Costs and pricing
Part of How to model a lead generation software budget
Check prospecting software return on investment before you renew
Estimate prospecting software return on investment in pounds: set five inputs, apply one attribution rule, restate costs with ONS indices and run a payback test.
What to take away
- Decide first whether the tool has paid for itself, then whether to renew or renegotiate.
- You need five inputslicence cost, seats, data fees, hours saved and the value of won deals.
- Attribution is never exact, so fix a rule before you calculate and keep it for every tool.
- Inflation changes the comparison, so restate older figures using ONS price indices.
- A payback period longer than your contract term is a renegotiation signal, not a failure.
Set the question before you open a spreadsheet
A renewal decision needs one number: has this tool returned more than it cost? Write that question down and refuse to move the goalposts. If the tool serves several teams, agree which teams count before you pull data.
Scope changes the answer more than any modelling tweak does. For a fuller view of the cost line, see our guide to prospecting software costs and budget guide for England.
Gather the five inputs
Five Inputs to Gather
- Licence and seat fees
- Data or enrichment charges
- Internal hours the tool replaces
- Value of deals it touched
- Alternative costmanual research or outsourced list
For example, a team paying £400 a month for seats and £150 a month for data credits spends £6,600 a year before implementation time. Treat that as an illustrative example, not a market rate.
Where internal records are missing, use a conservative estimate and label it.
Convert hours into pounds
Multiply saved hours by a fully loaded hourly cost, not salary alone. Employer National Insurance and pension contributions belong in that figure. A sales development representative on £32,000 plus 15% employer costs costs roughly £36,800 a year, or about £19 an hour across 1,950 working hours. That is an illustrative calculation.
Hourly Cost Calculation
- £32,000SDR annual salary
- 15%employer costs
- £36,800fully loaded annual cost
- £19hourly cost across 1,950 hours
Apply a scepticism factor. If a tool claims ten hours saved a week per rep, test whether four is more credible.
Agree an attribution rule
Decide how much credit the tool gets when a deal closes. Options include first touch, last touch, or a fixed share such as 20% of pipeline influenced. Pick one and apply it to every tool, or comparisons become meaningless.
Record the rule beside the numbers. If you need to account for spend that never appears on an invoice, our article on prospecting software hidden costs in England lists the usual omissions.
Restate costs using ONS price indices
A tool bought two years ago is not comparable with one bought today. Use the inflation and price indices published by the Office for National Statistics to restate older costs in current terms. The ONS publishes monthly CPI and CPIH figures, so pick the period matching your contract start.
Restating matters when you compare a legacy contract with a new quote.
Run the payback test
Divide total annual cost by monthly net benefit to get a payback period in months. If payback lands inside the contract term, the tool is working. If it lands beyond, you have three levers: fewer seats, a lower data tier, or a shorter commitment.
Present payback alongside the cost, never on its own. A single ratio invites arguments about inputs rather than decisions.
Check the compliance cost of poor data
The cheapest tool becomes expensive if its data leads to complaints. The ICO enforcement action page records fines and reprimands, including cases involving unlawful marketing contact. The sanctions available to the ASA cover non-compliant advertising, which can include withdrawn ad space and adverse publicity. Neither appears on your software invoice, but both belong in the risk column of your model.
Common questions
How long should a payback period be?
Match it to your contract term. A twelve-month contract needs payback inside twelve months to justify renewal on financial grounds alone. Longer commitments can tolerate longer, but only with confident retention.
Should I include staff time?
Yes. Licence fees are rarely the largest cost. Internal hours cleaning data, building lists and chasing poor-fit leads usually outweigh the subscription.
What if two tools claim the same saved hours?
Split the credit rather than counting it twice. Allocate the saving once across the tools that contributed, or you will double-count benefit and approve spend you cannot defend.
Do I need finance to sign off the method?
Involving finance early saves rework. Ask them which attribution rule they accept, then apply it consistently. A method agreed before the numbers arrive is harder to dispute.
