The Quote: How to Evaluate Accounting Software Pricing

Evaluate software optionsThe success of your business depends on being able to manage your books effectively. The right accounting software can make this job much easier, but with so many options on the market, it can be difficult to know which one will work best for your business. How do you choose the right package at the right price?

Know Your Needs

Before you compare prices, take time to do a business needs analysis so you’ll know exactly what features and functions you should look for. Needs will vary based on your industry and the size of your business, but be sure the software meets your expectations in terms of usability, scalability, report functions, workflow and document management, integration with third party applications, and security. Once you have your requirements listed, you should establish a ballpark budget. Keep in mind that the overall cost includes more than the software itself.

Compare Software Packages

Once you know what you’re looking for, you can begin looking at various providers to determine which packages meet your requirements. Our software selection tool will help you create a short list of companies based on purchase options, functionality, and the size of your business. You may be able to get a ballpark quote based on your requirements list, but the provider will likely want to discuss your needs with you in depth in order to create a custom quote for your business. This is also the time to schedule a demonstration so that you can see the software in action and the provider can identify any additional needs you may have.

Evaluate the Quote

With all the preliminary work behind you, you’re ready to take a close look at the quotes each of your short list providers have given you. As you evaluate the quote, ask the following questions:

  • Is the pricing model subscription-based or am I purchasing a perpetual license? Monthly subscription fees are common with SaaS applications. They often have lower start-up costs, but may end up costing more in the long-term due to recurring monthly payments. A perpetual license, by contrast, gives you permanent ownership of and rights to the software.

  • Is the pricing user-based or module-based? With user-based pricing, you pay a per-user fee for all modules. With module-based pricing, you pay a fee for each module you need plus a small additional fee per user. Module-based pricing may save money for businesses that need only a small number of modules and limited functionality rather than a comprehensive package. If you need a full-functioning software package for your business, however, user-based pricing is usually a better option.

  • Is it on-premise or cloud-based? These options refer to the manner in which your information is stored. Cloud-based options can offer significant cost savings, but if you already have the infrastructure in place for an on-premise solution, that may be the best solution for your business.
  • What are the maintenance fees? Most providers will charge an annual fee for maintenance, support, and service checks. This fee is usually a percentage of the software price.

  • What add-on products are available and at what cost? Add-on products deliver additional functionality to your software package. Your provider should show you which add-ons are available as part of the demonstration process. Make sure any add-ons you purchase will be compatible with future versions of the software.

  • What is included in the implementation/set-up fee? Compare project rates for implementation and set-up, as well as additional costs for any out-of-scope work. Find out exactly what is considered out-of-scope and how that additional work will be billed (hourly rates or per service fee). For example, how many hours of training are included in the implementation fee? How much will be charged for additional training if needed?

  • Does the quote include a detailed breakdown of hourly rates and charges for implementation? It’s always best to get an unbundled quote for set-up fees and services. You need to know exactly what is included in your quote and what will be charged as an additional fee later.

  • How do you handle data migration? Is an automated process available and is it included in the fee? Would it be more cost effective to hire an intern or temp to manually enter data as needed?

  • What is the cost for customization? How are fees assessed? If the software package looks like a perfect fit except for one small feature, customization can be a good option and will most likely be quick and painless. However, if you have major processes that must be customized, it may be better to review those processes and determine whether any can be upgraded for better efficiency with the new software.

  • Does the provider handle customization work or is it outsourced? It’s best to choose a provider who can handle the customization work internally rather than using an outside programmer. Outsourcing the customization means you will have to work with that third party for future support and upgrades. If your provider does outsource the customization, make sure the outside programmer has the necessary authorization for source code work.

  • Is project management built into the quote or is it charged separately? Project management costs can seem steep, but you’ll be glad you have an experienced individual guiding the process. Ask to meet your project manager in person to discuss project requirements and expectations.

  • How do you bill for training? Your quote should include a specified number of training hours. Plan for more training than you think you will need. If your quote includes a minimal number of training hours, bear in mind that you will likely need to pay an hourly fee for additional training.

With your final project quotes in hand, you’re in a good position to choose the most cost-effective software package. While some services are worth paying extra for, it’s important to get an itemized quote and to ask plenty of questions ahead of time so you won’t be surprised with additional fees that inflate your final project cost.