The price of accounting software is easy to determine; the costs associated with accounting software, on the other hand, are much more difficult to determine. You can determine the price of your accounting software by asking the vendor how much they charge for their software. The quote you will receive will likely include the licensing fee to meet your needs, but there are other costs of the accounting software that are included in this quote. These are the true costs of the accounting software program, and they need to be included in your analysis when you consider the total cost of owning an accounting software application:
- Development for Customization
- Process Redesign
Cost Number 1: Implementation
The implementation costs of accounting software include any costs needed to install and configure the program. Some basic accounting software packages can be downloaded to run on almost any desktop while others require certain hardware and software in order to run properly. You will have to check the hardware and software specifications on any accounting software program you will buy to see if you will require an upgrade of hardware or operating system to run the program. For higher-end accounting software, you will need to hire outside consultants to configure the program so that it runs properly. Even the most basic accounting software program needs to be tailored to your particular business, so you will have some set up and configuration costs involved.
Cost Number 2: Training
If you do not know how to use your accounting software, it will do you no good. Many vendors provide initial training so you can learn how to use the program. However, you will only receive some basic training; few vendors are likely to offer comprehensive, in-depth training to you at no additional charge. Plus, you will have periodic turnover of employees so they will have to learn the program at some point as well. The time spent on initial training and then annual training of employees should be considered in your cost analysis of any accounting software application. If it takes an average employee two weeks to learn this software before they can begin to be productive, then you should include their biweekly salary and benefits and the loss of productivity into your cost analysis. In the end, you can expect that higher-end software will likely require more training time and costs than low-end accounting software requires.
Cost Number 3: Development for Customization
You may be able to use accounting software straight out-of-the-box if you have a standard, service-based business. But all small businesses are not the same, with some businesses having unique needs for compliance, regulatory, or legal reporting. Therefore, you may need to have your accounting software application customized to meet your needs. You should add these anticipated customization expenses to the cost of your accounting software.
Cost Number 4: Process Redesign
If you have a business that is up and running, you probably already have an accounting software program that you have been using but that no longer meets your business’s needs. Any new accounting software should make your business processes easier to perform, but will also require you to adjust some of the processes to align with the accounting software’s processes. You should understand the flow of information within your business so you can anticipate the amount of processes that will be changed.
Cost Number 5: Maintenance
You will need to maintain your accounting software and any hardware or software that supports the application. If you run a server-based accounting software application, then you should consider the costs of maintaining those servers. Cloud-based accounting software applications can eliminate these costs, but the vendor may charge a maintenance fee, either annually or monthly, to recover these costs.
Cost Number 6: Upgrades
You will have to upgrade your accounting software at some point whether you want to or not. Many software developers are designing obsolesce into their products so that they only run on particular operating systems or they will not provide training and support for outdated versions of their programs. You may also need to upgrade your accounting software should your business grow or add additional accounting modules to enhance the core program's functionality. Again, you can add these upgrade costs to the total cost of accounting software.
Cost Number 7: Support
The last cost we consider in the total cost of accounting software is the cost of support. You will run into problems using accounting software, and will need to get in touch with either the software provider or a consultant to help you resolve your problem or show you what you are doing incorrectly. You should add the anticipated costs of technical support to get the true picture of the cost of your accounting software.