Step 3: Calculate your software budget

Reading time: 2:28

Budgeting for new software goes beyond what you can spend on it. New tech must also meet your business needs for your team to successfully implement it and give you value for money.

A person using a calculator and their laptop simultaneously

We’ve created 2 checklists to help you understand the potential financial benefits and savings, plus the financial costs, you need to consider before deciding which software product you want to spend your money on.

By drawing up a budget you’ll avoid getting surprised by extra costs after you’ve committed to buy your chosen product.

Top tip

Don’t forget to think about the medium and long-term costs, as well as your initial spend. This will help you decide if this is an investment you can, and want to, commit to.

Consider all the costs

The costs for new software aren’t always limited to the initial price you pay for access to the technology itself.

It can include additional services offered by the supplier, as well as getting your team trained to use the new system.

Additional costs from the supplier could include:

Initial set-up costs:

  • licence fees
  • installation
  • training
  • compliance (such as GDPR and health & safety)
  • project management
  • consultancy fees and paid-for advice

Ongoing costs:

  • software licence renewals and upgrades
  • Cloud service subscriptions
  • hardware leasing
  • upgrades and maintenance
  • IT support

Many software suppliers also include different payment options, such as monthly or annual subscriptions, one-off payments or pay-per-licence.

Monthly subscriptions: are a great way to go beyond an initial free trial to test a product and see if you like it. This gives you more time to try out features using your real business data. And you can cancel the following month if it’s not right for you.

Annual subscriptions: are often cheaper, but they will tie you to the product for longer. This could mean that you lose any cost benefit if it turns out the software isn’t a good match to your business.

Pay-per-licence: If so, be realistic about how many people will need to use this tech regularly, and factor that into your cost calculations.

Download the Software Costs Checklist (PDF 184KB)

Consider the benefits and savings

This section considers the potential return you’d get on your investment from new software.

The downloadable Software Benefits and Savings Checklist (PDF 181KB) will help you calculate the benefits, potential cost savings and hours saved per week you’d get from investing in software. It covers these main areas:

  • Your team - freeing up time so your team can carry out tasks that help to increase the business’ performance, productivity and efficiency.
  • Quality and accuracy – spending less time checking things and correcting mistakes.
  • Customers – improving service levels, leading to higher customer satisfaction.
  • Sales – increasing sales and generating more new business leads.

Example of assessing costs Vs benefits

Imagine someone in your team makes a mistake inputting customer data on a spreadsheet. This results in emails about a promotion campaign not reaching that customer until someone has found the problem and manually fixed it.

What are the costs to your business? Would your business miss sales opportunities until someone corrects the mistake? Are there labour costs associated with fixing the mistake, plus a manual check that there aren’t more errors of the same nature in your mailing list?

Perhaps you want to adopt a software that automatically checks the format of email addresses, and centrally stores customer data. That way, potential errors are highlighted in the system. Plus, as more members of the team are likely to see it regularly, any mistakes are more likely to be spotted sooner.

Assessing how many staff hours are spent on admin-heavy tasks like this, versus the cost of the software, is an example of weighing benefit savings against cost.

Help to Grow: Digital guidance

Step 4: Buy software with confidence

Once you know what you can spend on new software, it’s time to talk to suppliers, get quotes and trial some products. Find out the questions to ask and what to watch out for.

Step 5: Make new software work for your team

There are lots of potential challenges when introducing new technology into your business. Download our checklist for tips to help ensure that getting buy-in from your team isn’t one of them.

Apply for 50% off business software

Eligible businesses can get 50% off, up to £5,000, in approved Digital Accounting, Customer Relationship Management and eCommerce software.

Find your software
A casually dressed man, standing and smiling while looking at his mobile phone