How Much is Salesforce: Cost of Salesforce for Small Business

Salesforce is cheap. I’d say it’s free. No, even better – you will get paid for using it. Bear with me. I’ll explain to you what I mean, but before. Let me share a story with you where we reached the point where business was almost literally paid for using Salesforce. After reading this story, not only you will understand how salesforce is priced, but you will understand true cost of Salesforce for small business owners.

One more house

Max, a former marketing director and a dear friend of mine, was employed with a small business specializing in the manufacturing of prefabricated homes. Amidst the launch of their new product, they grappled with the challenge of selling enough houses to offset the product launch costs. In his quest for local Salesforce CRM experts, Max happened upon my website during an internet search, aided by his business software.

After a year of intensive collaboration, our professional relationship evolved into a close friendship. Moreover, our combined efforts led to the sale of an impressive number of homes, not only recouping the product launch expenses but also ensuring a steady stream of orders for the subsequent 14 months. With the help of Salesforce CRM and effective lead tracking, the remarkable journey all began with our determination to sell just one more house…

How we met

Back then, we were merely strangers, crossing paths for the first time.

He dialed through the intercom at my office, and with a casual push of a button, I ushered him in. His steps took him into the co-working space that we were temporarily calling home, and he couldn’t help but express his astonishment.

“Riga’s offices are a revelation,” he remarked, the surprise evident in his voice, speaking of the capital of our quaint Northern European country, Latvia.

“Well, we only rent a small section of this place,” I informed him, quickly dispelling any misinterpretations.

At the time, co-working spaces were a budding concept, slowly inching their way into the small business world. Ours was one of the pioneer shared workplaces in the country. We relocated to the meeting room, where I offered him a cup of coffee, setting the stage for our epic brainstorming session.

Five hours later, we emerged with a solution, a solution that would eventually shape this entire story.

No Sales Data

A critical part of my approach with new clients involves demonstrating the value of their investment, hence the “show me the money” strategy.

Remember when I suggested that Salesforce CRM, under the right conditions, could effectively be free? Here’s the catch: to reach a point where Salesforce pricing becomes an insignificant concern, you need to maximize your sales team’s efficiency and, crucially, monitor their progress using effective lead management.

During our discussions, it became apparent that no one in the small business had considered tracking the number of leads entering their pipeline. Without this customer data, it was impossible to gauge the success of our Salesforce CRM implementation.

Measuring a vague ‘adoption rate’—a popular metric among larger companies to demonstrate usage of the system—wasn’t an option. This was a small business. It needed low-effort, high-impact solutions that delivered immediate results. I had to find one quickly. And I did.

The Issue

The prefab housing company Max was part of had orchestrated a fantastic marketing campaign, pulling in a considerable number of leads. But these leads needed further qualification. With a limited sales force of only three sales representatives, they decided to evenly distribute the leads.

A small script on their website was set up to distribute emails to the separate inboxes of each sales representative. Every new lead was automatically assigned to a different rep in a rotating fashion. But a problem reared its head.

We were aware of the number of houses sold each month, but we had no insight into how many leads the script was actually generating. No one was keeping track of the number of submitted forms, or even the total number of site visitors…

So we decided, that we can measure only one parameter. Number of houses sold per month, per sales representative per year. This became our KPI.

The Math

Before we dive deep into the story, it’s essential that I clarify the mathematics underlying Salesforce. If you were to research ‘Salesforce cost for small businesses’ or look into the general Salesforce CRM pricing structure online, you’ll encounter subscription costs, which, unfortunately, represent only a fraction of the total expenditure. In fact, it often accounts for as little as one-sixth or even one-eighth of your total spending on the Salesforce platform.

Subscriptions

The Entry-Level Plan

When considering Salesforce CRM software pricing for small businesses, Salesforce Essentials often comes to mind. Reasonably priced at just $25 per user per month (25 EUR in Europe), it seems like a steal.

However, this plan offers limited functionality. It may be perfectly adequate if all you require is basic lead management, tracking of Leads, Opportunities, and Contacts. But, if you need something more robust right from the start, you might find it lacking.

The Common Choice

In reality, the majority of my small business clients opt for the Professional edition of Salesforce CRM, which costs $75 per user per month. That’s already triple the cost of the Essentials plan. For the sake of illustrating how Salesforce can be profitable for your business, I’ll use the Professional edition in our calculations.

Enterprise CRM for Small Businesses

Surprisingly, I have several clients with only five users who subscribe to the Salesforce Enterprise edition, a piece of business software which costs a daunting $150 per user per month. But don’t be put off by this figure. There’s a solid business rationale behind this pricing.

