You’re bombarded by Facebook ads and social media streams hyping all the apps you “must have” to run your business more effectively.
It’s easy to get lost in it, to feel overwhelmed.
In fact, it can and often does take a lot of software to run a business online these days: platforms, channels, plugins, integrations. But sometimes it seems like the only thing you “must have” are deep pockets.
At least the “good old days” of costly installation and upgrade disks are gone. They weren’t that good. Today we live in a better world of cloud apps, subscriptions, and automatic updates.
But it’s not necessarily cheaper. Individually, subscription-based cloud apps may be great deals, but cumulatively they can add up to death by a thousand cuts. The attractions of automatic payments and annual plans come back to bite you at the worst times.
That’s why you need to know not just which applications your business needs; you need to know how to budget for them.
For many of us, thinking about money and budgets is a challenge to say the least. And yet, in the brave new world of cloud apps and subscriptions, it’s critical.
I’ve learned that the hard way. So here’s my personal guide to buying all those apps and plugins without nickel-and-diming yourself to death.
From Product to Service
Applications on disk could be expensive, but upgrades came annually at most. You expected them and knew about what they would cost. And you didn’t need very many.
With today’s cloud apps — technically known as “software as a service” (SaaS) — you don’t install or even download anything. The software stays on the developer’s own servers, and you pay monthly or annually to access it through your web browser. (I’ve written separately about cloud apps).
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A hybrid of disks and the cloud are subscriptions like Adobe’s Creative Cloud. You download the apps to your computer, then set upgrades to download (semi-)automatically. I get all of Adobe’s apps for an annual price less than a single Photoshop installation used to cost on disk. Since I use half a dozen Adobe apps regularly, this has saved me thousands of dollars.
The New Way to Pay (and Pay, and Pay…)
Pretty much every cloud app has a monthly and annual plan, although they don’t call it “annual” any more. That’s so 2015. Now it’s a “monthly plan pre-paid annually” — which, you don’t need a college degree to figure out, is the exact same thing.
However, the typical annual plan already represented a sizable discount, sometimes as high as 40%, and the new wording really just makes that more explicit. The pricing tables spell it out, showing your monthly and annual savings comparisons with nifty switches and stuff.
You can save many hundreds of dollars a year this way, and they can call it whatever they want.
Pros & Cons: Annual vs. Monthly
It can also come back to bite you. Those annual savings will sound great for 364 days, until you get the renewal bill, because more than likely, you bought more than one annual plan, so the renewals all come due at the same time, especially when you’re least ready for it. You’re hit with a balloon expense that will kill your cash flow for the month.
Cash flow is often a worse problem than revenue for small businesses, which is why monthly plans may be more attractive or viable. You pay more in the end, but at least your cash flow is stable and predictable. The downside is this can really add up to high monthly expenses, subscription atop subscription, month after month after month.
Compounding the problem is that most cloud apps come in different sizes, usually three: personal or single-site, small business, and enterprise. Maybe under different names but the same basic thing. It’s usually pretty straightforward to see which one you need.
But not always. Providers are strategic in which features they include in each level, often to entice (or compel) you to buy the next one up. Sometimes you have to buy the pricier small business version (with four extra site licenses you don’t need) to get the critical features you really do need for just one website.
I hate when that happens, but sometimes it’s necessary. At least it’s a bigger tax deduction.
A Buying Guide
There’s no way I can sit here and tell you definitively which plans are better deals, or which apps and plugins you need or not.
What I can offer here are some things to consider that can help you make smarter buying decisions:
- Some combination of monthly and “pre-paid monthly” (annual) plans will probably strike the best balance between your budget and your cash flow. At least start from that premise, then see where your comparison shopping takes you.
- Personally, I’ve been tending toward annual plans not only for the total savings, but to limit the number of things I have to keep track of each month. The overall reduction in mental clutter (and stress) makes the prepaid discount even sweeter.
- Before you spend a dime on anything, see if the software provider offers a free trial period. Usually they do. Check it out. Some “personal” versions are free forever.
- Often the personal/single-site version will be enough for your business. You won’t get the full range of features and functions, but the basics may be all you need.
- Consider what you really need. That is, get what you need, but don’t pay for the same service twice if you don’t have to. For example, do you need a separate opt-in platform if your autoresponder has opt-in forms built-in? Well, you might, if you need its advanced analytics or other features. Or you might not, and save yourself a lot of money.
- If you can’t decide among similar platforms, get all the free trials, then pick a monthly plan from among them. That way you limit your financial commitment if you decide to switch. It’s always easy to upgrade to annual once you’re certain.
How do you manage your software budget? Share your hard-bitten experience in the comments below.