What Do Online Community Software Platforms Cost? (A primer)

March 22, 2017 Comments Off on What Do Online Community Software Platforms Cost? (A primer)

Continuing our platform-themed week; a quick primer for those looking at costs of community platforms.

Pricing

The pricing structure of Lithium, Jive, Salesforce, Telligent, and most community platforms today is typically based upon monthly or annual usage tiers.

In theory, this means you begin at a low level (usually an estimate based upon existing traffic to your website) and gradually pay more as the community grows. In practice, you’re more likely to be transitioning from one platform to another and stay within a single pricing tier.

The objective of tiers is to make the community affordable to more organizations but create a ‘lock in’ to the platform as your community (and presumably your investment in the community) grows.

For most external communities, the usage tier means the level of traffic (often unique visitors). For internal (employee) community platforms this is the number of registered users (usually a few dollars per user per monthly). Though some platforms (HigherLogic/Salesforce) use different structures.

Usage Tiers

The usage tiers for a typical external community (let’s imagine, 1m visitors per year) begin at around $1k per year for reduced-featured (forum-based) platforms (Discourse/Vanilla) and rise to $100k+ per year for a similar tier at a full-fledged enterprise platform (Lithium, Jive, Insided).

You can use the slider of the community platform comparison tool to see which platforms become available at which pricing level (see below).

You will notice at 1m visitors per year (833k visitors per month) anything below $50k per year will leave you with one of the smaller community enterprise platform vendors. These come with their own pros (more responsive to customer requests – especially key accounts) and cons (less development resources, fewer features etc…).

The Risk of Multi-Year Contracts And Importance Of Being On The Right Tier

As most enterprise platforms request a 1 to 3 year contract, it’s important to be placed in the right traffic tier at the beginning.

You can always move up (this is why the tier structure exists) but not many platforms let you move down if you’re attracting less traffic than predicted. One prospect recently signed a six-figure multi-year contract with an enterprise platform at a tier which was far too high for them. This can be a very costly mistake to make.

Some platform vendors will talk up the potential of your community and absolute reach to put you on a higher tier. It’s inspiring talk, but it’s better to be conservative here.

Estimate 10% of your current web traffic (at most) if it’s behind a community tab.

If you’re signing a multi-year contract you should usually request some sort of discount. Lithium has given 66% discounts on long-term contracts, other platforms have been known to negotiate aggressively to lock customers into multi-year deals.

In addition to the license, a few platform vendors charge for additional usage. Lithium charges for API calls above 10m per year (an API call is a request to their server via an application), Jive charges for high video usage etc…

Implementation

The pricing tier is a license to use the community platform for a given duration of time and for specific uses. If this is all you pay for, you will get a barebones platform with limited design or customization. In addition to the pricing tier, you also need to customize the design, integrate the community into any existing systems (CRM/single sign on etc…) and add any additional functionality too.

This usually requires paying an additional setup fee to either the platform vendor or implementation partners. Companies like Grazziti and 7Summits specialize in these implementations. Most vendors will have a recommended list of implementation partners. Make sure you check the financial relationship between these partners and vendors (money often exchanges hands to get referrals).

Implementation costs vary wildly. At the lower end, a typical enterprise platform integration will begin at around $15k. At the upper end this may cost $500k+. This depends very much upon the complexity of the integration and design requirements. Migrating data from one platform to another especially can be expensive. A recent client recently invested a high six-figure sum on data migration.

Be aware that during the implementation time, you’re still paying for the license. Any time wasted here costs you money. Line up the implementation partner and your set of requirements before signing the contract. We’ve seen many people get stung here.

Some vendors will require you to use them for the implementation – at least part of the installation and require a one-time setup fee to help you get started. This is usually in the mid five-figure range.

Additional Charges and Paid Modules

If you wish to use the community for specific purposes (gamification, collecting and storing knowledge, generating ideas, or deploy specific security requirements, hosting events, creating groups) you may have to pay for additional modules to be added to your community.

This is essentially pre-written software which can be lightly adapted or switched on for any client community. At the enterprise level, these cost between $20k to $75k each (this can become expensive quickly) at the lower end HigherLogic offer basic modules for $1.5k each. You may be able to negotiate having these modules included as part of a multi-year package.

It’s worth nothing you shouldn’t sign up for any module you might use. Only those you definitely will use. No platform vendor will refuse to let you buy a new module if you decide you need it later. You can be conservative here and add more modules when you need them.

Note that these modules too are on a license to you for a specific time (usually a year). They are not usually one-time additions. This adds to the total annual cost of the community. In some cases, the additional modules can exceed the license fee itself.

Training, Support, and Consultancy Costs

Most vendors include training and support costs within the license fee. Some will offer premium support or higher levels of training at additional cost, but these usually cover how to use the platform (which they should teach you to do anyway) rather than how to build a community instead (I’d recommend our courses instead here).

A few will include an additional 10 to 20 hours of consultancy time to get your community started. This often isn’t negotiable and tends to be billed at $100 to $200 per hour. You should not be paying more than $20k.

External Consultancy And Other Costs

When beginning the process of picking a platform, be aware of the total cost of the community. This includes not just the cost of additional modules and support, but also the cost of any additional changes later on. Anything you ask for which is not included within your contract will be billed at a $150+ per hour level.

In addition, be aware of your own time. It’s tempting to pick cheaper vendors or developers to help you launch the technology, but if you’re spending half your time every week on the process this costs escalates quickly.

If the risk of a mistake is high or your time to manage the project is limited, you can retain support from community consultants (including ourselves) in this space who have experience guiding clients through the process and developing platforms.

I can’t speak for other consultants, but our costs tend to range from $20k to $100k+ for more complex projects (around $40k to $50k is feels more common).

Be Aware Of The Total Costs

The total cost of a community is usually higher than you imagine. At the lower end of enterprise platform, $20k would be a good bargain. At the higher end you could easily spend seven-figure sums – especially if large migrations are required. Ensure you have a contingency budget in place for additional changes after the platform is live.

Good luck.

Comment on this post at FeverBee Experts

©2018 FeverBee Limited, 1314 New Providence Wharf, London, United Kingdom E14 9PJ FEVERBEE

We’d like you to join us.

We’re a group of community professionals who push each other to the cutting edge of our work. Every day we share our experiences, highlight new expertise, and push one another to become the best community builders we can be.

The day you join, you’ll get access to 1000+ practical tips, dozens of resources, and unlimited access to the top experts in our space. You’ll also get to see how we go about building a community amongst our own audience.

It takes just 30 seconds and doesn’t cost a thing.

CLICK HERE AND JOIN FEVERBEE

Level Price  
ALL COURSES The price for membership is $750.00 per month or $7,200.00 per year
Select
Community Development Program The price for membership is $1,100.00 per month or $10,560.00 per year
Select
Director of Community The price for membership is $8,770.00 per month
Select