The great software bargain hunt. (where to find discounted software)
by Phillip Morgan

By Phillip Morgan

A few months ago, I made a list of my computer hardware and software for my homeowner's policy and was surprised to see that the value of my software exceeded that of my hardware, cables, accessories, blank floppy disks, disk boxes, labels, desk, file cabinet, chair, and several other office furnishings combined. In short, a little software can soak up a lot of hard cash.

It only makes sense that we invest a lot of money in software, since without it, the best computer isn't worth much. But there's no sense in paying more than you have to. I've adopted the motto that a full-priced program is an overpriced program, and I rarely pay full price for one.

There are many ways to avoid paying full price, and I've listed some of the best ones here. You may not be able to take advantage of all of them--competitive upgrades and educational discounts have limited applicability. But you'll probably find at least one way you could have saved money on the last package you bought at full price. And because most software publishers offer financial incentives for current users to follow the upgrade path, you're bound to save money on the next software package you buy.

Mail Order

Retail salespeople are fond of mail-order horror stories and will gladly tell them to you. They'll conclude their stories with a warning that mail order is risky at best and the money you might save won't be worth the loss of convenience and customer service you expect and get from stores. But if mail order ever deserved a poor reputation for dishonesty or lack of service, it certainly doesn't anymore. Competition among mail-order companies has forced them to become more service oriented, particularly in the way of product training for their technical support personnel and salespeople. In the process, they've become even more competitive with computer and software stores than ever before.

At the same time that mail order has become more service oriented, retail stores have become less so. We expect software salespeople to answer all our questions and sell us exactly the applications we need. But retail stores often can't pay high enough wages to keep a technically proficient staff, capable of offering more than the most basic advice or technical support. You can find knowledgeable salespeople in stores--many are computer enthusiasts who learn programs on their own initiative--but the facts of retail sales are low wages, high turnover, and little formal product training.

Mail-order companies have lower overhead than stores and have national, if not international, access to consumers. Large mail-order companies can afford to pay their salespeople higher wages and commissions and to conduct more product training than stores can. Customer service and selling philosophies vary, but with many mail-order companies you can expect the salesperson you call to be able to sell you a product rather than simply take your address and credit card number. "They're not just order takers," says Valerie Paxton, vice president of marketing for a mail-order company based in Arizona. During more than 100 hours of initial training, new salespeople at Paxton's company learn a variety of the applications they'll sell.

Whether they're in stores or on the phone, salespeople can't claim to be familiar with every application available. At best, they can speak intelligently about most types of applications-- word processors, spreadsheets, utilities, games, databases-- and have a specialty or two in which they can discuss competitive products in detail. It's true that a mail-order salesperson can't show a program to you, but the same is often true in stores. A limited number of programs are loaded onto a store's demo computers. Even then, salespeople may or may not be able to demonstrate those programs to you.

Competition and consumer demands have prompted some mail-order companies to offer more than the lowest price. More and more companies are offering toll-free customer service and technical support lines. One New Hampshire-based company offers $5 overnight shipping on any package sent anywhere in the continental United States. That may not be quite as quick as driving to a local store, but if you can save $30 to $40 or more, a day seems like a reasonable wait.

To figure how much money you'll save ordering by mail, don't forget to take into account sales tax and shipping and handling charges. A mail-order company is required to collect sales tax only in states where it has a physical presence--such as a warehouse or business office. However, your state may require you to pay sales tax on your mail-order purchases. Check with your state's taxing authority for details.

Shipping and handling charges vary widely from company to company, so it's important for you to ask the salesperson exactly how much you'll be charged, who the courier will be, and when you can expect the package. Some companies have set handling charges, which they add to the courier's charge; others set a standard charge for all packages--generally from $5 to $10--to cover both shipping and handling. You should never have to spend more than $10 for normal shipping of a software package within the continental United States.

