The True Costs of Free and Low-Cost Software

Acquiring software for very little money — or even getting it for free! — can feel great. Yet is that bargain really a bargain? Learn how to assess whether that affordable software package is a great deal or a lemon.

Acquiring software for very little money — or even getting it for free! — can feel great. Everybody loves a bargain. But as in other aspects of life, you often get what you pay for. How do you figure out whether that bargain is really a bargain?

When shopping for software, it's important to consider not just the purchase cost, but the full costs of using that application over time. While some low-cost software is actually a good deal, other low-cost packages can be a nightmare of setup woes, training costs, and processes that just don't fit your organization. In this article, we'll take a look at all of the costs that might be associated with a piece of software — both in terms of money and staff time — and the questions to ask to ensure that an affordable software package is a great deal, not a lemon.

Varieties of Low-Cost Software

Low-cost or no-cost software comes in many different varieties:

• Free and open-source software is freely downloadable, has no cost to purchase, and you have freedom to alter, copy, and redistribute the software to others.
• Freeware is also freely downloadable, but it's owned by a company or individual and you can't alter, copy, or redistribute it.
• Shareware is usually free to try out, but you are required to pay a small fee after testing it — otherwise, it's similar to freeware.
• Free or low-cost versions of expensive software offer a starter package at little cost with the hope of tempting you to upgrade. For instance, an antivirus application might offer a free version with fewer features.
• Web applications that are free to access, such as Google Docs and Spreadsheets, Flickr, and others.

Different kinds of no-cost or low-cost software have distinct characteristics, which will determine how much you spend to use them — both in time and money. It's important to remember that software always takes time and money to create, so there must be concrete reasons as to why it is inexpensive or free. It could be that the software is free and open source — and thus was created largely by volunteer time and effort. It could be a marketing effort, or "loss leader" — an attempt to get you to buy more expensive software or services. It could be a vehicle for delivering advertising (like Google services). It could be donated software, which generally is the same as standard commercial software. It could be "adware" or "spyware" — software that delivers ads, or that funnels information about you that you might not want to give back to the software maker.

Understanding the True Costs

In order to understand the true cost of any software package, you need to consider all your interactions with it — from the moment you begin to think about using it to the moment you stop using it. In particular, it's important to consider the time that you and your staff will spend on it. Software can provide a powerful way to increase an organization's efficiency, flexibility, communication potential, and ability to reach its mission — but to take advantage of these benefits, you will need to invest time as well as money. For instance, you may need to customize a package up front, train your staff to use it, or dedicate time to maintaining it. Staff time spent dealing with software is time that isn't used to meet your mission in other ways, and therefore needs to be considered carefully as a kind of "cost" that is just as important as the amount of money it takes to acquire the software in the first place.

When you factor in time as well as money, the purchase price of a software package is often just a small fraction of the overall costs associated with its ongoing use. Disregarding these long-term costs can lead to disaster. A nifty but poorly implemented constituent database could mean you can't use any of the constituent information you thought you were capturing. If that neat little application turns out to be adware, and pops up dozens of windows advertising nutritional supplements (or something worse), you may have to invest in a techie who can clean out your system. A system that takes dozens of techie hours to install and set up may not look like such a good deal by the end of that process. Or what if that donated software needs a full-time staff member to maintain it?

On the other hand, there are great low-cost packages that are easy to install and use. Firefox, the free Web browser, is a great example of free software that is more stable, secure, and easier to use than most of the alternatives. Word-processing software Google Docs, Web-conferencing program Yugma, and file-sharing site Flickr are other examples of free Web services that are powerful and easy to use. Some free antivirus packages are also useful and friendly.

So how do you tell the disasters from the terrific deals? For any software package — whether free, low-cost, or priced for large organizations — you need to look at all the costs associated with the software, including:

