One question that comes up pretty regularly from companies evaluating Dynamics CRM is “what’s it cost”. They’re usually looking for general ballpark pricing just to understand if the Dynamics CRM software is a fit for their budget or cost expectations.

So, here’s a quick way to get ballpark pricing for the software. On average I’d say $1,200 per user is a good general rule of thumb. For smaller companies it can be as low as $500 per user. There ya go.

For those of you who want a little more accurate pricing and nuts-and-bolts detail, read on.  Microsoft licensing can be a bit confusing and pricing can vary so I’ll do my best to make this simple.

This pricing is for the On-Premise version which is typically installed at your business. Another version, Dynamics CRM Online, is the Software-As-A-Service (SAAS) version hosted by Microsoft at their data centers. The Dynamics CRM Online pricing is pretty straightforward and as of this writing is $44-$59 per user per month.

For Microsoft Dynamics CRM On-Premise, there are two primary types of licenses you usually need to purchase:

• Server License: You need one Server license for each server computer Dynamics CRM will be installed on. Unless you’re a larger company with a complex business model you mostly likely will only need 1 Server License. There are three Server Editions to choose from. Workgroup Edition is for smaller companies with 5 or less users. Enterprise Edition is usually for larger more complex companies. The majority of my customers are on the Professional Edition.
  • Workgroup Edition (Maximum of 5 users, includes 5 users): $2,500 – $3,000
  • Professional Edition Server: $2,000 – $2,500
  • Enterprise Edition Server: $5,000 – $6,000

• Client Access License (CAL): You will need one CAL for each “client” that will connect to CRM. Client doesn’t mean your customer but rather the number of your employees (Users) or computers (Devices) that will access CRM. In my experience, most companies go with the “User” license model. Note that the Workgroup Edition already comes with 5 CALS so there’s no need to purchase more.
  • Client Access Licenses (CALs): Approx $1,000 – $1,300

I listed each of the prices as a range because the actual price will depend on which Microsoft Volume Licensing program you already have and/or decide to go with. Common Microsoft Volume License programs include Open Value, Open Business, Select, and Enterprise. Each one has different benefits that I won’t get into here.

Here are a couple of examples of licensing configurations and pricing for Microsoft Dynamics CRM

• Small Business Example: Smaller businesses (1-50 employees) that don’t need more than 5 users usually opt for Workgroup Edition which supports a maximum of 5 users and also comes bundled with 5 Client Access Licenses. So let’s say you have 3 salespeople and 2 executives that will be using CRM. You may need:
  • 1 Server License: Approx $2,700
  • 0 Client Access Licenses: (Already comes with 5 CALs)
  • Total CRM Software Ballpark Estimate = $2,700

• Medium Size Business Example: Many of my medium size clients (51-500 employees) are using the Professional Edition with about 30 users on average. So let’s say you have 20 salespeople, 5 customer service people, 3 marketing people, and 2 executives that will be using CRM. You may need:
  • 1 Server License: Approx $2,200
  • 30 Client Access Licenses: Approx $1,100 each x 30 = $33,000
  • Total CRM Software Ballpark Estimate = $35,200

That covers the software. Another thing to consider for any CRM project is the cost to implement it (installation, customization, training, etc) for your business. I’ll cover that in a different post.

How’s this for a special offer?

Microsoft announced today they’re offering 0% financing on new customer purchases of Microsoft Dynamics CRM and ERP products.

It’s available from November 19, 2008 through March 20, 2009 for Volume Licensing purchases of $20,000 – $1,000,000.

No money down or deposits required.

http://www.microsoft.com/dynamics/purchase/zeropercentfinancing.mspx#

Lately I’m running across more prospective clients who previously deployed Microsoft Dynamics CRM but let their Software Assurance lapse. Most of them weren’t aware of the impact this lapse would have on their Dynamics CRM deployment and said they wish they had understood it better in advance.

So what’s the big deal with letting Software Assurance expire? First, let’s take a brief look at what it is. Software Assurance is a Microsoft maintenance offering that, depending on which Microsoft license program(s) you use, is normally included for a period of time with your software purchase. It usually lasts for two to three years and can be renewed at the end of its term. Software Assurance can include a variety of benefits such as New Version Rights, Phone Support, E-Learning, and more. Here’s a PDF Software Assurance Comparison Chart with detail on which benefits are included with which license.

Most of the benefits are nice to have but the one to pay attention to is New Version Rights. When Microsoft releases a new version of Microsoft Dynamics CRM, like they did with version 4.0 in January, New Version Rights entitles companies who purchased a previous version to an equal number of licenses of the new version at no cost. So as an example, let’s say you purchased licensing for 50 users of Microsoft Dynamics CRM version 3.0 in 2007. In January you would have received an equal amount of licensing for version 4.0 at no cost.

Now about the lapse part. If you don’t renew your Software Assurance and let it lapse, your Software Assurance expires and so do all of its benefits including New Version Rights. You can keep on using your Dynamics CRM software indefinitely but when a new version is released if you want it you’ll need to pay the full cost of the software to get it. So as an example, if you originally paid $50,000 for the last version and you let your Software Assurance expire, you’ll most likely need to pay a similar amount (or maybe even more) for the new version.

So back to the prospective clients. They all really want Dynamics CRM 4.0 but are now faced with either forking out the money for the new version or staying on the old version until they can justify the cost. In hindsight, most said they would have renewed the Software Assurance had they understood its impact.