Understanding the true cost of free services and software

Freemium versions are commonplace these days. But before you start using them you should consider what the actual cost of free services really are

Understanding the true cost of free services and software

Economists are more than familiar with the expression “there ain’t no such thing as a free lunch.” Essentially, what it boils down to is that you should be wary whenever someone offers you something without asking you for any money. You can’t get something for nothing. There’s always a cost. While you may not have to fork out money, you’ll be spending your time on configuration, learning or both. And as the saying goes “time is money.”

With the advent of cloud computing and SaaS (software as a service) there is a new wave of apparently free tech in the form of enterprise software. You don’t have to search for long to find market leading software offering a free trail or a free but somewhat restricted version of their flagship software, aka freemium versions.

We all know that it’s just a hook, the free trial will end or the restrictions may become a barrier you can no longer ignore and then all of a sudden free is over and it’s time to pay. But the real hook is that you’ve started using the software or service now. You’ve spent time and effort setting it up and learning how to use it, so even if you’ve decided it’s not quite fit for purpose, you’re more likely to pay up rather than try another system and go through the pain of change.

Premium freemium and extended free trials

It used to be that free trials were just a few days long or that they were extremely restricted. However, this has begun to change. Today, you’ll often find that free trails can be extended and the freemium versions of software have most, if not all, of the features that the paid version has. It’s hardly a secret why that is – providers have simply realised that giving you more features and more time to play around with their solutions means their software gets embedded into your day to day operations. The pain of change becomes greater as time goes by so you’re ever more likely to sign up when it’s time to pay.

There’s nothing inherently wrong or immoral about these methods, it’s just good business sense. Providers want their software to be indispensable to your organisations so that when it comes time to pay, you’ll understand its value and be willing. But as a consumer you should consider more than just money, you need to think of data management, user management, time spent now and time spent in the future. Those are the real costs of supposedly free trials and offerings.

Am I fragmenting my data and my users?

When you consider some common collaboration needs there are well known and free versions for most of them. Some examples are Gmail for a shared mailbox and calendar, Dropbox for storing documents, Evernote for sharing notes, Trello for task management and Slack for team communication. But what integrations exist between them? How many accounts does each person in your organisation need? Remember, that’s five accounts per person so far and that’s just for collaboration. How do you search across all of them and how do you manage permissions?
Keeping track of all the data, files and permissions is manageable with a team of a few people, but what about when your organisation grows? Even a small company of 20 people would become an administrative nightmare. Also, 20 times five equals 100 user accounts.

What’s the cost of a paid subscription?

Ensure you understand the cost of the paid subscription. You can’t know for sure when you’ll hit up against the freemium barrier but you can take an educated guess. What’s the estimated cost? And are you willing to pay it?

How easy is it to migrate to a new system?

This is a big one, because it’s where you could spend a massive amount of time and money if you decide you want to use a different provider. Just google search terms like “issues migrating from service Y to service Z” and I guarantee you’ll see many tales of woe about the time and cost of migrating.

Is there a fixed cost alternative?

It’s unlikely you’ll be able to stay free forever, a shame I know as I’d love to be free forever. So, when you start with free, you’re just deferring the cost until later. And whether your future cost is time or money, it’ll need to be paid eventually. So why not clearly define your costs before you sign up to anything? Estimates and projections are great, but nothing beats the certainty of a fixed price solution. It’s not free now but it’s not an unknown cost in the future either.

This article comes courtesy of Daniel Hobbs, director and founder of roostpak, the ‘intranet in a box’ solution for startups and SMEs that will consolidate and modernise the way your organisation collaborates at a fixed cost.


Share via
Copy link