How subscriptions compare?

You might be wondering, what sets these CRM platforms apart? To simplify things, I’ve drawn up a basic comparison of capabilities (not features) for each plan.

I’m not going to delve into the minute details of every plan. Features are rapidly changing, and they might differ even between two annual contracts created just two days apart. What I’m trying to highlight here is that features aren’t the most crucial aspect of this equation. What matters is aligning with your small business’s capability needs.

A word about hidden costs

While Salesforce consistently maintains clarity regarding its pricing structure upfront, there can be instances where customers anticipate certain features as part of the package, only to find out they’re classified as add-ons. Salesforce houses a suite of nearly a hundred distinctive add-ons.

One of the most widely used among these is CPQ, an abbreviation for “Configure, Price & Quote.” While Salesforce’s official documentation does indicate the availability of quoting capabilities from the Professional plan onward, this is only a part truth. For those with intricate pricing algorithms, you may find yourself requiring the additional CPQ add-on.

Hence, it’s fundamentally important to scrutinize your needs thoroughly and detail your requirements explicitly, which admittedly can be a tough task if you’re a newcomer to the Salesforce ecosystem. This is where professional assistance comes in handy! But let’s leave the promotional talk for another time.

Consultancy Costs

Another essential factor to discuss before delving into the nitty-gritty of Salesforce cost structure, which can significantly impact your small business, is the expenditure associated with consultancy.

How much should you allocate to those intelligent professionals in suits, or rather hoodies, who will help streamline your business processes? Well, it depends. It relies on the level of expertise you require, your geographical location, and the project’s scale.

Let’s refer back to Max’s scenario with the prefab houses. Despite having only three sales representatives, they needed an intricate quoting system; without it, a full Salesforce CRM software wouldn’t add any value.

To respect confidentiality, I’ll be adjusting the figures in this illustration, while maintaining the principle of the calculation. I trust you understand the reasoning behind this.

Implementation and Salesforce Pricing

Picture this: You’re a prefab house manufacturer and you need Salesforce’s Professional edition tailored to your specific needs. You want webform integration, opportunity customization, custom quotes with aesthetically pleasing PDFs, and an email and Salesforce Marketing Cloud platform integrated into your system.

This is not an extensive list of requirements, but it will cost you. However, it wouldn’t be equitable to divulge implementation costs without also addressing the ongoing costs associated with using the Salesforce platform.

Ongoing Costs

The notion of a fully “implemented CRM platform” is a myth. It’s not akin to buying a car. Rather, it’s more like leasing a car chassis, devoid of an engine, wheels, and transmission. You are tasked with furnishing the remaining components.

Your initial implementation is akin to starting the car, but fuel and maintenance equate to ongoing costs. This includes constant sales forecasting and adjustments based on the performance of your sales representatives.

Don’t let this intimidate you just yet. While it might sound complicated and expensive, I assure you, I’ll make good on my promise. As I stated in the beginning, I will demonstrate how to recoup these investments and even multiply them.

So, what’s left? The internal costs.

Internal Costs

The most underestimated aspect of the cost structure of CRM solutions for small businesses is perhaps the internal costs. This includes the time and resources spent on crucial tasks like lead tracking.

Take a look at this illustrative chart that I’ve prepared. It’s based on a few examples that I could relate to while drafting this article. While it’s not a universal representation for every project, the core concept is spot-on.

The most significant cost you’ll incur pertains to your internal resources – your time and effort spent on understanding the system, its workings, and building your business around it. This investment is crucial if you aim to start reaping the benefits of Salesforce, as I mentioned earlier.

Role of the Business Owner

As a business owner or manager, your involvement in the process at every stage is critical. You’ll need to start owning the product – aptly termed as the ‘Product Owner’.

This role demands a personal commitment as if the project was being executed for your personal gain. In my opinion, this is the most expensive aspect of the implementation, but it’s also the one that yields the highest returns.

Role of a Dedicated Employee

Not only will you have to be personally involved, but in even small companies, all successful implementations, without any exceptions (not a single one), involve a dedicated employee. Maybe managing Salesforce isn’t their full-time job, but it certainly occupies a significant portion of their time.

Yet one more house…

Now that you understand the context, let’s dive into how we made Max’s project a success. Remember, our goal was to sell one more house per employee. Here’s how we calculated the implementation of Salesforce.

We made our calculations per employee and set our Key Performance Indicator (KPI) to the number of houses sold per employee per year. We concluded that if one employee could sell one additional house per year, it would offset all costs related to Salesforce implementation and even generate a profit.