Mail-order returns can be a bit more troublesome than taking software back to a store. It used to be that, no matter where you bought a program, once you broke the seal on the disk pack, you owned that program--no refunds. Large chain stores have since loosened their return policies, and several now offer one-week or even 30-day satisfaction guarantees. For the most part, mail-order companies are still reluctant to take back opened, nondefective software; however, they too have become more flexible, depending on individual circumstances and manufacturers' policies. More and more manufacturers are offering satisfaction guarantees, which at least some mail-order companies honor.

Several companies have reduced the hassle and delay of returns by offering toll-free customer service, reimbursement of return postage for defective items, and free shipment of replacements. With preauthorized returns, some companies have reduced the delay of exchanging defective products to a day or two by shipping your replacement before they receive your return. Defective software is rare, though, so it's likely you'll never have to return a defective program.

If you've never used a mail-order company before, don't just order from the first ad you see. Look at the ads of several companies to compare policies and prices. You can expect a substantial price difference between mail-order and store prices, but beware of mail-order companies with significantly lower prices than the rest. You can generally judge a company by the size of its ad; the bigger the ad, the bigger the company, and the bigger the company, the better it can afford good customer service.

If you don't know exactly what you want, at least try to know enough to be able to ask specific questions about the type of software for which you're looking. You're asking for trouble if you tell a salesperson, "I just bought a computer. What software do I need?"

Competitive Upgrades and Introductory Offers

When software companies release new applications or new versions of old applications, they naturally wish to attract new users--preferably at the expense of their competition. A company often talks about increasing its market share, which is the percentage of total sales it achieves in a given application market. Microsoft, Borland, and Lotus (among others) favor competitive upgrades and introductory offers for increasing their market shares and putting users on the upgrade path--that 6- to 18-month cycle of version upgrades. What could be more valuable to a company than knowing that every year or so a significant portion of former purchasers will go out and buy a new version of its product?

These discounts are also used to reposition an existing product-- usually in the form of a new version--to go after the market leader. When Adobe Systems introduced Illustrator for Windows, it offered a competitive upgrade to challenge CorelDRAW!, the leading Windows draw program. More recently, Microsoft released Money with a suggested retail price (SRP) of $69.95 and a street price of $15.00. The target was Intuit's phenomenally successful Quicken. Computer Associates then topped Microsoft by offering the first 1 million copies of Kiplinger's CA-Simply Money for only a shipping and handling charge, which it followed up last fall with a free offering of CA-Simply Tax through April of this year. (It's perhaps the ultimate introductory offer, unless, of course, someone starts bundling free software with cash.)

Competitive upgrades are available to you only if you're using a competitor's product, while you can always take advantage of an introductory offer. To be eligible for a competitive upgrade, you must usually provide a page out of the competing product's manual or its original number 1 program disk. Some companies will accept copies of either of these or a copy of the completed registration card. A few companies ask only that you sign an affidavit of eligibility.

John Brandon, national sales manager for Adobe, advises any consumer contemplating a specially priced offer to consider two questions about the application: (1) Does it do what it promises? and (2) Does it offer appropriate features? These questions are particularly pertinent if you're considering a competitive upgrade. Although the new package may offer features you don't currently have, they may not be features you'll need or use. If you have no complaints about your existing software, you probably don't need to change products. If you're looking for new features, the odds are that your current program will be upgraded soon. Upgrading to a new version of your old software will save you the time of learning an entirely new program and may even cost less than the competitive offer.

However, competitive upgrades are less risky than introductory offers in some ways. They generally coincide with major upgrades, so you can be reasonably sure you won't be tempted by another upgrade in a few months. Since applications are sold at a regular price at the same time that they carry the competitive offer, you know you're getting a genuine discount. With an introductory offer you can be certain of neither. You don't know if you're really getting a $500 program for $99 or a $99 program with an inflated $500 SRP. Will the program ever sell for more than the introductory price? Such offers are often extended, and some never have expiration dates to begin with. Companies might be preparing upgrades even before they introduce a new program. Computer Associates planned its upgrade of CA-Simply Money to hit the shelves six months after the release of its free introductory packages. And software industry insiders joked that another manufacturer's $99 introductory package was so buggy that users would have to buy the upgrade just to run the program.

