Software costs don’t usually feel dangerous until they quietly become one of the biggest leaks in your business. From small startups to growing enterprises, scattered across teams and tools. This article explores how a License Cost Calculator can help you uncover hidden expenses and take control of your software investments.

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When your company grows, you’ll also invest in tools to help your business grow, including: software subscriptions, plug-ins, enterprise platform, and/or third-party services. However, the majority of organizations do not realize that licensing costs compound, rather than grow linearly.

According to a Gartner study, organizations overspend on software licenses annually–often by as much as 25%–due to unused licenses, redundant tools, insufficient visibility, etc. This isn’t just an inefficient way to spend; it’s a way for your company to lose revenue.

That is why a License Cost Calculator is more than just a tool to calculate total licensing costs; it is also a lens through which an organization can determine its total software spend.

Why License Costs Slip Through the Cracks

If you look at an individual license in isolation, it may not seem costly; a new user license could cost a few dollars each month or possibly a monthly fee of $30 per user. As your business grows larger and your staff expands, you will have many systems that you use every day. These systems may include a marketing system, an HR system, and dozens of other systems that are specific to the different areas of your company. In this case, you now have many applications that may be used within the organization, and thus you have many different subscription costs that you are not aware of as it relates to the total dollar amount that is being spent each month by the organization or after a full audit has been conducted to identify the total dollar amount spent on software, according to a Forrester report, you have already incurred the leak.

The License Cost Calculator will help provide a solution for this type of problem.

What a License Cost Calculator Really Does

The License Cost Calculator will provide an answer to three questions that you have to ask yourself:

What is the current cost of your licenses?
How many of those licenses are being utilized?
Where can savings or more effective processes be had by cutting back on licensing costs?

To use the License Cost Calculator, you will be asked to input the following information:

Total number of licensed users, or users utilizing a license;
Cost per user for that license.
Total number of licensed users and total number of non-licensed users.

The License Cost Calculator provides you with the following:

Total number of licensed users and total amount of monthly and annual fees/charges for those licenses you own;
Please include the following quantities in your calculation – unused license(s) or underutilized license(s).
The cost savings based on optimizing or changing the way that you are currently managing your licensing costs.

Simple calculations can provide necessary information that will help your organization realize value from its licensing costs.

A Quick Reality Check (Mini Quiz)

1. The total number of software programs we (as a team) are using right now
I can give you that exact #;
I can give you a close guess; or
I can’t answer the question.

2. We are utilizing all our licenced software every month
Yes, I am using all of my licenced software;
No, I have purchased all of my airports, however I DO NOT use all of them; or
I cannot answer that question.

3. I have looked at the software I have purchased this past 90 days and looked at whether my purchases are being utilized
Yes I have taken time to do that;
I have done it sometime in the past; or
I cannot answer that question.

If you had primarily “B” or “C” for the answers to these questions, chances are you are considering spending too much on non-utilised software licencing like many companies throughout the world are.

Are You Paying for Unused Licenses?

One of the major causes of a license being wasted is that too many “just in case” licenses have been purchased and you are currently waiting to use your licenses. The idea behind purchasing too many licenses is valid, but they keep taking money from your budget month after month due to being idle.

According to Flexera, up to 30% of licenses purchased through SaaS/Cloud services will remain inactive in a company, so think about the cost savings of recovering even just half of this amount

Where 365 TUNE Fits In

A function that 365 TUNE provides is as a cost optimization partner, and not simply a tool vendor.

By using sophisticated, proprietary, continuous, intelligent tracking methods as well as actionable data insights for tracking utilization patterns, 365 TUNE can carry out both cost calculations as well as offer insights into the behaviour that caused those costs.

With a built-in License Cost Calculator within the 365 TUNE ecosystem, organisations can:
Find any unused or duplicate licences quickly
Keep track of department-wide (real-time) usage of licences
Estimate future licence needs based on growth patterns
Review renewals strategically before committing to any additional/unnecessary expense

The end result? More informed decision making than reactive cost-cutting.

From Expense Monitoring to Competitive Advantage

The evolution of your small business will involve transitioning from tracking expenses to developing strategies for developing your business. A license cost calculator can be helpful to save you money, but also provide you with an understanding of how your resources are allocated.

Saving every rupee by discovering your “unused” licenses allows you to now apply those savings towards growing your business; growing your business could include, but is certainly not limited to, hiring new employees, spending more on marketing, developing new products, or improving current products. Allocating these savings in a competitive business market will be extremely important.

Peter Drucker said, “what gets measured can be managed.” Licensing cost is no exception to this rule.

Final Thought

The cost of licenses is something most people ignore, but this is usually where you may find the easiest and fastest way to positively affect your financial performance.

The problem is not necessarily related to the complexity of some processes; instead, it is simply due to there being no visibility of how much money was actually spent on licenses. Using proper methods, along with the benefits of advanced technology like those provided by 365 TUNE, can help you determine ways to save money or better use the resources you currently have.

In order to maximize your business’s profit ability it is possible to receive a greater financial benefit through finding an efficient way to spend money versus generating new revenue streams.