfair subscriptions become a trend?
Opportunistic investors behind the ConTech M&A explosion compelled some technology providers to apply simple subscription models to complex products in order to create predictable financial spreadsheets in an unpredictable industry.
This predatory trend hurts the industry because it shifts 100% of the risk of adoption onto contractors as investors collect and project revenue with certainty, even if their products never deliver the value that it was intended to deliver.
Like the scales of justice, balance needs to be restored through fair terms and obligations.
Include the following 3 terms in your subscription agreement to help restore fairness;
1. Define what ‘go-live’ and defer subscription fees until the software is live. An example of how to define go-live for construction accounting software would be:
- AP payments are paid through software
- Payroll runs (and/or) Payroll service export is completed through software
- Client is posting to the GL
- Complete entry of historical AIA/progress billings details to enable accurate retention billing
If you are considering other technology, I recommend collaborating with your prospective technology partner to define go-live in a way that is fair.
2. Establish a fair cancellation policy without penalty.
At our company, Plexxis Software, we allow customers to cancel at any time. We want to keep customers through our service, not because they are contractually obligated to us. Not all companies will go that far though. A fair compromise is 'at least' documenting promises made and key milestones in order to deliver what was sold in the sales process so you can establish a cancellation policy around deliverables.
3. Ensure technology partner provide detailed plans for adoption, including a complete list of tasks, commitments, milestones, skills and hours required. (NOTE that tasks, commitments, milestones etc. apply to both technology partner AND client)
Being aware of positive trends enables you to support them. Being aware of predatorial trends enables you to defeat them. Doing both enables you to help the industry evolve faster, more effectively and in the greatest way possible.
About the Author
Chad Pearson brings a unique perspective to AEC mixing 13 years in ConTech with careers in law enforcement and over 30 years competing in combat arts and coaching top professional fighters.
At Plexxis software, Chad is the Dir. Biz Dev and Dealer of Truth & Happiness and help subcontractors unite their teams with technology. Chad also coaches Plexxis teammates on high performance during chaos and critical stress.
Chad's formal training includes a Bachelor of Arts, Crisis Resolution, Police Defensive Tactics, Use of Force, CBRN Response (Chemical, Biological, Radiological & Nuclear), emergency response, criminal investigation and outlaw motorcycle gang liaison work.