If you're looking for a word processor, spreadsheet, database, or financial planning program, it's a good idea to check for these money-saving offers. You should keep in mind, however, that "discounts" are marketing schemes designed to get you to spend money, not save it. You're saving money only if you planned to buy the program in the first place or would be willing to pay full price without the offer.

Buying Used Software

One generally overlooked way to get inexpensive software is to buy it used. You may not know it, but many software companies will allow a registered user to transfer his or her license to you. The process is fairly simple and usually free. The registered user simply writes a brief letter to the company stating that he or she has given you the program and has not retained any copies installed or on floppies. The company then verifies the information with you and records you as the new licensee. You're entitled to the same technical support and upgrade offers as if you'd purchased the program new.

The key to license transfers is that a copy of a program can be licensed to only one person or business at a time. If, for example, you buy a used computer with software installed, you should contact the software companies and try to have the licenses transferred. If the license numbers are listed within the programs, the companies can trace them, contact the registered users, and ask for their consent to transfer the licenses. If the licenses can't be transferred or you make no attempt to do so, you're obliged by law to erase them from your hard drive or floppies. Using them would constitute piracy.

Computer games are rarely registered because when game manufacturers introduce new versions, they seldom offer registered users special upgrade prices. As long as you have the original disks and documentation, you generally don't have to worry about registration or license transfer. People get tired of games and give them to friends or sell them. As long as copies aren't made, there's generally no problem.

As the popularity of Windows increases, many people are replacing their DOS applications. If you like working in DOS, now is a good time to buy used DOS applications and have the licenses transferred. Some of the best sources for these programs are friends or acquaintances who buy competitive upgrades to go from DOS to Windows. Version upgrades usually forbid selling or giving away the old version, but competitive upgrades typically have no such restriction. Make certain your friends read their upgrade license agreements to be sure.

However and from whomever you buy used software, you should always try to get the original manuals. But if you buy an application from someone who bought it preinstalled on a new computer, you may not be able to get the original manual or disks. Although manufacturers are reluctant to distribute manuals separately, they'll usually sell them to you once you transfer the application's license.

New Copies of Old Versions

Inventory control isn't too much of a problem for software companies. They can usually produce packages quickly and inexpensively and have production runs only when necessary. Releases of new versions are carefully planned so that companies, distributors, and resellers aren't loaded down with old versions that have to be cleared out at reduced prices.

Companies will sometimes carry old versions for customers with special needs. WordPerfect 4.2 is still available from the company even though version 6.0 was released about a year ago. But most old versions aren't reduced in price significantly, if at all. WordPerfect still sells versions 4.2, 5.0, and 5.1 at full retail. Aldus sells PageMaker 4.0 and 4.2 at full retail. MECA keeps an inventory of tax preparation packages covering the past two or three years, which it sells at full price to people who need to refigure taxes from previous years. One industry spokesman told me he would rather take a loss on unsold packages of old versions than discount them and take away from sales of the new version.

Occasionally, though, a company will choose to actively market a discounted old version. When Corel introduced CorelDRAW! 4.0, it chose to reposition CoreIDRAW! 3.0 to capture a new segment of the market. For those who were scared off by CorelDRAW! 3.0's $595 SRP, the program now sells for about $140 (street price), while version 4.0 costs around $390. What's more, the upgrade to version 4.0 is around $225, making version 4.0 less expensive for those who buy version 3.0 first. The hassle and delay of upgrading may not be worth the savings if you want 4.0 to begin with, but if you get 3.0 first and it does everything you want to do, you've saved about $250. If you need to upgrade, you won't lose any money--instead, you will save a little.

