It generally provides for overall support and maintenance. Software does not wear out but it will become less useful as it gets older, plus there will always be issues within the software itself. Accurately estimate your software maintenance costs galorath. Once we do so, we move into the next pricing tier for maintenance. Development of software maintenance costs as percentage of total cost floris and harald, 2010 in another study, the relative costs of maintenance and software development. Software pricing considerations software maintenance. Average cost of service and economies of scale the saas cfo.
If we split that range down the middle to arrive at 2. Some charge 10 16% but that is commonly maintenance only. Planned maintenance percentage pmp maintenance ratio. What percent are you using for maintenance, vacancy, pm. Schedule compliance is a maintenance metric that measures the percentage of time that scheduled work orders are completed. Not very long ago, the typical software maintenance fee was 15 to. If you look at effort expended on a project across its entire lifetime, then the average percentage of the total effort spent on maintenance is 6080%. In frequently forgotten fundamental facts about software engineering by robert l. Glass, an article in ieee software mayjune 2001, he talks about softwares 6060 rule, that is that maintenance. Even in little rock, arkansas, and baton rouge, louisiana, where the most.
Society for maintenance and reliability professionals smrp best practice metrics, 3rd edition. For example, microsoft charges 16 % for maintenance, but hotline support is extra. Maintenance contracts and costs also make up a huge percentage of many it budgets and the costs continue to increase year after year after year. Its possible to minimize maintenance costs through intelligent planning and execution, but its also possible. Negotitate the maintenance increase percentage such that it is based on an economic indicator. Software maintenance pricing fair or out of control. Ask for maintenance fees to be based on the discounted price of. Some charge 10 16 % but that is commonly maintenance only. Key maintenance management statistics for maintenance. The average cost of operating expenses for a business as a. What are the typical maintenance fees as a percentage of hardware costs for enterprise servers. This varies and is a bit of a loaded question because every software product is different. Updating software, adding new functions, fixing bugs and solving problems. High software maintenance fees and what to do about them.
Initial hardware as a percentage of software cost 33% to 50% ongoing hardware maintenance 20% of the initial hardware cost initial design, build, implementation of services. A vendors maintenance and support fee on each software license, usually 20. I work with 5 software companies 3 play in the municipal market space, 1 in gis and 1 in works management. Planned maintenance percentage is a valuable metric for tracking the health of a preventive maintenance program and identifying opportunities to reduce reactive maintenance. Sap raises software maintenance fees for new customers.
The maintenance fee is the sacred cash cow for enterprise software vendors. Fl houses are mostly cbs and shingle roof on concrete slabs. Depending on your business model, you may need to discount the license cost deeply, but can still get the list price for. Software maintenance costs will typically form 75% of tco. The industry norm for software maintenance is about 15 to 20 percent of the original development costs. According to a plant maintenance study from 2016, 51% of manufacturing facilities now use a computerized maintenance management system. This contract is usually calculated as an annual fee. A big chunk of the 72 percent goes to maintenance and support and that reality isnt expected to change anytime soon. The software maintenance cost is driven by a percentage of the initial software license fee. Indeed, for a typical licensed software application, software maintenance fees should be 20% for the first five years of the products life, 15% for.
Maintenance cost as a % of replacement of asset value. The average percentage of projects deemed failed by the pmi research in 2017 was 14% as indicated on the chart above. To get an overall picture of the ideal profit margin, youll first need to know how to crunch the numbers. The popular benchmarking metric of costerv is a valuable tool for setting longterm goals when used correctly in conjunction with targets for plant reliability. Maintenance fees as a percent of the license cost are not cast in stone. Which factors affect software projects maintenance cost more. In order to remain in a healthy environment servers will need to go through maintenance, as its also a way to avoid drastic. For example, microsoft charges 16% for maintenance, but hotline support is extra. Manjit singh, cio of chiquita brands, says hes been watching maintenance fees for the software vendors he uses creep up from an average of. The consumer price index for urban wage earners and clerical workers cpiw increased 0. Also some force you to pay maintenance every year or you lose the software. That equates to a price increase of 25% not factoring in the cost of money, of course. Negotiate the maintenance as a percentage of the software purchase price not the list price.
