The hidden costs of PSA software, and how to surface them

The eight items, ranked by impact on a three-year total

This is the order in which we have seen them move the numbers at firms we have talked to. The first three on their own explain most of the gap between the quote and the actual spend.

Not all of them apply to every vendor, and not all of them are underhanded: several are perfectly legitimate and simply are not made prominent. The problem arises when you compare two quotes that contain them to different degrees.

• Implementation: from a few thousand to tens of thousands, often with an outside partner
• Separate modules: advanced resource management, business intelligence, revenue forecasting. These can double the per-user cost
• Seat minimums: a floor of five or ten users, even on the entry plan
• Usage meters: fees on invoices, projects, clients or tasks, which grow with revenue
• Connectors: integrations to accounting, CRM or BI sold as add-ons
• Data migration: cleaning, mapping and import quoted by the day
• Training: sessions for administrators and end users, often outside the contract
• Renewal uplift: annual adjustment clauses that surface in year two

How to build the comparable number

A quote can only be compared once it has been reduced to a total three-year cost at your real headcount. It takes half an hour to calculate and it frequently changes the ranking of the candidates.

Add up: 36 months of licences at the number of people you actually have, not the vendor's example; any minimums; the modules needed to do what you saw in the demo; implementation and migration; training; and an estimate of usage fees at your current volume plus 30%.

Then divide by the number of consultants and by three. You get annual cost per consultant, which is the only number you can put next to another quote without confusing yourself. At the firms we have run this exercise with, the apparently cheapest quote was almost never the cheapest over three years.

The signals to read in a quote

Certain phrasings recur and are worth recognising. They are not traps: they are the points where cost can move after signature, and they should be settled beforehand.

«Starting from» in front of a per-user price means the figure shown belongs to the lowest plan, which is usually not the one you need. «On request» next to a feature means separate module. «One-off setup» with no figure means the figure comes later. A very tight offer expiry is designed to compress exactly the verification you are doing.

The last thing to ask is the simplest and the least often asked: the list price before discount. If no list price exists, you are not evaluating a price, you are evaluating a negotiation.