Calculating The Total Cost Of Your CRM Solution
As with martech generally, software-as-a-service has become the de facto business model for most CRM vendors.
Yet despite seemingly clear pricing the true costs can be opaque.
It is imperative for sales and marketing teams to consider the total cost of ownership of a CRM solution so in this post we look at the basic costs of the leading CRM vendors, the key watch-outs and some things to consider so that you understand the 'true' costs of a CRM solution.
The pricing that is readily available on the websites of most CRM solutions is typically for basic CRM functionality and primarily for the core functionality used by sales teams.
Here are current pricing for the vendors that we consider to be leaders:
- Salesforce.com - from £20 per user per month for 'starter' to £240 per use per month for 'lightning'
- Microsoft Dynamics - from £86.70 per user per month
- Oracle - from £52 per user per month for Profession to £241 per user per month for Premium.
- SAP Digital CRM - £15 per user per month
- SugarCRM - £21 per user per month for Professional to £120 per user per month for Ultimate
- Zoho - £12 per user per month for Standard to £85 per user per month for Ultimate.
- HubSpot - free for the standard version and £390 per user per month for Premium
A notable exception is Adobe which doesn't openly publish it's pricing.
But it's very unlikely that these are the total costs that you will pay and there are some key watch-outs.
Marketing functionality costs are additional
The alignment and integration of sales and marketing is a critical CRM and how most companies realise the benefit of their CRM investment.
However, the costs above are for sales functionality only. Factor in marketing costs (lead nurturing, email marketing, marketing automation) and the investment required increases significantly.
Some are vendors are transparent on pricing. HubSpot, for instance, provide a calculator.
While others like Salesforce.com don't publish their marketing cloud pricing and you need to go through their sales team.
The key factors that influence pricing are:
- Contact volumes
- Communication channels
- Frequency of contact
Some of this cost could be mitigated by using third party applications like a separate email engine (eg. Mailchimp) or content management system (eg. Wordpress). Integration and data standards therefore become very important.
Operational and reporting costs are additional
As with marketing, often operational or back-office functions aren't supported by the basic packages.
Additional packages, customisation (see below) or workarounds and third party integrations are required.
Despite the 'transparent' pricing, many companies will need an element of customisation for the CRM solution to meet their requirements.
There are normally three options for a business needing to customise a CRM solution:
- Engage an implementation partner accredited by the software vendor. Salesforce and Adobe in particular have large partner networks.
- Retain a certified contractor to complete a scope of work.
- Hire and build internal capability
Each options has pros and cons in terms of lead times and costs.
Don't be seduced by the headline pricing and read the small print. If you are a team of five it may not be appealing to have to pay for 10 licenses in total that you aren't going to use.
As with minimum commitments training costs can be introduced.
Features of different tiers
From the sample pricing above you will have seen that they are plethora number of product tiers with differing features and levels of support.
It is recommended that you establish and prioritise the functionality that you really need to avoid being tied into a pricing tier that you simply don't need.
So how much do CRM solutions really cost?
The only answer is that it depends on your specific requirements.
However, unless you are a very small business or operate in a highly commoditised category where requirements are standardised, it is very unlikely that the headline prices featured on many vendor websites is what you will end up paying.
The effort and resource needed is often also forgotten and should be factored into your estimate of the costs involved.
Our recommended approach
- Get precise on your objectives and requirements. The CRM vendor landscape is much easier to navigate if you are precise on what you are trying to achieve, why, by when and the processes that you need to meet your objectives. This will mean that you have a set of functional and non-functional requirements that you can evaluate each vendor against and avoid unknown customisation costs.
- Don’t forget about key enablers of any CRM programme that can add time and cost to the process. Data migration, data quality and the need for actionable analytics and reporting can easily get overlooked. But trying to address these once a solution has been selected can be expensive and negatively impact on your planned timings.
- Work out total cost of ownership of a CRM solution. Don't be seduced by the software pricing. Instead work out the people that need to be involved and the amount of time needed; think about your marketing activities and sales processes (building new content can be time consuming and a significant indirect cost); and think about your CRM investment over at least a two-year period.
- Build the business case. Understand your objectives, gather your requirements and work out the cost/benefit of a CRM initiative. Costs can be relatively straightforward to estimate; but don't forget about the benefits that CRM programmes contribute - they are an enginge of growth for every business helping to attract and convert new customers and retain and grow existing customers. As well as helping to budget, the process should engage your business and build commitment to CRM.