The "outrageous" cost of old software

May 15, 2015
Cloud-based dental software is typically sold as a service. The brave new world of SaaS (software as a service) differs from the older client-server model. Instead of paying a large sum up-front, you pay a small, all-inclusive monthly subscription.

Andy Jensen

Cloud-based dental software is typically sold as a service. The brave new world of SaaS (software as a service) differs from the older client-server model. Instead of paying a large sum up-front, you pay a small, all-inclusive monthly subscription.

Recently, a kind doctor forwarded a message he received from a salesperson representing dental software that is not cloud-based. In that message, the salesperson described the monthly subscription for SaaS dental software as "outrageous"-a description I find primeval! The pricing debate-whether one is cheaper than the other-is usually fueled by a failure to compare apples to apples, which is certainly the case here.

To compare the price of old software to the current technology standard (which is the cloud), you must look at your technology footprint holistically. Remember, the SaaS model is an all-inclusive price. Everything from licensing fees to upgrade services is included. To calculate what you're currently paying for your old software, do some quick, back-of-the-envelope math, including these items:

Licensing fee. In order to make a fair comparison, convert all of your costs to a monthly amount. First, take the price you paid for your licensing fee and amortize it over three years. The resulting number will tell you what you pay every month for your software.

Imaging software licensing fee. Perform the same exercise, but this time for your imaging software.

Customer support and upgrades. If you're maintaining your software properly, you're paying a monthly fee. You may be paying an additional maintenance fee for your imaging software.

Data backup. Whether you have a service that takes care of your backup or you do it yourself, there's still a monthly cost.

IT services. Figure how much you spent on IT services last year to maintain your server and divide that by 12. The resulting amount is what you spend on IT services every month.

Hardware costs. Most businesses amortize their hardware expenses over three years. Most IT pros will recommend you purchase new hardware every three to four years as well. In this case, calculate the monthly cost of your server.

eServices. If you're sending your claims electronically, that equates to a monthly cost.

Installing upgrades. Whether you install upgrades by yourself or pay to have them installed for you, there's a cost. Take the annual amount and divide by 12 to give you a monthly cost.

Most doctors are surprised by what they're paying every month, typically in the $400 to $700 range. If your number is considerably lower, you're not likely maintaining your technology footprint properly. Chances are you'll face a larger one-time investment in technology at some point, like being stuck with XP machines, for example. However, every practice is different and that's OK.

Were you to compare your monthly cost to the subscription for web-based dental software, three things will become evident:

1. If the cloud is cheaper, then you should switch immediately to enjoy the savings;

2. If the costs are about equal, then you should consider the additional, inherent advantages of the cloud and modernizing your practice at no additional cost;

3. If the cloud is more expensive, then you have to ask yourself how much you're willing to pay to modernize your practice and take advantage of the benefits of the cloud.

In any event, paying upwards of $700 for tired, out-of-date software is truly outrageous. It's 2015! Is your practice still chained to a server?

Andy Jensen has more than 20 years of dental software experience. When he is not outraged over things some people say about the cloud, he can be found directing marketing activities at Curve Dental, a developer of cloud-based dental software. Curve Dental has prepared a paper that discusses dental software ROI. You can request your free copy by calling (888) 910-4376.

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