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Business owners and executives have nightmares about large purchases that they need to make once or twice in their careers. Replacing the company accounting software falls more or less into this category. There is a lot of pressure from family members, equity partners and employees to get it right!, make it work!…and for goodness sake don’t overpay!

These are all daunting challenges for sure; however, one of them presents more difficulty than the others. A lot of owners and executives come from some functional area such as finance, product development, sales etc. Using these skills, they often have the ability to evaluate functionality (get it right) and can ingrain the software within their business (make it work).

But what about pricing? How much should one pay for cloud accounting software?

Very often this a vexing question for our dear customers. Most of them correctly assess the situation and realize that they have not been monitoring the software market for years, there are big trends happening that make comparisons difficult and….Geez! Isn’t there a Kelly Blue Book guide for accounting software?

So where do they go? What do they do?

There are a few common reactions.

The anecdotal route is usually tried first. Hey, I heard Sam implemented an accounting system a few years ago! Lemme call him and pick his brain.

Its good start but…cloud tech has leapt forward since then, Sam’s business is sort of like yours, but not really, and the pricing structure and bundles he received are not around anymore.

The next attempt is to try and “do research” with the usual suspects, Gartner, G2, etc. Hours are spent online and this often results in analysis paralysis.  Sure, there is some good information out there, but when it comes to analyzing pricing, the same stumbling blocks appear.

Is the information timely? Do software companies price all companies the same? Most importantly, is this information relevant to my business e.g. my unique processes. my transaction volumes and, most importantly where I am taking my company?

So, what do we do? Is there no solution? How can we arrive at a reasonable answer?

The answer dear readers…comes from within.

Below are some frameworks that will allow you (the expert on your particular situation) to decide where you stand on a few key issues. Once you understand where you stand, you will have a good idea of what is a reasonable price point.

For these purposes, we divide businesses into three groups as follows:

1. Stable Small to Medium
2. Dynamic Small to Medium
3. Complex/Enterprise

Further these three groups can be assigned to three main classes of software.

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Most folks know without thinking if they are in the third group.  You pretty much know if you are an Enterprise level complex business.  So that much is clear but what about the first two groups?

What differentiates the so-called Stable SMB from the Dynamic SMB? Here is where you can bring your own knowledge to bear to find out where your business stands.

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The big picture folks can simply eyeball this list and identify if they are stable or dynamic.  The more analytical can go through each item and identify where their business stands on the range between dynamic and stable.  Either method will work.

Once you have identified who you are as a business, you have an excellent idea of how much you should be paying for accounting software and the software companies you should be talking to. Best of all you have arrived at this answer through your own internal analysis of your business and you did not depend on anecdotal stories, salespeople, white papers or any other external source.

The next big step is to identify the specific accounting app that is right for you.  We’ll leave that analysis for a future discussion.  At least for now you can be confident that you are looking for a home in the right neighborhood.