Comparing software prices

Are you looking for software and do you want to compare its prices? And are you curious how to compare software prices and what to look out for? In this article we explain everything about the prices and costs of software as a service (SaaS) and how to compare prices properly

• What are the different pricing models for software?
• Which factors determine the price of software?
• What are the hidden costs of software?
• How can I compare software prices properly?

What are the different pricing models for software?

Unlike on premise (local installation), no investment is needed in software as a service (software in the cloud). As a result, software as a service is usually much cheaper in the short term. Software as a service generally offers three different models:

• Subscription
• Price per unit
• Freemium

Subscription

With a subscription you pay a recurring amount for the software periodically. Depending on the software supplier, this can be per month, per quarter or per year. The fixed amount often becomes higher the more employees have to use the software.

Software suppliers also often offer different subscriptions with more or fewer features. The subscription with more features is more expensive than a subscription with only the basic features. You can compare this with a phone subscription, in which a subscription with fewer call minutes (or fewer features) is cheaper than a subscription with more call minutes.

Price per unit

With this pricing model you only pay for the software when you actually use it. For example, paying per quotation drawn up, per invoice, per transaction, per signed document, etc. With this pricing model you are not tied to recurring costs when you do not use the software.

Freemium

With freemium the software is free to use. When you want to use more options you have to pay for them. Examples of freemium products are Spotify and YouTube. The biggest advantage of a freemium model is that you can try the software for free. A disadvantage, however, is that the basic model does not offer all the features you as a company would like to use.

Tip: Compare software prices by choosing a pricing model that suits you

Before you start comparing software prices, it is useful first to determine which pricing model suits your company. Suppose you want to buy software for making quotations. Many suppliers of quotation software charge a fixed amount (subscription). If you make roughly 1 or 2 quotations per month, this monthly amount is often on the high side. In that case it is more advantageous to consider a supplier of quotation software where you pay per quotation (price per unit). If, on the other hand, you draw up a lot of quotations per month, then paying a fixed monthly amount is more advantageous.

Which factors determine the price of software?

The three most important factors that determine the price of software as a service are the number of features, the quality of the features and the type of software.

Number of features

The price of software will increase or decrease depending on how many features are available. An ERP system, for example, offers a great many features and is therefore often more expensive than other software.

Quality of features

The quality of software can differ per software supplier and this can affect the price. This difference can lie in, for example, the user-friendliness of the features or the performance of the software.

Type of software

There is software that functions as a stand-alone program or that is integrated as a module in other software. CRM software can, for example, be bought as stand-alone software, but it can also be offered as a module within an ERP system.

The infographic below gives a fictitious representation of what the different price factors mean for the price of software.

Stand-alone software can be more expensive for a single component but is cheaper in total than software with multiple features. Stand-alone software is often specialised in that component and asks a higher price for it.

Tip: Compare prices based on the features you need

We recommend comparing software prices based on the features you need. It is a waste of money to buy software of which you use only 50%. You compare software prices based on features by taking the following steps:

1. Determine which processes you want to digitise and which features are important for this.
2. Make a shortlist of software that meets these wishes and compare the quality
3. Compare the price of the software that meets your quality requirements

What are the hidden costs of software?

There are a number of price elements of software that are easily overlooked. Since these can be fairly high cost items, it is important to have the software supplier inform you about them. Below we describe the most important ones.

Implementing software

Depending on the software, implementation can involve a lot of costs. There is software that you can use straight away yourself without any implementation help, but there is also software for which you have to hire a consultant to help you. There is also a difference in how long a consultant takes to implement software. This can vary from a few days to a few weeks.

Training in software

When you want to start using new software, you need to have your employees trained in it. Depending on the software, these costs can be on the high side, and as a company you want to take this into account in advance.

How can I compare software prices properly?

Stating a single price per software package does not give a reliable picture of the actual costs, which makes comparing prices difficult. We therefore advise against comparing software prices one to one. The tips in this article are a good aid in making sure you can compare software prices properly. SoftwareWatcher goes a step further in case you cannot work it out yourself. You can enlist our help in drawing up a detailed price comparison. Curious about the possibilities of a SoftwareWatcher price comparison? Then go to our software advice page and fill in the form.