It’s often a big mystery when researching the cost of a CRM or Customer Relationship Management system. Vendors rarely make their prices visible upfront. Instead, they force you to contact them directly to ask, “What is the cost of a new CRM?”
To avoid this, sometimes Not for Profits (NFPs) try to answer this question through a time-consuming RFT (Request for Tender) process, only to find out later that they can’t afford the solution.
Other times, they give their contact details to the vendors to get some indicative quotes. However, they often don’t understand the total costs they are given. This may lead to significant budget overruns later, both for implementation and ongoing costs.
So, what is the cost of a new CRM?
Like anything, it really depends on your organisation’s needs. I have NFP clients that spend 5-figures, and I have others that are closer to $1 million if you include internal and project management costs.
At a minimum, I suggest that even the smallest Not for Profit organisation set aside $50,000 to invest in a new CRM in the first year. Furthermore, internal resources will be required to support the design, data migration, configuration, testing and training.
This is why many Not for Profits will delay the upgrade or replacement of ageing CRMs that no longer meet their needs.
Nevertheless, your CRM is your most valuable system in your entire application architecture because of the data it holds. So, eventually, you will have to make this decision, even if only to protect it better from cybersecurity threats.
5 Price Considerations for your new CRM
So, if you are considering the replacement of your CRM, here are five things to consider regarding pricing:
Free licenses do NOT mean free! Some NFPs are lured by free licenses offered by vendors such as Salesforce and open-source software like CiviCRM. However, they later realise that the cost of implementing, customising and maintaining the system quickly surpasses the licensing cost of other purpose-built systems.
End of FY discounts: Vendors are more motivated to sign new contracts at the end of the financial year. So, consider your timing and preferred vendor’s country of origin (as it relates to their standard EOFY) when negotiating, as you may get a discount.
Beware of the Add-Ons: When considering vendor costs, it’s important to understand how they price their solution. Depending on how options are considered, the total implementation cost and ongoing fees can quickly double or triple the base price. For example, some Association CRM vendors have a preferred Learning Management System (LMS). The costs can be significantly higher if you choose their option versus integrating with your existing LMS.
Beware of volume pricing when migrating data: Many CRM vendors price their software based on variable items that can fluctuate greatly, such as the number of profiles in your system and the number of emails sent. If you don’t want to spend more than you should, ensure you do a clean-up exercise before migrating your data to a new system.
Lock in multi-year pricing: When negotiating, vendors are more likely to discount their licensing fees when you sign a multi-year agreement. Since your organisation will likely keep a new CRM for a while, a 3-year agreement is a low risk.
Last words:
The cost of a new CRM is expensive and often complicated to understand. However, I hope you find this information useful for your next CRM selection process.
If you need further help, let me know. I help Not for Profits select CRMs all the time.
Tammy Ven Dange is a former charity CEO, Not for Profit Board Member and IT Executive. Today she helps NFPs with strategic IT and data decisions.