4 MIN READ · PRACTICAL GUIDE
A subscription quote tells you what access costs. It does not tell you what the system will cost to introduce, operate and eventually replace. A useful comparison makes those costs visible before a contract is signed.
This guide provides a planning model, not current vendor pricing or tax advice. The example uses euros to make the arithmetic clear; the same method can be used in sterling with a consistent currency assumption.
Put every proposal on the same baseline
Start with a shared service boundary. Does the offer include production and test environments, identity integration, support during your operating hours and the reporting functions your team needs? If one proposal omits these, comparing licence prices alone rewards the narrower proposal.
Separate cash expenditure from internal opportunity cost. Both matter, but they answer different questions. A cash budget helps finance plan payments. An economic comparison also includes the time your team spends configuring, cleaning data, learning and supporting the new system.
The FinOps Foundation describes forecasting as an ongoing capability that depends on reliable information and collaboration. Applied to a modest SaaS purchase, the practical lesson is to revisit assumptions with the people who control usage, rather than accept the first estimate as permanent.
A transparent three-year example
Assume 20 users, a hypothetical price of €30 per user per month, unchanged usage for three years, €6,000 implementation, €2,000 integration work, €1,200 annual support and 120 internal hours valued at €35 per hour. Add a €2,000 exit allowance. These are invented planning assumptions, not prices from any supplier.
| Component | Calculation | Three-year amount |
|---|---|---|
| Subscriptions | 20 × €30 × 36 months | €21,600 |
| Implementation | One-time assumption | €6,000 |
| Integration | One-time assumption | €2,000 |
| Support | €1,200 × 3 | €3,600 |
| Internal effort | 120 × €35 | €4,200 |
| Exit allowance | Planning provision | €2,000 |
| Economic planning total | All above components | €39,400 |
The model excludes VAT, foreign-exchange movements, financing costs and inflation. The external-cost total, including the exit allowance but excluding internal effort, is €35,200. An allowance is not necessarily a cash payment in the modelled period; show it separately in your payment schedule.
Write the payment terms beside each line. An annual upfront subscription creates a different cash requirement from monthly billing even if the quoted annual cost is equal. Do not subtract assumed tax recovery unless your finance adviser confirms the treatment for your circumstances.
Test three assumptions that can change the decision
User growth: if the team rises to 30 paid users in years two and three, subscription cost becomes €28,800: €7,200 in year one plus €10,800 in each following year. With every other assumption unchanged, the total becomes €46,600. Check whether occasional approvers need a full licence before using that figure.
Price changes: a five per cent price rise at each anniversary would make the original 20-user subscription line €22,698 over three years. The model’s total would then be €40,498. This is a separate scenario from user growth, not a prediction of what a vendor will do.
Scope changes: an extra integration may introduce build fees, ongoing hosting and support work. List the change as a separate item so that it is not hidden inside a vague contingency percentage. Identify the person who can approve it.
Treat renewal and exit as operating tasks
Record the renewal date, cancellation notice period, permitted price changes and export procedure. Assign an owner well before the notice deadline. A procurement saving at signature can disappear if nobody checks usage before renewal.
Request a sample export and confirm whether attachments, relationships and activity history are included. Our cloud exit plan explains how to turn export rights into a testable operational plan. For a broader system purchase, use the ERP selection framework alongside this cost model.
Frequently asked questions
Should the cheapest total win?
No. The model compares cost, not suitability. A lower price does not compensate for a missing mandatory workflow, unacceptable security risk or unworkable migration.
Should estimated savings be deducted?
Keep them in a separate benefits model. State which hours are actually removed, which are reassigned and which savings depend on adoption. This prevents uncertain benefits from concealing known spending.
Source and scope
Primary framework checked 14 November 2026: FinOps Foundation: Forecasting. The numerical model and scenarios are original illustrative calculations. They are not supplier quotations, benchmarks or promised savings.