Organizations that are committed to measuring the effectiveness of their. What are typical maintenance fees as a percentage of up. Smrp maintenance cost as a percentage of replacement of asset value rav source. Support may include telephone assistance time as well. Forresters wang notes that the typical maintenance and support cycle has a big. What remains, in my mind, is the cost of software maintenance and supporting.
Software maintenance fees may not be invulnerable to change. Accurately estimating software maintenance costs is critical to proper project management, as software maintenance makes up roughly 75% of. Standard percentage rate for annual software maintenance. The software maintenance cost is driven by a percentage of the initial. What are typical maintenance fees as a percentage of upfront license costs for enterprise software. In the longterm achieving zero downtime is considered a myth. What are typical maintenance fees as a percentage of upfront.
The rise in success is the result of the many changes in modern it. First, they are increasing maintenance fees directly. It spending and staffing benchmarks 20192020it budget. How to cut software maintenance and support costs and fund it.
Sap raises software maintenance fees for new customers cio. There is a lot of new construction in my areas, so maintenance, in theory should be lower. Maintaining an app is critical to its overall success. Preventive maintenance is the most desired cmms feature, followed by asset management and work order management. Every supplier has a different way of calculating maintenance and different competitive rates, but for the most part maintenance ranges from 2025% of net license fees. A vendors maintenance and support fee on each software license, usually 20 percent to 25 percent of the net license. A few years ago, 1518% of the software license fee was a typical benchmark.
To calculate planned maintenance percentage, start by dividing the number of planned maintenance hours by the number of total maintenance hours in the same period. Accurately estimate your software maintenance costs. The software maintenance cost is driven by a percentage of the initial software license fee which is usually between 1625 % of the license cost per year. This contract is usually calculated as an annual fee based on some percentage of the total software cost. What are the typical maintenance fees as a percentage of. How to cut software maintenance and support costs and. Heres what the average american spends to maintain a home. Any business can save 1218% by investing in preventive instead of reactive maintenance. Software maintenance is the annual cost that you pay for upgrades and support of the software.
According to accentures report, how software maintenance fees. Visit payscale to research maintenance technician hourly pay by city, experience, skill, employer and more. Most complete erp solutions are around 20 % which includes maintenance and hotline support. Software maintenance cost is derived from the changes made to software after it has been delivered to the end user. Organizations with bestinclass maintenance will have a pmp of 85 % or higher. To calculate the maintenance capital expenditures for 2009 you do 25. Development cost versus maintenance cost stack overflow. According to the plant engineering 2017 maintenance study, which was one of our main sources for this infographic, the average time spent on scheduled maintenance is 19 hours per week. Businesses, on average, spend 80% of their time reacting to. The top maintenance statistics you should know for 2017. Software maintenance is the annual cost that you pay for upgrades and. Postdelivery maintenance in modern software development. A whopping 50% increase in software maintenance cost for this title. The time spent fixing bugs in software should be frontloaded to the first 612 months of release, however as time approaches infinity, the time spent on maintenance versus the time spent on initial.
Key metrics of it intensity, including users as a percentage of employees, pcs per user, percentage of users with tablets, percentage of users with smartphones, users per network site, percentage of. An annual charge of 20% of the license fee list price is a good staring place. Your operating expense ratio is your operating expenses divided by your revenue. Planned maintenance can also be broken down into several types. Technology vendors often sell a maintenance contract with their software. Some of those companies will have it departments that play an important role in the business while for others the it department.
Not very long ago, the typical software maintenance fee was 15 to 18 percent of license fees. It generally provides for overall support and maintenance of a software product, including applications. It might not sound like much, but run the numbers out three or four years and see the impact. This means your cost for recurring maintenance will be equal to 2025% of the upfront software fees you paid for after any discounts that were a.