The Low-Cost Air-Carrier Analogy

When picking a new technology, is the lowest priced option always the best choice? That's like saying, "Flying a low-cost airline is always better than flying Delta." When you add the cost of carry-on bags, the importance of getting to your destination on time, and the comfort of a seat with plenty of legroom, you may end up spending more than what you bargained for with the lower-cost option. Software is the same way.

Applying Total Cost of Ownership to Your AEC Software Evaluation

If price were the only factor taken into consideration when making a software purchase, the choice between higher-priced, high-quality software and lower-priced, often inadequate software would be simple. Unfortunately, in most cases, this reasoning fails to apply. In order to accurately forecast the cost of each prospective software solution, companies must take a holistic look into all variables surrounding the purchase - the total cost of ownership (TCO) should always be considered when making any new buying decision. The total cost of ownership includes not only the purchase price with the initial licensing fee, but also the costs of implementation, training, maintenance, and support.

From the outset, companies that fail to take underlying costs into account during the software selection process are placing themselves at a disadvantage. Although they may see instant benefits in terms of the price they initially pay for software, they will always be swimming upstream. Whether they have difficulty integrating the new software with their tech stack, waste valuable time training their employees in the use of a confusing user interface (UI), have trouble contacting a limited support team, or experience nauseating rework when the software inevitably crashes, companies are bound to pay extra for bargain solutions. Once the choice of software has been made, and valuable man-hours have been spent on implementation and training employees, the cost of making a switch rises drastically. As a result, when thinking in the long term, it simply is not worth it to go for the cheapest analysis and design software solution on the market.

The true cost of going cheap is always more than the upfront savings. In order to make up for their low prices, software providers have to cut corners somewhere, whether in customer service, features, or reliability. They also tend to have less-experienced developers working on their products, which can lead to more bugs and glitches.

A Tale of Two Buyers

Consider two buyers - the first is looking for a low-priced software solution, and the second is looking for the best value solution. Analysis and design software providers know that the second group is willing to pay more for a better product, so they continue to invest in research and development (R&D), customer success, and support. They need not worry about acquisition since they do not rely on price as their main selling point. As a result, software providers with higher-priced products almost always deliver higher-quality solutions that better fit their users' needs. They are also constantly making improvements and bug fixes to ensure their users do not succumb to pressure from competitors. On the other hand, low-priced AEC software solutions use their pricing to buy into the market. They are not as well equipped to deal with issues that may arise. Whenever their solution fails, it means, in the best-case scenario, hours of downtime and lost work, and in the worst-case scenario, days of rework or the loss of a contract or customer. And even if the lower cost seems to outweigh the negatives at first, there is no guarantee that a low-cost provider will continue to evolve with companies' needs in an ever-changing market.

When deciding between each of the available building optimization software options, there are many possible solutions to take into consideration, each with its own respective benefits and drawbacks. The number of solutions is growing rapidly, and with the recent increase in competitors in the AEC software marketplace, buyers have an even more difficult decision to make. They must ensure not to decide solely based on cost, but instead focus on all underlying factors. With cove.tool, for example, although the upfront cost may appear higher, once the added benefits are considered, the total cost of ownership is lower than similar solutions. The time saved on rework alone compared to similar solutions easily accounts for the pricing difference. Choosing building optimization software is not as simple as choosing between commodities. It requires looking past the sticker price and considering everything that comes with each software choice.

Returning to the buyer example - Buyer 1 fails to look ahead and makes their software choice based on one dimension: price. Buyer 2 makes their decision with the future in mind and considers all variables when purchasing software. Buyer 1 does not care what the software solution looks like and decides to purchase the least expensive system that meets some of their current requirements, while Buyer 2 searches for the very best solution at the lowest total cost of ownership and values finding the right solution and the best partner. 

Buyer 1 only wants cheap solutions with little consideration for quality. They have not thought through the long-term effects of a sub-optimal solution on the performance of their business. In this case, they are hoping whatever is available on the market will be sufficient, which is a rare occurrence. It may seem an obvious and desirable consideration, especially to the purchasing department: a lower price is preferred. However, software decisions are never that simple. The lowest price may not entail the lowest total cost of ownership. Often, there are hidden fees, such as the time spent on re-drawing geometry or the cost of hiring dedicated support staff to make the solution work, much less perform optimally. Down the road, there may also be unanticipated costs a buyer must absorb that were likely not budgeted.

Buyer 2 has found a better way to purchase technology solutions. Instead of searching for "good and cheap," they look for the best overall combination of quality, flexibility, and price. They hope to build and keep their momentum going. While they focus on acquiring the solution with the best ROI and overall value, they also strive to deliver excellent performance. Buyer 2 assesses all aspects surrounding their choice of analysis and design software: end-to-end workflows for the team, flexibility to work with all 3d modeling platforms, an easy-to-operate user interface, hands-on support, and world-class training. After evaluating each aspect, they know that the option which initially seemed more expensive may turn out to be the lowest cost solution for the firm.

A Better Framework for Considering AEC Software Pricing

Companies on the market for software solutions have much to consider beyond the initial subscription price. Reputable suppliers with the most experience and the best credentials are rarely the cheapest sources. Therefore, companies must carefully balance price, training time, implementation, and availability of support throughout their deliberation and ensure to calculate total cost of ownership before making their software choice. When all these factors are considered, the low-priced option may not be such a bargain after all.