How to understand the real cost of a software project

Information Technology

Many people are disappointed, upset or downright distraught when a software project costs more than they had anticipated, or been led to believe.  Occasionally, rather than being the saviour of the business the project becomes the death knell.  However, many of these project do deliver huge benefits to the organisation.  So I thought that I would outline the components of any project like this to help people understand what is involved and can be one of the success stories.

Firstly, if you are looking at more than one solution, it is essential that you compare with apples with apples.


To compare pricing for software implementation projects in a way that does compare apples with apples, there are five aspects of the pricing that you need to consider.  These are:


·         Hardware which includes

o   server  

o   desktop upgrades / replacements

o   mobile or handheld devices

·         Software which includes ongoing costs e.g. monthly subscription and upfront costs

o   actual application

o   any associated platform costs

o   and perhaps desktop upgrades

·         Implementation which includes:

o   Changes to the application itself

o   Integration to other applications

o   Data migration of legacy data

·         Training of users – initial

·         Support – the cost of maintaining the application once the go-live has been achieved and will usually include ongoing training especially of staff who are new after the go live date as well as any support contract which may be optional or mandatory

For any given project, some of these may be $0, which is fine, but the questions still need to be asked.  A realistic estimate can only be given once a detailed scoping of your particular situation and requirements is completed.

Gill Walker

Owner Director, Principal CRM Business Consultant at

From developing a basic system from scratch when running a Support Desk in the United States in 1991, I understood the importance of Customer Relationship Management, the benefits that it will bring to a business and using technology to support the CRM strategies.. I am a subject matter expert in Microsoft Dynamics CRM. I have worked with all versions of the product, and my skill set includes strategy, scoping, solution design, installation, implementation, support and user training.

Comments (2)
David Solomon

David Solomon, Business Performance Strategist at

Hi Gill. Could you please also comment on the skills and prices charged by the consultants doing any implementation? Is it essentially true that you get what you pay for? Is it therefore false economy to go for the least expensive option? Or are there high quality people who can run the project without needing a king's ransom? Thanks.

Gill Walker

Gill Walker, Owner Director, Principal CRM Business Consultant at

Hi David Thank you for your question, which I'm sure is on many people's minds. There are a number of factors that govern what any consulting company will charge for their services, and these do include the skills that they have and how specialist those skills are, so you can expect to pay more for harder to find skills, not only because those people are rarer, although this is part of the reason, but also because those people usually spend longer on their marketing in order to find the people who are willing to pay for their skills - so it is a sort of catch 22 situation. Also, suppliers who charge you an hourly or daily rate with just an estimate for the project, will typically sound cheaper in the short term than people who can give a quote for the job. However, there is much greater chance of you paying more than the original estimate with the first group than with the second. In general, when selecting an implementation company you are looking for: a partner rather than a supplier, someone with whom you feel you can work over a period of time, and usually someone who is flexible enough to be able to work when you want them to work, so not assume that you need to have them onsite for five days per week from the start of the project; Then you are looking for someone who understands your requirements and will not try to give you a solution that worked for pervious client without ensuring that it also works for you;           Then you are looking for someone with the expertise in the product as substantiated by customer testimonials. Customer testimonials are far more important than certifications. To conclude, it is largely, but not totally true that you do get what you pay for. So take your time, meet with more than one and ask loads of questions. Remember the maxim - Caveat Emptor, or buyer beware.