Some people feel that web based CRM is priced like a utility – you pay for what you use. However, that is a myth.
Most companies must commit to a pre-determined contract that is independent of their actual use. Web based CRM does not have the hefty upfront costs of hardware meanienance, upgrades and support as well as license fees that on-premise CRM applications have. But web based CRM may include fees for extra features such as mobile or offline access, various types of industry-specific functionality, extra storage, or premium support.
Both types can offer a great array of customization. Both types offer flexibility.
Web based CRM may be less expensive than on-premise software over a two year period, but that may not hold up over five years since on-premise deployments can become less expensive as the capital assets depreciate. For companies with less than 500 employees, the real advantage of web based CRM kicks in about year 7 of the deployment. These organizations are able to delay upgrade cycles due to integration and customization.
There may be issues that affect the cost that are not usually considered. Downtime, data loss, and time to restore a backup in case of catastrophe are items to be asked and understood.
Web based CRM brings together all the information about a customer in one location or database. This is a great advantage when dealing with multinational customers whose information would be stored in databases in various countries using an on-premise CRM. The information sharing that can take place impacts the bottom line. This can even happen with national accounts that are serviced by regional offices.
Web based CRM may never fully replace on-premise CRM because different companies have different needs. Costs, complexity and control will keep two different models alive for the foreseeable future.