The image shows an annual estimation of costs related to Salesforce. After a 5-hour long session, we came up with a conservative calculation.

We predicted that if one employee sells only one more house per year (spoiler: we exceeded this goal multiple times), we would still be generating a 13% Return on Investment (ROI) from the Salesforce implementation.

Disclaimer

A typical consultant might exclude your internal overhead costs from the equation to boost ROI figures, but I believe in transparency and building long-term relationships. This is more of a marathon than a sprint.

The Implementation Process

Curious about how it went? After signing the professional enterprise contract, it took us about a week to set up Salesforce Essentials and start collecting leads directly from the website. Despite the business wanting complex calculations as part of the Salesforce CRM pricing system (CPQ), I persuaded the business owner to start with a more basic sales CRM solution.

The Transition

This simple but powerful adjustment took us nearly two months to implement. While the technology was ready, the sales representatives did not have the culture of consistently checking Salesforce for tasks and leads. This was critical, as a good sales CRM system like Salesforce Essentials requires consistent usage for maximum impact. With the business owner’s involvement, we managed to change this scenario, leveraging the full potential of Salesforce’s marketing automation platform.

First review

After six months, I gave a call to Max and asked if he’s fine if we make our first semi-annual review and see what the results were.

At this point, we already knew almost everything about leads – where they came from, who was the service professional responsible for a lead, and what was the outcome of the communication, thanks to the marketing tools in Salesforce.

Guess what we discovered? During the first six months of operations, compared to last year, we sold seven houses more. This was more than two houses per person which is more than double the estimation. But hold on. That’s not it.

Unexpected discovery

We noticed an interesting tendency. One sales representative sold five houses more than the other two. While leads were distributed evenly, Mark and Carl had similar sales figures (names changed), while Josh was standing out. He always was a bit ahead of others, but this time he showed even more impressive results.

So, we started digging into the reasons. The discovery we made was simple, yet profound.

The real ROI

Before we dissect the reasons for this striking success, let’s fast-forward to 12 months post-implementation to provide a glimpse of the real ROI in this case study. By the end of the first year after implementation, we’d sold an additional 18 houses. Not to mention, the subsequent 12 months showed even further growth.

While these figures may appear almost fantastical, they’re genuine. This case study beautifully illustrates the potential of a Salesforce implementation when, and only when, the business owner is actively involved and other facets of the business (such as marketing) function effectively.

Seven Dollars Per Dollar

In essence, we garnered a return of $6.8 for every dollar invested in the first year. While the upcoming years didn’t exhibit quite as dramatic a ratio, the ROI still exceeded two. Seeing such a promising ROI, the business decided to upscale their investment into IT, including the introduction of a customer portal and additional subscription services.

This is a brilliant illustration of how a simple change can trigger a transformative shift in the business.

Now, glance at the chart again. Consider: what would be your KPI? What simple metric could potentially bolster your sales and render Salesforce self-compensating?

The Cost of Your Process?

Finally, let’s hit the concluding note. I’ve mentioned a key discovery we made, which significantly improved the performance of our entire sales department.

It turned out that Josh, instead of selling over the phone, consistently insisted on personal meetings, keeping potential customers in the pipeline until they agreed to meet. This was evident from the number of opportunities in Josh’s pipeline.

Unlike others who simply sent a quote based on the desired house area, Josh invited prospects to the showroom, showcased various options, and provided a superior customer experience.

In response, we revamped our sales pipeline and sequence of steps. We made it mandatory for sales team not to close deals unless we received a clear “no” from a customer. We also insisted on keeping Opportunities open for a longer duration.

If a customer didn’t respond for a week, while previously a sales rep might have marked the Opportunity as Closed Lost, we now insisted to keep them open for at least a month.

Don’t underestimate the power of simplicity. We didn’t perform any feats of rocket science. So, if we could achieve these results, why can’t you?

Final word

Thank you for taking the time to journey with me through this comprehensive look at the transformative power of a well-implemented CRM system. The results we’ve seen speak for themselves and illustrate the potential that lies within your own business.

Remember, every change, no matter how small, has the potential to create a domino effect leading to significant improvements in your business performance. Don’t underestimate the value of expert guidance in navigating these changes and leveraging a CRM system to its full potential.

If you’re inspired by this case study and want to explore how a similar transformation could benefit your own business, don’t hesitate to get in touch.

My team and I are experts in helping small businesses maximize their efficiency and profits through tailored CRM implementations.

We would love to hear from you and discuss your unique needs and objectives. Reach out to us, and let’s start the conversation about how we can help you write your own success story.

Thank you again for your time, and we look forward to speaking with you soon.

Cheers, J.