Every buyer I've ever met thinks software is too expensive.
Most think it's down to the cost it takes to make the software - but that's not entirely true.
Or at least, they're only seeing a fraction of the picture.
A massive chunk of the price you're paying for enterprise software has nothing to do with building the product. It's the cost of selling it to you.
And a big part of that cost is driven by your buying process.
A software vendor has to pay for marketing, pre-sales engineers, solution architects, legal teams, commercial teams, bid managers, partner managers, customer success, professional services, infrastructure, security certifications, compliance... the list goes on. And all of it gets baked into the price.
This is how any business works. You don't walk into a restaurant and assume the price of your meal is just the cost of the ingredients. There's rent, staff, energy, insurance, the chef that trained for 15 years.
Software is no different.
The cost of selling to you is eye-watering
Let's have a look at a typical enterprise tech sale.
The vendor will likely spend 12-18 months courting you. During that time they'll deploy senior salespeople, pre-sales consultants, solution architects, executive sponsors, bid teams, and probably a small army of people in the background pulling together responses to your procurement process.
They'll respond to your RFI. Then your RFP. Then your supplementary questions. Then a PoC or a Pilot. Then the contract negotiation, which in financial services can drag on for months because your legal team wants to rewrite the entire agreement on their own paper.
Every single hour of that effort is a cost that the vendor needs to recover. And guess where it gets recovered?
Yep. In the price you pay.
RFPs are the biggest culprit
I've spent 20 years on the vendor side of RFPs and I understand completely why they exist. In regulated financial services - or any systemically important purchase for a company - governance demands a structured selection process. That's fair and reasonable.
But let's not pretend the process is cost-efficient, because it absolutely isn't.
A typical enterprise RFP in banking tech will involve the vendor spending hundreds of hours on the response alone. Pulling in subject matter experts, writing bespoke answers to 300 questions (half of which are generic and could be answered by reading the website), creating custom presentations, running workshops, doing reference calls. And then multiply that by the 3-5 vendors on the shortlist, most of whom are going to lose.
Those losing vendors don't just eat that cost. They spread it across every deal they do win. So the winning vendor's price isn't just covering the cost of selling to you - it's also subsidising the cost of all the deals they lost getting to your door.
It's like the restaurant having to cook 5 meals and throw away 4 of them, then charging you for all five. That's what an inefficient procurement process does to software pricing.
Contract redlining is another money pit
I've had deals where the sales process took 12 months and the contract negotiation took another 6. A full year from first meeting to signature, with half of that time spent going back and forth between legal teams arguing over liability caps and indemnity clauses.
Salespeople are tied up on a single deal instead of working new business. Legal counsel isn't free. And the opportunity cost of having your best people trapped in contract limbo is enormous.
Some of this is necessary. I'm not suggesting anyone should sign a contract without proper due diligence. But there's a massive difference between diligent and bureaucratic. And too many procurement processes tip well into the latter.
So what would make it cheaper?
If you're a buyer reading this and thinking "well what are we supposed to do about it?" it's a fair challenge.
There isn't a quick fix. This is cultural more than it's procedural.
You can't solve it by tweaking a template or adding a step to your evaluation scorecard. The bloat is baked into how large organisations think about procurement, and unpicking that takes genuine leadership from people who are willing to challenge their own internal machinery.
But let me give you an example of what the problem looks like up close.
I once wanted to sell a pilot to a major supermarket for £50k. In three months they could have deployed the software, conclusively proved it worked, and had total confidence in the approach.
Their procurement department blocked it.
They demanded the internal team went through an RFI, then a full RFP, including no fewer than eight vendors.
I asked them what the internal cost was for this process.
£500k.
Half a million pounds of internal cost for an evaluation that was less robust than a £50k pilot with a vendor they had already identified.
That isn't diligence. It's insane!
Most procurement processes are designed to protect the people running them, not to get the best outcome for the business. Nobody ever got fired for following the process. But plenty of companies have overpaid because nobody had the guts to challenge it.
If we could sell you software at half the price and still make the same margin, we both win. It's not a fantasy. It's what happens when the cost of selling drops.
But that only changes when buyers stop treating procurement like a procedural obligation and start treating it like what it actually is: a commercial decision with a real cost attached to it.