Is the cost of software equal to its initial price?

The world is changing rapidly, the 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 the differences by yourself. It is especially important for businesses. No matter if the business is big or small, local or international, sooner or later the changes will be necessary. Very important is the moment when businessmen realise that it is time to adopt new solutions and adapt to a new reality.

But where to begin?

There are a number of articles and research 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 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. In that moment you need to make important decisions about what to choose. On one hand there is a bespoke software solution tailored for your company and its needs and on the other hand there is an off-the-shelf software solution, universal and ready to be installed anytime.

This is the decision you should make consciously and after long hours of considerations 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 the 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 clearly. Off-the-shelf software has its fixed number of features and modules and you can choose some of them but some of them may still not meet all your needs. These are the basic modules consisting of features that might not be useful for you or sometimes lack important functionalities for you. 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 have to hire a new IT company to fix malfunctions and, once again, pay extra money for that. 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.

Off-the-shelf software

Bespoke software. What do you pay for?

Without a doubt, the initial price of a bespoke software is higher than a ready-made solution but when considering the whole cost over a few years, the situation is different. You should definitely think about the future and how the cost of the software solution will change and after what time your performance will be increased. Think about it like about an investment that will be returned. You pay more in the beginning but you can be sure that you will gain more in the future. Also, when you decide to buy a tailored solution you buy more than just a product but in many cases with the software solution you get an IT partner that will be working beside you, upgrading the software to be more and more efficient and to 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 in the beginning but in this price you have much more than just a software solution. 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.

Bespoke software

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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 in to your new place but you have nothing to say in terms of extra features or what is 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 needed. Than 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 own plans. It costs more in the beginning 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.

fixed price

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

software cost

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