Business Resources

How to Keep Technology Costs Down

By: AllBusiness.com

For many business owners, technology spending represents a good portion of the yearly budget. In the startup phase in particular, tech costs can balloon as you acquire new equipment and systems to get your fledgling business off the ground.

However, there are a few tips you can follow to keep tech costs down and safely contained within a small business budget.

First off, figure out what technologies you really need and how advanced they should be. The technologies you invest in should satisfy core business requirements; they should add value to your business and give you a return on your investment, even if it's an intangible return such as customer satisfaction.

Next, you'll want to research what products and services are available within your budget. Cast your net far and wide by talking to a trusted IT consultant and different product manufacturers, as well as conducting your own research online. The more information you have about the technology, the more options you'll have available.

A knowledgeable IT consultant can be your biggest ally. If they know your business, they can often pinpoint what you need or recommend a variety of solutions to choose from. If you do not already have a consultant, be sure to check out How to Choose an IT Consultant.

Technology acquisition is rarely as straightforward as buying electronics or other equipment because of the supplemental costs such as system design, installation, and maintenance and support.

Before purchasing, you will want to calculate the Total Cost of Ownership (TCO) to ensure that you stay within budget, and try to plan for upgrades and additional features so these costs don't come as a surprise down the line. Sometimes calculating the TCO can be complicated, so once again, you may want to ask your IT consultant for help.

If it's hardware you're after, determine if you need the equipment new or if you can get it used. You can often find quality used laptops at a fraction of the cost of new ones, for example. But if you decide to buy the equipment used, make sure you get it from a reputable vendor and ask about warranties and support.

If you are buying new equipment, most large vendors offer a range of products and services aimed at small business customers, with more moderate price points and a variety of financing options.

One of these options is leasing, which gives you the advantages of no upfront costs and a fixed monthly fee. Make sure to calculate the total cost of the lease before you sign a contract, however, because you could be paying more for the equipment over the period of the lease than if you purchased it outright.

If you are buying multiple products from one vendor, you can also try to negotiate a bundled rate. Vendors are more open to negotiation than you would think, so ask for a discount and see what happens.

Free trials offer you another opportunity to save cash. Software and services companies sometimes offer 30 or 60-day trials, and if you like the product, you can negotiate a discount when you sign up.

Some technologies have a higher upfront cost but will save you money in the long run, such as Voice over Internet Protocol (VoIP). VoIP can save businesses thousands of dollars a year in long distance calls and other communications, so don't overlook the advantages of paying for cutting-edge technologies with a long-term payoff.

Finally, you may want to consider outsourcing or signing up for managed services that offer a fixed monthly cost. With sufficient planning and research you can keep tech costs down and your business up and running.

Be sure to read How to Develop a Technology Investment Strategy for helpful advice on how to implement a strategy that aligns with the specific goals of your organization.


Scarlet Pruitt is a freelance writer and business consultant based in San Francisco. She has covered business and technology for publications in the U.S., Europe, and Latin America.

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