Huge Discounts On Enterprise VMS SoftwareBy: John Honovich, Published on Dec 10, 2013
A member asked for advice on VMS software for 100 stores with 90 cameras each. His main concern is price, and because of that, he is rejecting enterprise VMS options.
This is a mistake.
Large purchasers of VMS software should and routinely do get huge discounts on VMS software. Let’s look at this example.
90 cameras each at 100 stores is a total of 9,000 cameras. Assume a $300 MSRP for enterprise VMS software and the total cost is $2.7 million – a significant expense.
VMS Company Incentives
However, the VMS developers have major incentives to give huge discounts.
First, 1000+ camera projects are very big deals, financially for any VMS developer. Consider that ‘giant’ VMS companies like Genetec and Milestone do $50 - $75 million in annual revenue. The potential for a few million dollar purchase in a single deal is very significant.
Secondly, competition is strong. There are lots of companies offering VMS software and NVR appliances, all around the world. There’s little lock-in (or network effect) that forces new customers to have to use a specific VMS. VMS developers know this.
Third, the market has become more mature and the growth rates have slowed as IP cameras have become more mainstream.
What To Do
While you may be initially quoted MSRP, any larger purchase should not give up. If the quote is from the integrator, push the integrator to go back to the VMS developer or simply talk to the VMS company themselves. Remember, really big deals can make or break numbers for sales people.
In this example, with 9000 cameras, I would expect 66%+ discounts, with the final negotiated per camera price under $100 per channel (instead of the MSRP of ~$300). That’s a discount / ‘savings’ of ~$2 million.
The other important thing to remember is that large projects have special needs for scalability, management and integration. Getting a heavy discount, even if you still need to pay a modest premium over lower end software, is likely worth it.
One critical motivation enterprise VMS companies have in getting new accounts is the potential for annual fees / software ‘maintenance’ licensing. They may be willing to drop price even further for the licenses, but they may try to make this up on the back end when you want to upgrade software.
So push hard and directly for a big discount but also negotiate / anticipate future upgrade costs right at the beginning.
Different From Cameras
Large scale purchasers of cameras can also obtain discounts, but these are typically far more modest than what enterprise VMS companies will offer. This is simply because cameras have card costs to the manufacturers and typically include multi-year warranties that must be covered. Also, most cameras are typically available online at already significant discounts off of MSRP.