Buyer beware: The hidden costs of free software for nonprofits

money tunnelWhen it comes to purchasing new software, many organizations do so to increase efficiency, save time, and reduce costs. This is particularly true of nonprofits, which often have limited staff and busy schedules.

Enter "free" software: on its surface, a simple, cost-effective solution. However, free software isn’t always free, and nonprofit executives often learn this the hard way: after incurring costs from implementation, consultants, ancillary features, support, and ongoing maintenance. These costs add up to more than a solution with an upfront cost but long-term savings. Here are pitfalls to avoid and tips to help you select something that will be a better fit for you, your nonprofit, and your budget over the long haul.

The Misleading Sales Pitch

Low purchase prices and robust "communities" of users tempt nonprofit executives to invest in these free solutions. However, the "free" program is typically a bare-bones solution, containing only limited functionality. The sales staff exalts the limitations as a selling point, telling potential clients that their software is highly customizable. While this is true, it’s this customization that contributes to the overall cost.

If You Can’t Implement the Software, It Will Cost You in the Long Run

Consultant fees for implementing a system you can’t negate any initial cost savings. Why? Transforming the basic software into a usable solution for your organization typically requires consultants. Most nonprofits do not have IT personnel on staff, which means that they are completely dependent on these consultants to implement the software. More complex features increase implementation cost. Consultants work on an hourly basis, often charging up to $150 per hour. And once the system is up and running, the staff needs to learn how to use it. There is often limited documentation on these low-cost products, and the trainers to help also cost additional money. What does this say about a system that is so difficult to understand that it requires consultants to manage? In the end, the nonprofit could have paid a higher up-front fee for an all-inclusive software solution and greatly lowered their costs.

How to Find a Comprehensive and Cost-Effective Solution

Organizations should look for all-in-one software solutions which don’t require external consultants to set up or maintain. All-inclusive CRM solutions will provide many of the above costs in their total pricing. That means that nonprofit executives know exactly what their up-front and ongoing costs will be.

Ask providers the following:

How many of their clients require consultants or trainers during implementation.

The price per hour for any consultants.

The average cost of total implementation for most of their clients.

A detailed price breakdown of:

  • Purchase price for the software
  • Installation and implementation costs
  • Customization options
  • Migration of your data from the old to new system
  • Ongoing monthly fees
  • Staff training
  • Ongoing product support

Research Now, Save Later

While it can be tempting to "save now and pay later", it is worth your time, now, to do your homework, test drive software, and calculate the full cost of "free" and paid software solutions. Free often comes at a higher cost in the long run.

Photo credit: Nomad_Soul/Shutterstock

GretchenGretchen is Director of Marketing for NonProfitEasy, an all-in-one software solution provider whose mission it is to change the status quo for the greater good. Gretchen’s passion is to ensure that every nonprofit has the technology to deliver services to their communities as affordably and efficiently as possible.

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