How to Avoid Unfair Subscriptions in Construction Technology

By: Chad Pearson

I often think that being a former police officer and growing up in a police and military family has made me more sensitive to noticing predatorial 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 predatorial trend of ‘unfair subscriptions’ we need to protect the industry from.

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.

Consider this;

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?

It is likely that 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 predatorial 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 if fair.

2. Establish a fair cancellation policy without penalty.

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.

#buildTRUTH