BUSINESS OPERATIONS By Michael Stromberg
Know the Pros and Cons of Construction Software Pricing Plans
W
hen it comes time to choose a construction management software or accounting tool for your business, besides comparing features, you will also need to understanding pricing structures. Different construction software products offer different pricing models, and each pricing model has different factors that will impact the total cost to your business. Some software products are subscription based, while others offer a perpetual license. There are also free versions of some construction software programs (usually with more limited features), as well as open-source options. To complicate things more, exact pricing information can sometimes be difficult to find on vendor websites.
Option #1: Perpetual License A perpetual software license is a type of software pricing model that allows you to purchase the program once and use it forever. While the software itself can be used indefinitely, any upgrades, updates, or support usually must be purchased separately. Perpetual licenses are commonly found in on-premise deployments (or installations) where the customer pays for a license to use the software on their local servers or desktop computers. Before the advent of cloud-based software, this was the most common type of software pricing model. Today, however, perpetual licenses for construction software are increasingly rare, as most construction software companies have moved toward subscription-based pricing models.
Factors Affecting the Licensing Price When paying a one-time fee for a perpetual license, the primary factor affecting cost will be which software features are included with the license. A given software provider will likely have multiple license tiers or modules available for purchase. Lower-level tiers will provide Michael Stromberg is a lead data analyst and the head of software for Construction Coverage. His background is in software engineering and mechanical engineering. Construction Coverage specializes in researching construction software, insurance, and related services. Learn more at www.constructioncoverage.com.
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basic features, while upper-level tiers will provide more advanced features in addition to the basic features offered through lower-level licenses. With construction project management software, for example, the lowest level license might offer basic project management features or project tracking features only; whereas, the highest level license would also provide advanced features covering preconstruction, accounting, and analytics. The other factor affecting cost is how many licenses are needed. For example, a customer may have the option to purchase additional licenses for use by employees or contractors in their organization. The exact cost of these additional licenses will depend on the software vendor and the specific licensing terms associated with their product. In some cases, an unlimited number of users may be able to access the product under a single license. In other cases, each user may need their own individual license.
Additional & Hidden Costs of Perpetual Licenses It is also essential that customers understand the hardware requirements and any ongoing support or renewal fees associated with their perpetual license agreement. One of the largest costs associated with a one-time software license (outside of the license itself) is supplying and maintaining the necessary hardware to support the software. If the customer is responsible for maintaining the hardware—as opposed to a cloud-based solution where the vendor maintains it—they will need to account for any hardware purchases, upgrades, or repairs that may be necessary to existing systems. This could mean purchasing new computers for employees, upgrading servers and other existing infrastructure, or setting up a new system from scratch. Businesses that go this route will need to set aside an appropriate amount of IT budget for these tasks. Outside of the hardware costs, some vendors will also require customers to pay annual maintenance fees to receive updates, technical support, and other services related to their purchased software package. This