Getting the right price for small business software.
Last week we where discussing requirements with a new client, when the conversation turned to “how much is this going to cost”? He had gone to a well-known provider upon which the initial fee was 100 k, just for the implementation. This did not including the year on year Subscription or any integrations. Even for a larger SME, the initial costs are just too prohibitive. This is why Pricing for small Software for small Business is so important.
Why does software cost so much?
For a number of software providers, they have to charge significant amounts of money to cover the R and D costs of bringing a product to market. They need to employ specialist developers who don’t come cheap. They also take the risk of anticipating business demand in the future which may not come to fruition. Most need to test and accredit their solution to make sure it is fit for purpose to fulfil regulatory regimes across a number of territories. The investment cost runs into the millions, even for quite modest programs.
That being said you are also buying into a brand. Some of the established players definitely put up their margin due to their name. Kind of the “Apple” of the software world. That has value as if a provider has been around for a while, and get a reputation for reliability, in which they should be rewarded for their efforts. The flipside to this is that in the fast paced world of software a vendor can swiftly become out of date and get taken over by a competitor and left behind (Sage V Xero).
Difference between ERP and Modular Software.
Just because it has the brand name does not mean that is the best fit for your business. I was speaking to someone in the engineering sector and he was expressing his frustration that even with expensive software, it still doesn’t do exactly what was required. This is partly because some business have niche requirements and software vendors build to generic requirements they imagine their client base needs. The more complex the software package becomes, then the interdependencies become more entwined and therefore less flexible. This is where the move from traditional ERP stand alone packages to more modular software comes into its own.
See the next series: Do you need expensive software ?
