Is the cost of software equal to its initial price?

The world is changing rapidly; digital transformation affects all aspects of life and surrounds us with new technologies, ideas and solutions. There is no other way than to just keep up the pace, change the stereotypical way of thinking and make a difference by yourself. It is especially important for businesses. Whether the business is big or small, local or international, the changes will be necessary sooner or later. It is very important when businessmen realise it is time to adopt new solutions and adapt to a new reality.

But where to begin?

Several articles and research are trying to find the answer and inform you where to begin the digital transformation of your company, and, without a doubt, the most important is an analysis of what is needed, especially for your business. In many cases, this is an updated, powerful software that will maximise the efficiency and performance of the company. From that point, more changes and digital upgrades may be done. At that moment, you need to make important decisions about what to choose. On the one hand, there is a bespoke software solution tailored to your company and its needs, and on the other hand, there is an off-the-shelf software solution that is universal and ready to be installed anytime.

You should make this decision consciously and after long hours of consideration and research. You can read about both of these types of solutions in this article, but the thing you should pay extra attention to is that the initial price is not the final cost of the software solution.

Off-the-shelf software. What do you pay for?

At first glance, the price of a ready-made software solution is lower and has many features of bespoke software, but after looking into it, you can see the differences. Off-the-shelf software has a fixed number of features and modules, and you can choose some of them, but some may still not meet all your needs. These basic modules contain features that might not be useful for you or sometimes lack important functionalities. Adding and modifying them costs extra money and does not guarantee it will be perfectly suitable for you. There is also the matter of maintenance. In most cases, you must hire a new IT company to fix malfunctions and, once again, pay extra money. As you can see, the initial price is not the total cost because you have to add many different expenditures to make it work efficiently, and because of that, it takes much more time for the software to earn the cost of the purchase.

Bespoke software. What do you pay for?

Without a doubt, the initial price of bespoke software is higher than a ready-made solution, but the situation is different when considering the whole cost over a few years. You should consider the future, how the software solution’s cost will change, and after what time your performance will increase. Think about it like an investment that will be returned. You pay more initially, but you can be sure you will gain more in the future. Also, when you decide to buy a tailored solution, you buy more than just a product. Still, in many cases, with the software solution, you get an IT partner working beside you, upgrading the software to be more efficient and meet all your software needs. If you need a module to communicate with customers and upgrade your customer service, you will have it. If you need an integrated system for many different departments to increase the data accessibility and flow of information, you will have it. A bespoke software solution is made to maximise your profits as much as possible. It costs more initially, but you have much more than just a software solution at this price. The crucial information is when this software solution will return the cost of its purchase and start earning for you. After comparing this information, you can see that the bespoke software is superior to the off-the-shelf one.

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Comparison of the costs and prices

When you see the prices of both software types, you may ask yourself, why should I pay more? In the case of a software solution, you need many calculations to see which option will cost more in the long run and do not forget that it is an investment rather than just a cost. We can compare it to buying a house. On one hand, you can buy a ready-made house from a developer at a low price. You pay and can immediately move into your new place, but you have nothing to say regarding extra features, the layout of rooms, etc. After a year, you see that the fireplace is not enough to heat the whole house, so you decide to install a central heating system that costs you a certain amount of money. After some time, you see that the kitchen does not look like you wish it looked like and decide to remove a wall and open the kitchen to the living room. You pay again and get what you need. Then you decide to have a child and need a new room. Things like that happen all the time, and you must invest more and more into your default house to tailor it to your needs. On the other hand, you can have your house made according to your plans. It costs more initially because you must pay the architect to design it, get many permissions and pay the construction company, but with the help of these people, you can be sure your house will be a perfect fit for you. The kitchen will be opened to the living room like you always wanted, your future child will have its own room, and the heating system will heat your house even on the coldest days. You need to pay more in the beginning but be free of extra expenditures for the future.

It is the same with the software. If you decide to buy the off-the-shelf software solution, you pay less initially, but it is not as effective and needs to be constantly modified and changed. On the other hand, if you decide on bespoke software, you pay more initially but can be sure that it is the most efficient, and you will start earning faster. Remember, in the case of software solutions, the initial price is not the final cost. When you decide on a software solution, you invest, and you should know the money will be returned, but the question is: when?