How Much to Invest in a Digital Platform?

How Much to Invest in a Digital Platform?

America and Canada have over 335 million internet users, representing 91% of their population. This shows us that all companies, regardless of their size, should have a digital presence, whether it's an internal platform for Real Estate company processes in Austin, a Hotel reservation system in Miami, appointment scheduling for a Hospital in Toronto, or a food delivery system for a Restaurant in Vancouver.

However, despite the increasing number of users and the growing presence of digital solutions in our lives, we encounter significant barriers that hinder some companies when it comes to investing in technology: the initial cost, a lack of understanding of the benefits it could bring, resistance to change, a lack of technical knowledge, or frustration with the use of current technology that isn't adapted to the company's needs, among others.

In any case, when it comes to investing, beyond personal preference, the decision should be supported by:

• Efficiency

• Time savings

• Increased productivity

• Return on investment

• Improved customer service

• All of these are attributes that the technology to be implemented can bring to the company.

This leaves us with two paths: software as a service or custom software.

For software as a service, you can find hundreds of options online, with monthly subscription models ranging from $0 to hundreds of thousands of dollars, depending on the features used or the number of users in the company. Good examples include Hubspot, Shopify, and Covermanager.

However, software as a service has some disadvantages, such as limited customization, difficulty in integration with other systems, and the fact that customer data, sales information, and internal processes are the property of the service provider.

On the other hand, custom software allows:

• Adapting features to the company's processes, not the other way around

• Enhancing the user experience

• Optimizing time

• Complying with local regulations

• Greater control and precision in key areas of the business

• Safeguarding customer data

• Continuous updates and maintenance according to the company's demands, not the provider's

• Control of the infrastructure

• Using data for creating dashboards, statistical reports, or feeding new artificial intelligence or machine learning models for the future

• Flexibility and ongoing improvement that can adapt to changes in the company over time.

• Integration with other digital platforms that the company already has.

• Freedom to own your own technology and data

What's the Cost of a Custom Digital Platform?

It's crucial to understand that the cost of a digital platform varies based on what the company actually needs.

Thus, the value of a web digital solution can range from $20,000 to $1,000,000 or even more. Although prices vary significantly, several factors influence the final amount.

Let's review each one of them!

Planning and Strategy: Between $1,500 and $10,000 or more

The business's objective with the new platform must be defined. To do this, the needs of both the business and its customers must be understood and translated into business objectives. The functionalities and the development roadmap and stages will be defined during this stage.

Design and Construction: Between $10,000 and $200,000 or more

The design, architecture, and how a platform is built are fundamental when it comes to assigning a budget. These elements are crucial not only for creating an optimal user experience (UX) but also for SEO positioning on Google in the case of a web platform open to end-users.

It's important to understand that the visual aspect of a platform, beyond being attractive, should be user-friendly, meaning that users navigate easily, find what they need quickly, and resolve their needs in a few clicks.

Additionally, responsive design must be included, meaning that it works on smartphones and tablets. This is particularly important in times when more than 50% of users use their mobile devices to perform tasks online.

Infrastructure or Servers: Between $1,000 and $80,000 per year, on average

In the market, it's possible to find servers starting from $25 per month, which are suitable for simple web pages. This type of infrastructure features storage capacity shared among all users who purchased the service. This means that each customer can only harness a portion of the server's overall performance, limiting essential aspects for creating a successful digital business (loading time, security, stability, etc.).

Moving up the ladder, we will find virtual private servers (VPS). Priced between $1,200 and $30,000 annually, it's generally chosen by owners of web platforms with moderate traffic. Although it offers better performance compared to traditional shared hosting schemes, one of its main limitations is that if not configured correctly, it can pose significant security vulnerabilities.

Finally, there's the option of a dedicated server. Prices range from approximately $20,000 to $80,000 per year. With this service, you rent a complete physical server for the platform. Being fully scalable and exclusive, it's the best choice for a platform with high traffic and a need for fast, flexible, and customized service.

Maintaining the Platform: 20% of its initial cost per year

Digital platforms remain active and functional for years, and it's necessary to keep them secure, correct possible errors, and add new features or modules. This allows for improvements as the business evolves or changes. Security upgrades are important if you want to keep your reputation and keep your business safe from cyber-attacks.

In Summary

The implementation or development of a digital platform may require different prices, depending on its scope within the company's processes. To be successful, it's important to incorporate professional services to ensure a return on investment and that it's implemented within the agreed-upon timelines.

The decision between using software as a service or custom software should be based on the company's needs and those of its users. In the case of choosing the latter option, it's essential to select the right technology partner to make life easier for your users and customers.

As Arthur C. Clarke wrote, "Any sufficiently advanced technology is indistinguishable from magic."

Bring the right magic.