The initial cost of purchasing and implementing a content management system might be only a fraction of the costs you must consider. Understanding what software will truly cost you matters more than the number published on the pricing page. In this article, we’ll help you discover what the total cost of ownership (TCO) is and how to use it to calculate the total cost of the CMS.
#What is the total cost of ownership?
Total Cost of Ownership (TCO) refers to all expenses associated with owning, operating, and maintaining a software system over its entire lifespan.
For a more detailed version, Gartner defines TCO in relation to software as “a comprehensive assessment of information technology (IT) or other costs across enterprise boundaries over time. For IT, TCO includes hardware and software acquisition, management and support, communications, end-user expenses and the opportunity cost of downtime, training and other productivity losses.”
TCO accounts for everything you pay for your CMS from signing the contract until you finally retire it or migrate to another platform.
How to calculate the total cost of ownership for a content platform
There are differing opinions on the best way to calculate TCO for software. For example, Forrester stated that implementing TCO requires a comprehensive and continuously updated catalog of asset inventory, in-service dates, and agreed-upon operating cost rates for activities.
Businesses also need to devise a way to divide those costs among the multiple business areas that use them, and they believe this can be a daunting task for many enterprises that might not be worth the effort.
However, we disagree and believe that while calculating an exact TCO can be difficult due to the number of varying factors, there is plenty that many businesses can achieve by performing a TCO analysis, particularly as it relates to choosing the best content platform for their needs.
Here’s how a total content management system costs can be calculated:
What you need to calculate the total cost of ownership for a content platform
All associated costs for the entire platform lifespan:
Initial Setup Costs: Software licenses, related hardware costs, development, and implementation costs.
Ongoing Expenses: Hosting, maintenance, required upgrades, support, and personnel costs.
With this data, you can calculate TCO by adding the initial setup and ongoing costs and then dividing that by the expected lifespan of the platform to determine the initial total cost of ownership.
For example, let’s calculate a TCO over a 10-year horizon. Let’s assume that the initial setup costs for an enterprise CMS are $350,000, and then there are annual expenses of $100,000 for the first 3 years. After the first 3 years, there is an estimated 10% increase in ongoing expenses due to increased security, upgrade, and maintenance costs. So from years 4-7 there is an annual expenses cost of $110,000. Then this increases by an additional 15% for years 8-10 to $121,000 annually.
So the total associated costs would be:
- Initial Setup Costs: $350,000
- Ongoing Expenses: Years 1-3 = $100,000*3 = $300,000
- Years 4-7 = $110,000*4 = $440,000
- Years 8-10 = $121,000*3 = $363,000
- Total Costs = $1,453,000
The TCO over those 10 years would be $1,453,000/10 = $145,300 annually. This provides a rough estimate of how a TCO calculation would look, but what’s important to know are the various factors to consider when determining CMS expenses.
#Calculating content management system cost
Ultimately, calculating the total cost of a content management system or content platform comes down to various factors.
One of the largest initial expenses for a content platform or any software is licensing costs. What you pay to be able to use the software and receive updates and ongoing support.
Each CMS will have its own pricing structure for licensing, and there will also be additional costs for enterprise customers, depending on the number of seats or users required. Vendors can also charge based on the number of sites or projects required.
For example, at Hygraph, our Scale Package begins at $799 per project per month (billed yearly). This provides access for 25 users and 4 roles. Meanwhile, our custom Enterprise plan can provide 100+ seats and 20+ roles.
API and locale costs
APIs are essential to a modern content platform as they facilitate the communication and exchange of data between disparate systems. So, you can pull data from your CRM or eCommerce tools and incorporate it into your CMS. When it comes to calculating TCO, vendors might place limits on the number of API calls allowed per month.
For example, Hygraph’s Scale package supports 1 million API calls per month and allows for overages. For the custom Enterprise plan, we offer tailored custom limits on users, locales, entries, API operations, and more. Meanwhile, other CMS vendors sometimes enforce strict limitations of 500,000 or 1 million API calls per month for similar-level plans.
Multinational brands that cater to audiences in different regions and languages also need to account for other locales or the number of languages you can translate your content into. Hygraph offers 8 locales for the Scale Package or 60+ for the Enterprise package.
An enterprise-grade CMS will be required to store thousands of content assets for the business and facilitate thousands of content entries, like pages on a website or mobile application. Some platforms may limit the content entries allowed under a specific license or pricing plan, while others may charge additional fees for exceeding a certain number of entries.
Understanding how content entries are priced is crucial to determining an initial total cost of ownership and choosing the right platform to avoid incurring additional fees and unexpected costs just as your business begins to scale.
Hygraph allows 50,000 content entries on the Scale package or over 1 million+ on the Enterprise package. These content-related costs also apply to content models, which for Hygraph include 75 for the Scale package or 150+ for the Enterprise package.
Learn more about our costs: Hygraph Pricing
Another factor that affects the TCO of a content platform is the hosting package used. Many brands opt for cloud hosting nowadays, but those in highlight-regulated industries might require dedicated servers and on-premises hosting.
While several ongoing costs are associated with a CMS, various non-recurring fees must be considered to calculate TCO. For example, depending on your existing technology stack, you might be aware of integration and customization requirements or can define them with your system integrator. These fees will vary depending on the CMS you use, and other costs like migration fees also need to be taken into account.
Brands that opt for a SaaS-based CMS will typically expect support as part of their subscription. Other CMS platforms might charge for support at an additional cost. For example, depending on your package, CMS vendors may offer 24/7 support or a dedicated account manager, while others may only provide email support during business hours. For example, Enterprise customers using Hygraph can count on a dedicated Customer Success Manager and 24/7 access to professional technical support.
A sometimes overlooked part of the TCO of a content platform is the need for initial and ongoing training for staff. The required training level will vary depending on the complexity and familiarity with the platform. However, opting for a user-friendly CMS with many marketing features that non-technical staff is accustomed to can minimize the need and subsequent costs for extensive training.
Developer costs are also a necessity for calculating the total cost of ownership as initial implementation and integration costs can vary. If you need to hire system integrators to handle the implementation or ongoing maintenance, it can impact the cost.
Additionally, you need to ensure that the CMS vendor has a robust API capable of streamlining integrations with different tools in the software stack; otherwise, this can lead to additional development costs. Hygraph offers a GraphQL Query API, GraphQL Mutations API as well as an Image Delivery and Transformation API plus numerous integrations to make extending functionality and connecting other tools easier.
#What to do after calculating content management system cost
Determining the total cost of ownership of a CMS can help you make more informed decisions about which content platform is best suited for your business today and in the future. But what do you do after you’ve found the perfect platform and are ready to pull the trigger?
It’s time to migrate to your new CMS. But before migrating, you need to understand the true cost of migration. Read our eBook to find out: The True Cost of CMS Migration: The A-Z Guide to Switching Web Content Management Platforms.
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