Why the headline quote misleads
A procurement comparison built on the annual licence fee rewards the vendor that shifted cost into implementation, support tiers and year-two price rises. The only honest comparison is the total a vendor will invoice across the life of the contract. Even that, as set out below, is a floor rather than a ceiling.
A worked comparison
Take a platform quoted at €80,000 a year. Implementation is €150,000 and support runs at €20,000 a year, on a five-year term. The term cost is €150,000 + 5 × (€80,000 + €20,000) = €650,000, more than eight times the figure on the first page of the proposal. A rival quoting €95,000 a year but €40,000 to implement and €10,000 support costs €565,000 over the same five years, and wins despite the higher headline.
| Line |
Vendor A |
Vendor B |
| Annual licence |
€80,000 |
€95,000 |
| Implementation (one-off) |
€150,000 |
€40,000 |
| Annual support |
€20,000 |
€10,000 |
| Five-year total |
€650,000 |
€565,000 |
What the total still leaves out
Term cost is a better yardstick than the headline, but it is not total cost of ownership. Before the comparison goes into a recommendation, pressure-test what is missing.
- Exit and switching costs. Data migration out, parallel running and retraining are real money, and they are what make a mediocre vendor hard to leave.
- Price escalation clauses. Many contracts index the licence annually or reprice at renewal; a flat five-year assumption flatters the incumbent quote.
- Internal effort. Your project team, process redesign and the operational drag of cutover appear in nobody's proposal.
- Scope creep. Modules, users and environments that were "phase two" in the sales cycle become invoices in year one.
- Integration and middleware costs that sit with a third party rather than the vendor being scored.
Limitations
The calculator assumes flat annual charges and a single implementation payment, which no real contract honours exactly. Treat the output as the minimum credible cost of each option, then ask each vendor in writing which of the excluded items above will appear on an invoice.