Guide
Essential Questions to Uncover the Total Cost of Software
What is TCO (Total Cost of Ownership)?
Put simply, it is the sum of all costs and expenses related to buying, implementing, operating and managing your software solutions (either directly or indirectly).
Why is TCO an important factor to consider
TCO is important because it determines your ROI. A TCO analysis can reveal that software actually costs a business upwards of 5-8x the original purchase price. Understanding how much your software is going to cost you over time helps you make better buying decisions when deciding which software provides the best possible ROI.
What factors into TCO?
The three major costs areas associated with purchasing and implementing software are:
- Acquisition costs
- Operating costs
- Personnel costs
Questions to Ask Your Software Vendor
Acquisition Costs
| Cost Component | What it is | What to ask your vendor |
|---|---|---|
|
Software upfront/subscription cost
|
Cost of the software whether a one-time, monthly, or yearly recurring fee as well as the cost of user licenses.
|
How many user licenses does that price include? Are there any other factors that could increase the price for me, such as the number of contacts in my database? Are there any add-ons or additional products that customers like me commonly need to purchase? |
|
Implementation/onboarding cost
|
Cost of setting up the new system for your business and onboarding users.
|
Do you offer or require onboarding services? What is the cost?
Is support for implementation available? Is this an additional cost? |
|
Integration cost
|
Cost to integrate external systems into your new software.
|
Will I be charged to integrate my other systems with the software? For example, we need to integrate [insert list of systems] with this software.
Do customers like me usually need custom integrations built? |
|
Data migration cost
|
Charges to migrate data into your new software.
|
Will I be charged to migrate my data into the software?
How simple is the process of migrating my data? Will I need to purchase additional services to accomplish this? |
|
External system interface cost
|
The cost to integrate your new software into external systems so they talk to each other.
|
Do customers like me typically require additional API or developer work to integrate this software with their other systems? For example, we need to integrate with [insert list of systems].
|
|
Other acquisition costs
|
Any additional acquisition costs not accounted for above.
|
Do customers like me typically need additional customization to make the software work for them? What does this usually cost? |
Operating Costs
| Cost Component | What it is | What to ask your vendor |
|---|---|---|
|
Cost of additional contacts or user licenses
|
The cost to add new users or additional contact records as your business expands.
|
What is the cost of adding users in the future? Are there any other limit increases that I may need to purchase? If so, what are their costs? |
|
Training cost
|
Cost of external consultants, contractors, or firms to train employees to use the software.
|
What type of product training do you provide? Is this included in the cost of the software? Do customers like me typically seek out additional training for their employees? How much do they spend? |
|
Software maintenance cost
|
Cost of external consultants, contractors, or firms to provide software upgrades, updates, patches or bug fixes needed to improve functionality and keep the software in working order.
|
Is software maintenance such as upgrades, updates, patches and fixes included in the cost of the software? How often do you release improvements and added functionality to your software? |
|
Customer support cost
|
The cost of getting technical product support from external consultants, contractors, and/or the software vendor itself.
|
Do you offer ongoing product support? What is the cost for this support? How often is support available and what is their response time? |
|
Additional operating costs
|
Any additional operating costs not accounted for above such as additional integrations, enhancements or security.
|
What security measures are included in the cost of the software? Are there any other integrations or enhancements that customers might need to make to the software? |
Personnel Costs
| Cost Component | What it is | What to ask your vendor |
|---|---|---|
|
Number of personnel
|
The number of personnel (i.e., part time, full-time, agency/contractor) needed to manage your software such as CRM/MA champion/admin, IT support staff, and process/strategy consultant.
|
Do customers typically employ a dedicated admin to manage the software? Would you suggest that customers employ or hire any additional personnel such as strategy consultants or IT support to help them with the software? |
|
Cost per personnel
|
The average cost paid per personnel.
|
What does it cost to employ an admin for this software?
|
|
Total cost of personnel
|
The total amount spent per year on personnel (i.e., part time, full-time, agency/contractor) hired/employed to manage the software.
|
How much do customers like me typically spend overall on personnel to manage the software?
|
Download a pdf version of this guide
Calculate the Total Cost of HubSpot Software
At HubSpot we believe in transparency when it comes to the cost of our software. That's why we built a TCO Calculator to help you determine the true cost of HubSpot's software before you buy.
