One of the first questions we get from veterinary practice owners and managers is How much does the software cost? 💸
We get it. Price matters.
But it's not just what the price tag reads. As many of us know, veterinary software can actually cost way more than the price suggests (time, frustration, errors, limitations). 😠
Throughout the veterinary industry, this price question lacks a straightforward answer—for many reasons. Know that it's similar in human hospitals, partly because every hospital is different and has different goals.
The purchase of software (whether full veterinary practice management software or workflow software) is a pretty unique one.
After all, you are purchasing the system for your hospital. What else affects so much of your client, staff, and patient operations?
We’ll do our best to explain what we’ve learned about veterinary software pricing.
How much does veterinary software really cost?
In human health, new EMR software can cost in the hundreds of millions of dollars (or more), and that’s just for the software!
In veterinary medicine, it’s not that much, but pinning down a number is complicated and it obviously depends on the size of the hospital.
🤐 Here’s a little industry secret we’ve heard that best summarizes the total price: Software companies aim to charge upwards of 3% to 5% of a hospital’s gross revenue per year for full practice management/hospital information software.
Some do this with large up-front costs, which spread over the life of the purchase, and others do it through recurring fees. And it’s similar in many human health models.
🤯 How is that possible, you ask?
This percentage number can be reached from the software price itself, sales of hardware, costs to maintain servers and databases, installation, support, add-ons, or upgrade fees. It can also be subsidized via ancillary sales contracts and partnership fees (think the value of lab or supply contracts, or credit card transactions, or in the most lucrative examples, by selling your practice and client data).
Bottom line: That 3% to 5% number is likely talked about in board rooms but probably won’t come up during sales calls. And if it holds, practices that do $2 million in annual revenue can expect to pay at least $5,000 per month for practice software, one way or another.
Want to understand more? Let’s break it down.
Software and Software Support
The price for the software is usually split into 2 costs: one-time and recurring.
One-time fees are the installation, training, setup, data migration, and support costs. But in some software models, these can also be one-time costs per computer (called “seat licenses”). And with older software models, you often must pay for each software update. These costs can range from $2,000 to more than $500,000, depending on your center.
Then there are the recurring costs for software and support. These often depend on your software type (cloud vs. server-based) and what you paid up front.
With more modern software, the cost of the software upgrades, cloud servers and databases, security, backups, support, and more, are often rolled into one monthly fee (sometimes called SaaS or Software as a Service). These costs are often charged per user or groups of users.
Add-on Software and Integration Costs
Software often can’t do it all, so there are likely other tools that you’ll want to connect to your main software.
Sometimes these are upsells from the main software provider. Sometimes these are other companies entirely. Those software add-ons have costs of their own, and connecting them to your practice software can also carry a cost.
Hardware costs can quickly add up. You’ll need to factor in the cost of any machines needed to run your practice software, such as computers, tablets, and TVs. Plus, don't forget the peripherals (eg, keyboards, printers). You'll also need to consider maintenance and replacement costs for each device.
Server, Security, Backup, and Database Costs
If you use server-based (non cloud-based software), the servers themselves will be one of your largest costs.
The cost to purchase, upgrade, and maintain servers is often in the tens of thousands or more. And that doesn’t account for the money you spend protecting and backing up your data, and the maintenance that comes along with it.
If you go with cloud-based software, the majority of this is usually wrapped into the software costs (above).
IT Support Costs
IT professionals are increasingly important members of any modern veterinary team. Especially if you use server-based software, you’ll need to hire an in-house or contracting experts to spend significant time (and money) on your hospital IT infrastructure (eg, servers, security, network, computers, peripherals).
IT salaries for a full-time person can be upwards of $60,000 to $80,000 per year. If you have cloud-based software, costs tend to be lower because there are fewer servers/backups/security infrastructures to maintain.
Human healthcare estimates “switching costs” in the hundreds of millions of dollars! Don’t underestimate this one—and know that not every software carries the same switching costs.
And to be clear, this isn't necessarily because switching itself is costly. It's the cost of time for your team based on how easy the new software is to setup and learn.
How much work does your team have to do for setup vs. how much does the software company take on? How much of staff training do you need to handle vs. how much does the company take on?
How easy is the software to use? If it’s so complicated or clunky that you have to reduce revenue-generating visits for a few weeks, that must be factored into your overall costs.
This one is a cost you pay if you choose the wrong solution. You could use paper or even a folder on your hard drive as your “practice software” and be very cost-effective.
But the cheapest solution isn’t always as cheap as it appears. 🕵️♂️
Long-term effects on staff from usability issues are difficult to quantify but important to consider. In human healthcare, miserable software is a leading cause of staff leaving a hospital—and in some cases, a profession.
💸 So… Are Software Costs Worth It?
Yes! Compared to vehicles, supplies, or equipment, your software has an outsized impact on your organization. Arguably more than anything you use in this day and age.
From capturing missed charges to improving staff efficiency and patient care, good software is the lifeblood of a healthy veterinary practice.
Plus, when software is well designed, it actually has the potential to appreciate in value as your team uses it (think analytics, trends, and workflow improvements) and make you money (think missed charge capture and efficiency savings)!
💎A wise hospital owner once put it this way: Buying software is more about value than price.
Here’s what they meant: If you’re choosing between something that will cost $1000/month but earn 10% to 20% more revenue (efficiency, happiness, missed charge capture) and an alternative that only costs $10/month (100 times less!) but only makes 1% to 2% more revenue, which would you choose?
Savvy practice owners know that price is only one side of the comparison coin. In this case, investing in the higher quality solution would make an average-sized veterinary practice at least $160,000 more!
So if you are contemplating new software, we’ll leave you with this: Don’t ignore your opportunity cost—or the cost of missing out on potential gain—from using better alternatives. Picking the wrong software—or sticking with one that is antiquated and hard to use—limits your organization and has extreme costs that aren’t immediately apparent.
⏲ Opportunity cost is like a money meter, running every minute in the background until you fix it.
So in the end, if you find a great partner that offers software that can actually make you money, make your staff smile, and do it simply while constantly growing and supporting you, and you are spending under 3% to 5% per year for it... consider that an unbelievable value! 🙌