TCO White Paper: CRM Vendor Pricing: Fees, Subscriptions & Hidden Costs

The way companies use and pay for customer relationship 
management (CRM) applications is changing. Moving from a 
predominantly perpetual license-based system, where companies paid a large up-front sum and then smaller annual maintenance fees, CRM software providers are now moving towards monthly or annual subscription fees to access CRM software on the Internet.

The various pricing schemes can create confusion among buyers as they try to assess the total cost-of-ownership (TCO) of different CRM services priced under various schemes. For example, there are still several companies offering license-based pricing models. Also, some companies offer a subscription option in addition to a perpetual license option.

In July we did a comparative price analysis of four leading CRM solutions for mid-market organizations. Forrester Research defines mid-market organizations as any organization with revenues of less than $1 billion and/or fewer than 1,000 employees. The CRM solutions included in this TCO analysis are:

  • Microsoft Dynamics CRM 2011
  • Sage SalesLogix
  • SugarCRM

For this analysis we looked at the following costs and requirements: for premise-based solutions we included the server and end-user (named user) licenses and annual support and maintenance fees. For on-demand solutions we looked at the annual end-user (named user) subscription fees. Each solution had to include mobile access, integration with Microsoft Outlook, a customizable reporting engine and configuration and customization capabilities.

We looked at the three-year TCO (total cost of ownership) for a 10-user; 25-user; 100-user and 500-user deployment. We assumed the following storage requirements: 5GB for the 10-user; 10GB for the 25-user; 15GB for the 100-user and 25GB for the 500-user deployments. For this analysis, we used standard list pricing as available in July 2011. Term, volume and other discounts (such as discounts available under the Microsoft Enterprise Agreement) have not been considered.

You can download this analysis here.

Here’s a preview of the 3 year TCO for a deployment of 25 users:

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