• Evaluation. The time spent looking at the application and trying it out to make sure it works for you. This time is required whether or not the software is of high, low, or no cost to acquire. Solid documentation, demo versions, and people who can answer your questions can all make it much quicker to understand whether the software package meets your needs and to assess the long-term costs of your investment.
• Acquisition. What you pay to get the software. Software may be freely downloadable, or have a small processing fee (corporate donations often work this way.) Free Web services obviously have no cost of acquisition. Shareware (software which is free for a demo version, or for a specified time period) is generally quite inexpensive.
• Installation. Installation costs will be nonexistent for Web-based free services, but for other software there may be notable time involved in downloading and installing the software. Make sure to consider the costs of any new hardware that will be necessary to run the package.
• Migration. It also costs time (and sometimes money) to migrate your data from your current system to a new application. If, for example, you want to migrate your constituent database to a new product, it will take staff and possibly consultant time to export the data from your old system and import it into to your new system. Solid documentation and good import features can speed this process.
• Training/Learning Curve. Staff members will need a time to learn a new software package. For a simple, easy-to-use application, staff might be able to familiarize themselves with the new software in just a few minutes. In order to effectively implement complex software, though, it might be necessary to conduct informal training, send staff to paid training courses, or to hire a consultant or trainer to design and conduct a training program. Choosing not to train your staff on a complex application certainly doesn't reduce this cost; on the contrary, it can dramatically increase the learning curve cost — as well as support and maintenance costs — as your staff struggle to figure it out on their own.
• Support. Support costs — those incurred when you need help — are often the largest chunk of software costs, and often are higher for free and low-cost software. How much time will it take to support your staff in using the software? If there is a problem, how will you troubleshoot and fix it? Are there actual humans outside your organization who you can ask? Is there phone or email support? Are there active email discussion lists or forums? Are there consultants you can hire? Open-source software is generally supported by community forums or discussion lists, and by paid consultants. Web-based free services rarely offer human support if you have problems, though some have community forums. Free or low-cost versions of more expensive software invariably come with little or no support.
• Maintenance. Some kinds of software tools need maintenance. If it is a simple tool or application, then it is unlikely that this will be a factor. However, if it is a more complex system (like a Web site content management system, for instance,) it will require some degree of regular maintenance (backups, small changes to functionality, cleaning out spam, and so on).
• Risk. What happens if the company that makes the software goes out of business, or the software changes so much that it doesn't meet you needs anymore? What if the software stops being developed, and you need to migrate to a new package after you've been using the software for a while? This is one of the most difficult costs to estimate and account for, since it is difficult to evaluate risks of this sort. If a software package is mission critical for your organization, it's likely worth minimizing these kinds of risk, even if that means paying more.

Questions You Should Ask

It can be difficult to think through all of those costs, and some of them — like inconvenience and risk — are hard to estimate. At a minimum, make sure you ask some key questions:

• Why is it free, or so cheap? Will the vendor gain something from your use of the tool that you'd prefer not to give?
• Is there any danger that it contains spyware or adware? If so, it's almost certainly not worth using.
• Does it really meet your needs? Or are you compromising so much to get a low-cost solution that it's not worth the implementation and learning-curve costs?
• Will the application be mission critical for your organization? Or is it just a useful utility? How long will the organization use it? If you are considering a mission-critical application that will be with you for the long haul, you should hold it to a much higher standard.
• Is it a scalable and strategic solution? Avoid investing your time and money in something that won't have the flexibility to support your mission in the long run.
• How much time and money will it take to implement or migrate to this solution? Is it worth it?
• How many other organizations are using it? What is their experience with it? If you can't find other happy customers, that's a substantial sign that it may not be the right choice for you.
• What kind of support is available? Will you be able to get answers to your questions, or help from consultants?
• How likely is it to stick around? Who owns it, if anyone? If it is open-source software, how vibrant is the community of users and developers? If it were no longer developed or maintained, how would that affect you?

If you are considering multiple products for the same task, comparing the answers to these questions side by side can be instructive. In many situations, you will need to balance different kinds of costs for your own situation — for instance, is it better to pay more up-front in order to reduce support costs down the road? Thinking through best- and worst-case scenarios can also help give you an idea of the costs. What could the software provide that would make it work perfectly, and be very low cost on an ongoing basis? What would be the worst that could happen if the software package was a complete bomb?

Finding a Great Deal

Software bargains abound. Between open-source software, free Web services, and shareware and freeware, there are an increasing number of low-cost options.

But buyer beware! A bargain is not always really a bargain. A low-cost software package can come with all sorts of hidden costs, from the time spent setting it up and learning how to use it, to time spent dealing with inconveniences created by the software, to costs in finding answers to your support questions. Enter into any software acquisition, no matter how little (or how much!) they cost, with your eyes wide open.

Michelle Murrain, Ph.D., has worked with nonprofit and educational organizations on technology issues, particularly Internet technologies, since 1994, and is a nationally recognized leader in the nonprofit technology field. She is the coordinator of the NonProfit Open Source Initiative (NOSI) and principal of MetaCentric Technology Advising, a technology consulting practice focused on helping nonprofits implement technology sustainably. She blogs about nonprofit technology at Zen and the Art of Nonprofit Technology.

Jenny Council of Netcorps, Steve Heye of the YMCA of the USA, John Keynon, and Laura Quinn of Idealware also contributed to this article.