Here’s a number you can throw your arms around: CRM costs roughly $5-6 million a year for companies with over $1 billion in sales, according to a recent Aberdeen Group report, So, about ½% of annual sales or less. Costs flatten significantly as revenues climb over $1 billion or the number of users increases.

CRM Software

How much does CRM really cost for companies $50m to $5b?

The bad news: if your annual sales are only $50 million, a comparable CRM system will cost you about 2% of sales per year, four times as much.

Aberdeen surveyed 645 manufacturing companies with revenues between $50 million to $5 billion. The survey included the average number of users in each revenue bracket, annual software license and maintenance fees and annual professional service fees. Note that figures quoted are ongoing annual costs and do not reflect the initial cost of implementation.

Software companies spend millions upon million developing and evolving their CRM products. As one on the most sought out applications in the entire ERP library, every vendor wants their CRM offering to be the hallmark of their complete solution. And that same basic software code, with all its functionality, is going to be delivered to companies at the lower end of the revenue scale as well as multi-billion dollar corporations; Aberdeen found companies in the $50 million to $100 million range paid, on average, annual software license fees of about $480,000, while companies in the $1 billion to $5 billion bracket paid almost $2.4 million. Maybe it is the smaller companies who are getting the better deal!


Company Size    License    Maintenance    Services    Total       
$50-100 million    $482,941    $82,518    $351,374    $916,833       
$100-250 million    $695,395    $147,689    $581,090    $1,424,174       
$250 -500 million    $985,714    $115,546    $655,263    $1,756,523       
$500 million- 1billion    $1,364,286    $205,912    $1,110,000    $2,680,198       
over $1 billion    $2,360,577    $493,069    $2,081,000    $4,934,646    
Source: Aberdeen Group, 2007

Average cost per user turns out not to be a useful indice; $50 million companies pay north of $15,000 per user per year while $1 billion+ companies pay only about $6,000 per user. Obviously, the model that software companies use is not cost-based as much as it is value-based. Regardless of whether CRM costs less that one percent of sales at the low end or even over two percent of sales at the high end, the conventional wisdom is that it is worth it. While most ERP modules increase efficiency and streamline processes to reduce costs, CRM is perhaps the only application intended to increase the top line as well; it is a revenue generator. As such, CRM might be one way $50 million companies become $1 billion companies.

Written by :

tracey boxer