How To Budget For CRM Software?

One of the toughest challenges facing many organizations and businesses considering is to determine how much or how to budget needs to be allocated for CRM (Customer Relationship Management) software system. It can be difficult to gauge because of the numerous variables involved such as the license costs, maintenance fees, installation costs, etc. These variables play a vital role in reaching the final budget figure. More often than not, the CRM cost estimates fly under budget and most companies fail to ascertain in advance the true cost of setting up a new CRM system. One of the most common questions is the organization struggling to choose between a ready made solution vs getting a custom CRM software developed to fit in their needs. One can answer the question in a rational way if the decision-making process starts with creating and evaluating the list of pre-defined requirements for the CRM web application.

Define Your Requirements

The advantage of decision to make a CRM system lies in the fact that the product will meet all the custom business requirements and can suit the unique business processes. However, certain requirements may be too costly to implement in the alpha product version, hence they’d be pushed to another build, which means that the overall cost to develop the CRM system will rise accordingly. Moreover, it may happen that the development agency is not familiar with your business domain and hence not be able to understand the problems specific to the business domain.

Hence, at this stage brainstorming becomes important and it is important to sit down make a long list of all the required web app features. Ideally, it should be a cross-team discussion to help create the definitive features list.

Reverse engineering is one powerful technique to help collect all the product requirements including the hidden ones.Once the complete set of features is available, all the requirements should be mapped into three buckets, namely:

1. Must haves (score of 8 -10 with 10 being most critical ones)

2. Should haves (score of 5-7 with 7 being more important ones from a business domain stand point)

3. Good to have (scored between 1-4)

The final set of requirements mapped on the aforementioned scale shall help assess various existing solutions, along with the potential CRM development pricing. New product development can aid meeting specific requirements while ready available tools may require change management.

Choose between Readymade Vs Custom-made Solution

Post the requirement mapping step, a Request For Information can be floated for potential vendors to provide quotes and feature list. In order to evaluate the vendor’s responses, you may multiple the requirement score by product rating weight using this chart below.(Source: Wayferry)

Based on the evaluation done with this approach and considerable amount of brainstorming, it can be determined whether an off-the-shelf CRM solution can be a good fit or you have to build your custom CRM (This may be true mostly if the available solutions do not meet the requirements that come in the “must haves” and “should have” buckets).

Perform Cost Analysis

Available CRM Solutions in the market are generally priced per user, per month which means you have to multiply the base cost of your CRM by the number of people on your team who will be using it to calculate your total monthly CRM investment. The monthly per user cost may vary from $10 per user, per month to upto $150 per user, per month depending upon the features/package you opt for your users. On the other hand, the initial cost for custom CRM development usually starts from $70,000 (Figures based on the average custom development costs charged by Dew Solutions) based on the project scope and requirements for the first build. While the price tag certainly seems hefty, (especially for startups), CRM systems are usually developed continuously. Hence, your investment will be spread over a 3 to 10 years time span. The greater the brainstorming in the beginning, the more accurate the cost estimates become.

Also, the choice of deployment model (on-premise vs cloud) plays a vital role in cost projections. An on-premise solution will carry a much higher upfront investment for servers and setup. Setting up a cloud-based CRM is less capital intensive but you are tied into making payments on a regular basis. At the time of implementation, on-premise CRMs will incur support and hosting costs, which can be a huge cost. You may also need to upgrade your hardware, which can be expensive, and looking at how it will hold up five years into the future can be hard to predict. Cloud CRM has a much lower upfront cost but over time monthly fees adds up. It’s particularly important to view your CRM budget as a constant fixture in your business costs rather than a one-off project if you go down this road.


While the cost of provisioning a CRM may vary based on industry and usage, following a structured approach may help reduce the risk of overshooting the costs and help budget for such a solution with more accuracy.

If you are looking for an agency to consult on your CRM strategy and pricing, you may reach out to us at

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