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How to save money on business software when starting out

John Paterson rounds up the free and low-cost software options available to help you start your business

When starting out in business, one of the first things any entrepreneur needs to do is set up their internal IT systems. But the cost of setting up a business – even with basic software tools – can be pretty steep.

Traditionally, a typical five user business would need: Microsoft Office (Word, Excel, PowerPoint – £180 per person), Microsoft Outlook (email, contact manager, calendar – £90 per person), accounting software (eg Sage or Quickbooks – £100) and a customer relationship management (CRM) system to keep track of your customers, prospects and sales pipeline, (eg ACT! from Sage – £750 for five users).

That’s £2,200 before you’ve done anything else, and doesn’t even include the hardware to run these systems, maintenance and upgrade costs.

But there are alternatives to buying conventional software – and some of them are completely free.

Web apps

Instead of buying the software on a CD and running it on your PCs, Macs or server, you use applications that are delivered over the web. The vendor hosts all the applications and data on their servers so there is no software to install or maintain, you just use your browser to access the system, and the vendor handles all the IT chores such as updating the system and backing up. Best of all, instead of buying all the software upfront, you pay a monthly subscription and can usually cancel at any time.

Examples are Google Docs as a replacement for Microsoft Office (email, word processing, and spreadsheets) and KashFlow Accounting for bookkeeping.

Open source software

Open source products are those developed by a community of programmers and then offered free to the world. Many of these products are technical applications that need a high level of competence to use, such as Linux, an alternative operating system to Windows, and MySQL, a database application that’s an alternative to Oracle or Microsoft SQLServer.

But there is also a lot of end-user software, such as Open Office, an alternative to Microsoft Office, which can be downloaded and installed by the average semi-technical user. Other famous examples are the FireFox web browser and Thunderbird email client from the Mozilla foundation.

Freemium products

Freemium products are systems that are offered for free by software vendors in the hope that you’ll upgrade to a premium product if you like their basic version. Unlike free time-limited trials, they are free to use forever and many people will find that they never need to upgrade to a chargeable version if their requirements remain the same.

Freemium is a whole new way of marketing and buying business software. The benefit to the software vendor is that instead of spending millions on advertising and marketing, they offer a basic level product for free and then if the product is useful, customers will flock to it and word of mouth will do the marketing for them. Then maybe as few as 10% of the ‘free’ customers will upgrade to a paid-for ‘premium’ version for more features.

The benefit to users is that they can start for free without any commitment (effectively an unlimited free trial) and many will never have to upgrade to a paid-for version at all. If and when their requirements grow, then they can spend (normally very little) money with a vendor that they now trust because they’ve been using the system for a while.

Examples of freemium products include DropBox for file back-up, access and sharing, Really Simple Systems for CRM and Skype for telephony and instant messaging.

Web apps, open source and freemium solutions to help you start out:
Product Model Description   Freemium offering Pricing
AVG Freemium Virus protection Free for basic protection …25.95 for more advance protection
DropBox Freemium File back-up and synchronisation  2Gb data free $9.99 a month for 50Gb storage
Google Docs Freemium Word processing, spreadsheets, presentations, drawing, forms 10 users for free £3.30 per user per month
KashFlow Web apps Simple bookkeeping and invoicing None £15.99 a month
MailChimp Freemium Mass emailing 2,000 emails per month From £6.34 a month
MalwareBytes Freemium Malware protection Free for basic protection £19.95 for real time protection
Open Office Open source Word processing, spreadsheets, presentations, drawing, database Free Free
Really Simple Systems Web apps, freemium A full CRM (customer relationship management) system comprising sales, marketing, customer service & support A two user sales system for free From £10 a month for extra users to £35 a user for the Enterprise Edition
Skype Freemium Telephony, video calling and instant messaging Free calls and messages to other Skype users Cheap calls to landlines
SurveyMonkey Freemium Surveys / market research 10 questions and 100 responses From £18 a month for unlimited questions and 1,000 responses
Thunderbird Open source Email and contacts – Microsoft Office replacement Free Free
Ubuntu Open source Desktop and Server operating systems (replacement for Windows 7 and Windows Server) Free Free

John Paterson is the CEO of Really Simple Systems

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