Step 3: Calculate your software budget
We’ve created two 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.
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.
By drawing up a budget you’ll avoid getting surprised by extra costs after you’ve committed to buy your chosen product.
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
- Compliance (such as GDPR and health & safety)
- Project management
- Consultancy fees and paid-for advice
- Software licence renewals and upgrades
- Cloud service subscriptions
- Hardware leasing
- 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.
Are you considering software that’s 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.
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:
- Staff – freeing up time so your team can carry out tasks that help to increase the business’ performance, productivity and efficiency.
- Quality – 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 versus 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.