Understanding the True Cost of CRM Software: Beyond the Initial Investment

Customer Relationship Management (CRM) software is necessary for most business operations today. This is because CRM improves overall efficiency by streamlining customer interactions, enhancing communications, etc.

Investing in CRM will prove beneficial to businesses across industries. However, before making an investment, it is essential to have a comprehensive understanding of the cost of CRM software. More often than not, the costs involved go beyond the upfront investment. Implementation, onboarding, customization, and maintenance costs must also be considered.

As there are several CRM options in the market, picking the right fit for your organization requires careful consideration of your requirements, budget, and goals. This blog provides an overview of CRM pricing, the different factors that affect it, and tips on choosing the ideal CRM software.

How Much Does CRM Cost?

CRM pricing can range from $15 to $200 per user per month to around $3000 for multi-user plans, depending on various factors.

Most top CRMs offer a free plan. This would be suitable for organizations with budget constraints. Those looking to test the CRM’s suitability can also use free plans. Free trials also serve this purpose.

However, free plans generally offer limited features and would not be sufficient to support complex operations and large customer bases. Hence, while free plans may function as a starting point for businesses with simple requirements, paid plans are advisable for higher customization needs.

Factors that Decide the CRM Cost

Several factors influence the cost of CRM software. Understanding these factors enables businesses to estimate costs for their requirements.

Here are some factors that influence CRM pricing:

• Features and Functionality: The higher the number of features, the higher the cost. So, consider your organization’s requirements and goals and choose plans with concurrent features. In this manner, you may conserve resources and avoid paying more for features you won’t use. In any case, you can always add more features as your firm grows.
• Number of Users: The size of the team affects costs. CRMs typically include a cap on the number of users that can be added to each plan. For example, Zoho CRM provides various features in its base plan for free for three users, making it one of the best CRM for small business.
• Data Storage: Some CRMs have a limit for the maximum data you can store.

Types of CRM Pricing Models

Different types of CRM pricing models cater to different business usage needs and preferences. Here are some of the most popular types:

1. Per-User Pricing

This is one of the most common pricing models. With per-user pricing, the overall cost of the CRM is determined by the number of users and has a fixed cost per user. Should additional users be needed, you will have to register them, and the prices will go up in line with that.

2. Flat-Fee Pricing

Under this arrangement, companies pay a fixed, pre-arranged charge regardless of the features and services used. This indicates that you can access every feature in that specific plan.

The quantity of users is typically limited, though. Additionally, you could have to pay for things you don’t require. Businesses with predictable demands can use this model.

3. Tiered Pricing

Different levels, or tiers, are involved in tiered pricing; the prices of each tier vary based on the number of customers and services permitted. The price goes up if companies choose higher tiers with more sophisticated features.

This flexible model allows businesses to pay less or more according to varying requirements.

4. Freemium Model

CRM providers that follow the freemium model offer some basic services for free, while you have to pay for the more advanced functionalities. This serves as an entry point for small businesses and allows them to move to the paid plan when needed. Thus, they upgrade the CRM as they scale up their business.

Metrics to Measure ROI of the CRM

Measuring the Return on Investment (ROI) after implementing your chosen CRM enables businesses to evaluate its efficiency and justify the investment. It also allows you to switch your CRM software if it is not improving revenue.

Here are some metrics to help you determine if you have chosen the best CRM software for your needs:

• Customer Acquisition Cost (CAC): CAC is the average cost of acquiring a new customer. If this cost lessens after the implementation of the CRM, then it has successfully increased the efficiency of your customer acquisition efforts.
• Customer Lifetime Value (CLV): This metric measures the total revenue a company can expect from a customer throughout their relationship. By improving the CLV, the CRM contributes to the company’s long-term growth.
• Time to Close: The best CRMs allow your sales team to close a sale quickly and move on to the next one. This enhances the sales cycle efficiency.
• Average Sales Cycle Length: This metric measures the time it takes for a customer to go from initial contact to making a purchase. CRM should help reduce the average sales cycle length by removing obstacles and bottlenecks.
• Upsell Rate: The CRM should enable you to sell related or supplemental products and services to your existing customer base. Marketing to an existing customer is cheaper than acquiring a new customer.

How to Choose the Right CRM

Before selecting the CRM for your company, you need to consider several aspects besides pricing.

• Examine your objectives, challenges, and specifications. Make sure the CRM you select will assist you in overcoming hurdles and achieving your goals.
• Determine which teams will use the CRM and get to know their requirements. An easy-to-use CRM can enhance processes and productivity.
• Ensure your chosen CRM can cater to your future business needs. It needs to be scalable.
• Make use of free trials to assess the CRM software’s suitability. Interview your team for their input.

Expenses After the Initial Investment

It’s possible that the CRM may cost far more than you initially planned for. There are frequently extra expenses to account for in your budget in addition to annual or monthly subscription fees.

• Implementation: Implementation includes data migration, system configuration, and training. While some CRMs assist with implementation for a fee, you might also need to hire a third party for setup.
• Customization: Tailoring your CRM for specific business needs can lead to additional expenses. Large-scale, complex CRMs usually require an advanced level of customization and charge higher.
• Integration with Other Systems: Seamless integration of the CRM with your existing systems is necessary for uninterrupted operations. This might incur additional costs.
• Maintenance and Support: After the initial setup is complete, your CRM might still cost you in the form of software updates, bug fixes, and customer support services. Moreover, the software for CRM will have to be upgraded as you scale up your business. Hence, remember to take these costs into account while planning the budget.
• Add-on Costs: There might be features not included in the standard package that you must pay extra to use. Discuss all the features of the plans with your provider in advance to avoid surprises.

Wrapping Up

Your organization’s unique needs will ultimately determine the cost of the CRM software. However, businesses must clearly understand all the costs involved and plan for them.

Consider different pricing plans, understand the actual costs, and assess your objectives to make an informed decision.