The cost of today’s CMMS: Understanding key components and considerations

April 6, 2021
David Berger says the price of a software package depends on cost structure, company size, and desired features.

Comparing the price of CMMS options can be a very frustrating endeavor. One reason is that there are so many components, options for each of these components, and multiple ways to price each of these options (i.e., software subscription fee per user per hour for a cloud-based solution versus one-time site license fee plus annual maintenance and support fee).

Asset Manager

This article is part of our monthly Asset Manager column. Read more from David Berger.

Another complication is that many CMMS vendors refuse to provide a definitive quote for what could be a substantial component of the final cost, because you are not yet able to provide sufficient detail. This is especially true when pricing integration with other software applications such as ERP because of unknowns, such as the level and detailed nature of integration required. Therefore, companies find it difficult to near impossible to compare prices, let alone value for money.

This article cuts through some of the complexity of determining the cost of implementing a new CMMS package by summarizing some of the main components, as well as some important considerations that drive costs for companies of all industries and sizes.

Key cost components

License fee—The software purchase usually involves a one-time licensing fee that can be an overall site license, or can be calculated on the basis of the number of named users set up on the system. Licenses can also be based on the maximum number of concurrent users allowed to log onto the system or even a given module. For higher-end CMMS packages, the average price per concurrent user can be anywhere between $2,500 to $10,000.

Hosting—One option is to host the software off-premises by either the vendor, a third-party company, or the cloud. The advantage is that someone else manages the cost of hardware, space, labor, security, maintenance, etc. Hosting fees can be a monthly fee based on the number of users and/or usage.

Software as a Service—In order to avoid a significant upfront license fee, many companies are opting to pay a monthly subscription fee, typically per named user, although there are many variations on this. The fee usually covers all software costs, hosting, software updates, support, and sometimes even basic implementation and training.

Source code—Some vendors bundle the source code with the software license fee. Others refuse to release their source code except under escrow. Still others allow users to purchase the source code for a one-time lump sum, usually an amount not exceeding the license fee.

Customization—If any custom programming is required to modify the software to fit your needs, there is usually an estimate provided based on a per diem rate of roughly $800 to $1,500. Customization is highly discouraged as it can be difficult to receive proper long-term vendor support and may destroy the upgrade path when new versions are released. Instead look for a CMMS package that is scalable and configurable to accommodate your needs, now and in the future.

Maintenance—Updates and bug fixes are usually priced as a percent of purchase price in the range of 10 to 20 percent of license fees.

Support—This includes a 1-800 number and website help for users. The cost is usually buried in the license fee and/or maintenance contract for a certain number of hours/month of support. After that, it is charged on an hourly basis at consulting rates ranging from $50 to $450/hour depending on the complexity of the problem.

Training—The greatest temptation for users is to cut back on training in the name of saving money. This is a big mistake, as training is your insurance that you will achieve a return on your software investment. Training costs vary dramatically depending on the type of training (e.g. classroom, computer-based training, train-the-trainer, simulation, on-the-job, and so on).
Implementation—With most modern software packages, the greatest cost can be installation and implementation.  Prices vary dramatically but a rule of thumb is one to three times the cost of the software. In some cases, the larger vendors pass on some of the implementation responsibility to a third-party consulting firm so that the vendor can focus on software development.

Hardware—Depending on the condition and extent of your existing infrastructure, hardware requirements may be minimal or astronomical. If you need to add or replace your user workstations, file server, network, telecommunications equipment, and peripherals in order to accommodate the new CMMS, the hardware bill can be add up quickly.

Other—There are other budget considerations that are sometimes forgotten when upgrading or implementing a new CMMS such as cabling, facility changes, telecommunications, and especially additional staff requirements.

Which tier are you?

Most CMMS vendors talk about three tiers of customers. At the high end (Tier 1), are large, capital intensive companies with hundreds or even thousands of maintenance personnel.  These companies are found in oil and gas, mining, utility, pulp and paper, and other resource or process industries.  CMMS packages are sold for millions or tens of millions of dollars.

At the other end of the scale, companies with maintenance shops having 15 or less tradespeople are typically classified as Tier 3. These companies are usually targeted by a different group of CMMS vendors that sell their software for $25,000 to less than $1,000.

Tier 2 customers are somewhere along the continuum between the two extremes. CMMS vendors servicing this customer base usually overlap heavily with the vendors targeting the tier immediately above or below them.

Range of features and functions

In general, the cost of CMMS software has slowly dropped as the functionality improves. The less expensive CMMS packages tend to take up less disk space, are easier to install, and run faster on older computer equipment than the more expensive packages. The time to learn the package is shorter because of the reduced complexity.

What you gain in moving to the high-end packages is the depth and richness of features, especially as it relates to a given industry. For example, many high-end packages will have sophisticated modules to manage projects, calibration, service desk, reliability, linear assets, cases, and so on. Even basic features may have sophisticated options such as the ability to budget by individual account code, more sophisticated warranty tracking, and more choices in diagnosing equipment problems automatically with condition monitoring and a troubleshooting database. Less expensive CMMS packages typically have a subset of these features such as ability to store a project code reference on the work order or purchase order, ability to budget by month only, ability to accommodate tool requirements via the standard inventory control system for parts, ability to handle warranty information through a reference field on the equipment record, and ability to record meter readings for determining when PM is required.

Thus, less expensive packages have the basic features in each category as shown above, which may be all that is required for many maintenance operations. 

Reliance on third-party software

Many of the less expensive CMMS packages rely heavily on third-party software in order to enhance functionality.  For example, most of the packages allow import from and/or export to spreadsheets, report and graphics generators, accounting packages, project management software, and so on. Some have the ability to interface with more sophisticated third-party software, such as shop-floor data collection systems, knowledge-based diagnostics, and ERP systems.

For the CMMS vendor, this is an easy way to add functionality to their package without much additional cost.  The disadvantage of using this approach is that users must purchase and learn multiple packages. Many of the high-end CMMS vendors have built in the additional functionality into their packages or have built the interfaces so that it is seamless and fully integrated.

Support variances

Another key difference between the CMMS packages at each end of the price spectrum is the support to be expected.  The vendors of less expensive CMMS packages expect to make their money from selling volume. This means their package must be simple enough that people can buy it “off-the-shelf,” easily install it themselves, and run with little support from the vendor.

The high-end CMMS vendors sell less volume but provide more direct support in the form of installation assistance, consulting, configuration, and training. In a very large install, revenue from these services may be greater than the cost of the base software. 

About the Author: David Berger
About the Author

David Berger | P.Eng. (AB), MBA, president of The Lamus Group Inc.

David Berger, P.Eng. (AB), MBA, is president of The Lamus Group Inc., a consulting firm that provides advice and training to extract maximum performance, quality and value from your physical assets, processes, information systems and organizational design. Based in Toronto, Berger has held senior positions in industry, including for two large manufacturers, and senior roles in consulting. He has written more than 450 articles on a variety of topics such as asset management, operations management, information technology, e-commerce, organizational design, and strategy. Contact him at [email protected].

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