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Red Flag: Product Tiers

Second, businesses should not pay for software features they don’t need. This seems obvious but is still quite common. Sometimes software companies make this unavoidable.

The most common way of overcharging is by offering unnecessary product tiers, generally built around the number of users, volume of data, frequency of use, or level of features. There are usually penalties when you breach that limit.

Tiers help software companies again ensure a minimum amount of revenue and force clients to pay for more product than they need.

If software sellers do require clients to entered tiered agreements, then they should provide clients with usage updates. Too often, as usage declines businesses are unaware they’re paying for services they’re not using or don’t need. With long-term contracts, sometimes there’s nothing businesses can do about it.

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