Customer Management Articles

How to Reduce the Cost of CRM Software for Your Small Business

by Gitanjali Maria
Published on 6 April 2017

Attracting and retaining customers is a top priority for most small businesses. Not easy though, is it? In order to give you a fighting chance of pulling in and engaging clients you cannot afford to be without customer relationship management software (CRM). Many small businesses think a CRM is an expensive luxury - but it doesn't have to be.

This article will help you with tips and tricks on how to save money on the cost of CRM software for your small business.

What is CRM software?

According to Gartner, customer relationship management (CRM) is "a business strategy that optimizes revenue and profitability while promoting customer satisfaction and loyalty. CRM technologies enable strategy, and identify and manage customer relationships, in person or virtually. CRM software provides functionalities to better manage the four business segments: sales, marketing, customer service, and digital commerce."

Buying CRM software

Customer management has many dimensions. It involves multiple functions such as lead management, marketing automation, and after-sales customer support. CRM also covers customer analytics, customer data management, and reporting.

At one glance, you may feel that you require all these features. But remember that choosing a CRM software that meets your requirements without any frills will be light on your pocket as well.

Understanding the cost of CRM software

According to Gartner (content available to Gartner clients) reveals that CRM is the fastest-growing business software application market. Another Gartner report estimates that the CRM market was $26.3 billion in 2015. With hundreds of vendors and software stuffed into the market you may find yourself lost trying to choose from among the different CRM products, modules, and pricing models. You may also end up shelling out more money than required.

To help you in your buying process, we've classified the pricing of CRM products into three broad categories - Starter price range, Mid-range price, and Enterprise price. We have also matched each price range with the approximate number of users that it can support.

This classification has been done basing pricing data from the top 15 CRM software according to GetApp's CRM Category Leaders ranking for Q1 2017. See the Appendix section at the end of the article to learn more about the methodology used.

Note: Prices are on a per user per month basis. Pricing plan terminologies used by different software vendors vary and may not exactly match with the terminologies used here. The three pricing categories here only provide a general estimate of the pricing ranges and target user base supported by different vendors. See the Appendix to learn more about the methodology we have used to arrive at the three price categories.

The above meter only provides a rough estimate of the price ranges and users. Your total expenses may vary depending on your actual purchase.

Putting a price on CRM software features

What are the most important features offered by a CRM software? Do you require all these features or just a few of them?

In this section, we have identified the price categories in which these features are most likely available.

Note: The above results are not for any specific software but derived from analyzing the features offered by the 15 software considered. For example, the green 'Advanced' cell represents the presence of a feature in a particular price range for 50% or more of products.

Choosing a product version with all the features that you want will help you avoid spending extra money. You could be happy with a free or a starter version if your requirements are few. An enterprise version need not be the best choice for you. You may get overwhelmed by the bells and whistles in the enterprise range software. Clearly outlining your feature requirements is one of the first steps that help you choose the right software.

Customer service considerations

How important is customer support to you? Do you think you would often need to reach out to support personnel for technical help? The price of a software varies depending upon the support structure that you choose.

Most CRM vendors offer basic support such as live chat, email support, knowledge base, and video demos to all customers. But for services such as a dedicated account manager, priority support, or faster response times, you'll need to buy a premium version of the software.

The table below provides an idea about the price ranges and support services offered by the top 15 CRM software vendors.

You should choose a version of the software that best meets your requirements and is within your budget.

Other ways to save money on CRM software

Here are some other tips to help you reduce the cost of CRM software:

  • Choice of billing cycle: Most CRM software offers either annual or monthly billing options. If you opt for an annual billing option, you'll be able to save a month or two's costs. But there are also risks involved in going for an annual subscription. You get locked with a vendor. Annual subscription plans are useful when you are renewing a contract or are sure about your product choice. Take the example of Pipeliner…

Pipedrive offers savings of $12 per user per month for their Platinum model if you opt for annual billing!

  • Modular vs suite solutions: Some vendors like bpm'online provide different modules for sales, marketing, and services. These modules integrate with each other and provide a bundled CRM solution. In such cases, choosing only the services that you require can help save costs. You may not want one or more of the modules and can save money by not buying an integrated solution.
  • Free and open source software: A lot of CRM software solutions, such as Zoho CRM, HubSpot CRM, Insightly, and Capsule CRM offer free versions of their products. Though the number of contacts supported by the free versions are much fewer, it will help you get a hands-on experience of the software. You can use these software free of cost till you reach the threshold limits. Some of the open source CRM software include EspoCRM, SuiteCRM, Oro CRM, CiviCRM, Fat Free CRM, and Zurmo.
  • SaaS vs on-premises software: Cloud-based CRM solutions usually cost less than in-house CRMs. Cloud-hosted CRM products have an average price of $10 - $100 per user per month while on-premises CRM software cost $250 - $1000 per user license. SaaS options usually work out better for smaller companies as they are less costly. Also with many CRM functions being field-based, a web-based solution will offer better connectivity and enable collaboration.
  • Software compatibility, integrations, and mobile app support: If you already use a lead management system or a help desk software, you would want your new CRM software to integrate with these. Compatibility between the different systems is essential for smooth operations. Also, ensure that the software you choose offers mobile apps free of cost or at minimum prices. Mobile apps are particularly useful for your field staff and will help provide a wholesome experience.
  • Evaluate different purchase options: It is a good practice to do your own research before buying a software. Your research can help you identify re-sellers and eCommerce sites which might be selling the software of your choice at lower prices. You can also connect with third-party resellers who might be able to offer advanced customer support at lower prices than the vendor.

Next steps

  • Go visit GetApp's directory for customer relationship management software to read more about CRM software, their prices, and models.
  • Check out our CRM software comparison page will help you evaluate multiple products based on their features, prices, and support options.
  • If you have your own tips and tricks to save money when buying an application, please leave your comments below. Likewise, you can share your experiences of buying a software in the comments section.
  • Use our CRM software scorecard to identify the most suitable apps for your company based on your pricing and feature requirements.

Appendix: Price range meter methodology

Starter price range

The starting price of most of the products is $0 and this forms the lowest value of the range. The higher end of the Starter price range is calculated by taking the average of the lowest prices of the top 15 products. This ensures that the starting price of most of the products fall within this range. Similarly, the number of users supported by a software in this price range is the mean of the number of users supported by the starter versions of the top 15 vendors.

Example: If the lowest pricing plan (other than free versions) offered by vendors A, B, and C are $10, $5, and $15 respectively, then the higher end of the starter price range would be $10 (average of all the prices).

Mid-range price

The lower end of the Mid-Range Price segment is the higher end of Starter Price Range. To get the higher end of the Mid-Range Price segment, we took an average of the mid prices of the top 15 products. In cases where there were multiple pricing plans between the starter and enterprise versions, we have taken the average of those plans to identify the product's mid price value.

The number of users supported by a software in this price range is the mean of the number of users supported by the mid-price versions of the top 15 vendors.

Example: Suppose product A has four pricing plans: Basic, Professional, Business, and Enterprise at $10, $20, $40, and $60 respectively. Then the mid-price value for product A is the average of its Professional ($20) and Business ($40) plans, i.e., $30. If the mid-price of the other two vendors B and C are $20 and $40, then the higher end of the mid-range price segment is the mean of $30, $20 and $40 (= $30).

Enterprise Price

The enterprise pricing segment starts from the higher ends of the mid-range pricing segment. All prices above this value lie in the enterprise pricing range.


Comments


Apps mentioned in this article