Some types of programs are more likely than others to be discounted for clearance when they become dated. Most software stores have a bargain bin full of games and miscellaneous old programs. The shelf life of games is very short--usually three months or less--so if you're patient, you might wait for a game to lose favor among buyers and then get it for a third of its original price.

Tax packages are virtually guaranteed to be discounted on April 16. New versions are released each year, and old versions aren't upgradable. This may not help the majority of computerized taxpayers, but if you're eligible for a deadline extension, you can save $20 or $30 by waiting. Mark Bullinger, product manager for MECA's Andrew Tobias' TaxCut, says some people like to use the previous year's program to plan for the current year's taxes, even though tax codes and rates will change. Bullinger says his product usually sells for around $40 but is often reduced to between $10 and $20 after April 15. As mentioned above, this discount doesn't come from MECA, which retains full price on older software, but from merchants and distributors who want to get the program off the shelf.

Educational Discounts

Some of the best discounts on personal productivity and desktop publishing software are available to college faculty, staff, and students. Software companies such as Adobe, Aldus, Microsoft, and WordPerfect offer educational discounts of as much as 80 percent off SRPs--which usually translates into 50 percent or more off street prices. Aldus PageMaker 5.0 for Windows, for example, has an SRP of $895; with an educational discount, the price is $199.

Companies use educational discounts to develop product and brand loyalty by getting students to use their applications at home as well as in the classroom. Although profits can be slim on the original sales, educational sales can put more users on the upgrade path and increase a company's market share.

Educational sales may also help curb piracy, which is often widespread on college campuses. Brandon, from Adobe, says many potential pirates might be encouraged to stay legitimate if they're offered a low price and a clear conscience.

In most cases, there's no difference between commercial and educational versions, but it's a good idea to ask before you buy. Educational versions are specially packaged and usually channeled only through educational distributors, who in turn sell only to authorized educational dealers. Manufacturers' and distributors' policies vary as to who can be an authorized dealer, but the number of dealers in any one geographical area is generally limited. College bookstores are often licensed to sell educational versions, and mail-order companies are getting into the educational market, too. Prices seldom (if ever) vary, so shopping around for an educational price is probably a waste of time. Call the manufacturer of the package you wish to buy to find the authorized dealer nearest you.

You'll need to show the dealer proof of eligibility--a college ID will usually suffice--and you'll probably have to sign an eligibility affidavit. If you work with grades K-12 as a teacher or staff member, you might also be eligible for the discount; contact the manufacturer or an educational dealer to find out.

Vendors of Low-Cost Software

If you really want to find inexpensive software, you might look at software publishers that specialize in high performance at low cost. Parsons Technology (One Parsons Drive, P.O. Box 100, Hiawatha, Iowa 52233-0100; 800-223-6925) publishes DOS word processor Quite Write ($29) and DOS spreadsheet ProCalc 3D ($49), along with a full line of productivity software products for DOS and Windows with extremely reasonable price tags.

Likewise, Abacus (5370 52nd Street SE, Grand Rapids, Michigan 49512; 616-698-0325) specializes in translating and republishing high-quality German software (and books) for the American market at prices that are frequently a fraction of the cost of similar programs originating in America. For example, you can buy The Frugal Desktop Publisher, which offers a broad range of desktop publishing features, for only $19.95.

Save Your Money

There are many ways to avoid paying full price for software; I've lined up the best strategies to garner substantial savings. Additional ways to save software dollars are hardware premiums, software premiums, and shareware. Software bundled with hardware is often competitively discounted, if not free; some applications have one or more free programs bundled with them; and shareware programs can be much less expensive and just as powerful as those you buy commercially. No matter where or how you buy your software, a little footwork might very well save you enough for a second application. And after a few months, when you add up how much you've invested in software, you can smile-- knowing that the price you paid for your programs is a lot less than what they're worth.