How To Take The Pain Out Of Technology Costs
Recently, I had I conversation with a technology consultant advising a real estate company. They had significant investments in a custom website and system but there were some additional improvements that were recommended.
We were talking about how staying current with technology is critical for their image, recruitment and agent retention and I thought we had a productive conversation about how upgrades like this were a necessity. I assumed he was passing this invaluable knowledge to the company leaders, but it turns out he wasn’t!
Because the cost he estimated for the project was going to be wrong and higher than originally stated, which meant he was going to have ask his client to pony up more capital. Ouch! Unfortunately this is a common situation with technology expense planning. Yet, there's a better way to manage this—one that can guarantee your costs and also ensure your technology will stay current without unpleasant cash calls.
Right down to our very core, we are programmed to think of all our purchases as a one-time investment. We think this despite having previously bought numerous computers, cell phones, video games—you name it. From cars to running shoes, groceries to fitness equipment, we never think of our plans for replacing something we just bought. Yet, that future is almost always inevitable.
This problem is particularly compounded in the technology industry, where tech purchased today is outdated in very short order. By the time you turn on your new computer, download an app, or launch a new website, new technology is already moving forward in leaps and bounds, and your existing tech can't keep up. At every level, technology is evolving at exponential rates.
How Do We Keep Up?
IIn a world where technology is constantly advancing, how do we keep up? More importantly, how does a real estate business survive and thrive in an era of constant tech updates? It's simple: treat your technology like a utility.
Everyone is familiar with the concept of monthly bills for electricity, water and gas. We pay our internet and cable bills without batting an eye, and we go to the grocery store for fresh produce each week. It's no problem because these expenses are planned and budgeted, so we don't have to worry about them.
Here in western New York, I pay my gas on a balanced plan that charges the same rate all year long. I know exactly how much my monthly bill is going to be because it rarely, if ever, changes. It also means that I'm buffered from gas-gobbling winter months, as my payments are spread out evenly across the year. It makes it easier to manage my bills, while the gas company makes the exact same amount of money either way.
Applying The Utility Model To Web Technology
Here at REW, I work directly with businesses that fall within the "Enterprise" category. These are larger companies, typically with hundreds of agents, and they have a distinct advantage when it comes to managing tech costs: their size!
By viewing technology as a utility, our Enterprise clients are able to spread the costs of their real estate websites and apps out over two to three year periods of time. We avoid the peaks and valleys of the traditional cycle, and take advantage of a billing method that's consistent, fair, and easy to plan for. There's no surprises, and no need to fork over the entire cost of a website at once.
When we build technology under the Enterprise model, REW actually "loses money" for the first year or so, but it evens out over time. Just like my gas company operating at a loss in the winter months, and making up for it in the warm summer months, our Enterprise model trades immediate profit for long-term stability.
Having this even, balanced cost over time is an extraordinary advantage for an Enterprise client, who gets all the benefits of having an innovative website, without the financial burden. It makes it easy to stay on top of technology changes, whatever they may be.
A Method For Staying Current
Better still, because this model provides stability on both sides of the contract, we're able to provide upgrades at no additional cost. The concept is simple: our clients pay for a fully fleshed out, custom, highly personalized system that meets their current and upcoming needs. We plan these into the project and timeline, and ultimately come up with modern technology that's both functional and beautiful.
Meanwhile, we keep the payment terms short--no longer than 3 years--because we know that's the maximum amount of time you'll want to go before refreshing your technology. Towards the end of the term, we revisit your company's technology desires, and come up with a whole new plan to meet those needs without raising any fees.
If you want technology that will accurate reflect your brand, stay modern, and meet the ever-changing needs of our tech-focused world, you need to treat your technology like a utility. It's that simple.
The True Cost of Technology
Budgeting for technology is like budgeting for any other aspect of your life: to eliminate the stress, all you need to do is take a look at what your true technology costs are, and then plan for them.
Look at your account system upgrades, data costs, subdomains, modules, website redesigns, and add a contingency for the inevitable surprises. Just for fun, do the math to find out what your per agent fee would be for this technology too. Once you have these numbers, you'll know the minimum amount you'll need to spend to stay on par with your competitors.
Once you know your true costs, you have two options:
- Save up for another inevitable big hit
- Spread out those costs over time
We work with a company that has 2,000 agents and receives top shelf technology for under $20 a month per agent. They get absolutely everything their agency needs from their online tech in a modest per agent fee (that they pass right on to their agent via splits), working out to an entirely managable monthly cost. By contrast, if that client were to buy the same top-of-line site outright, they'd be looking at an instant hit of $1,400,000. Ouch. It doesn't matter how successful you are—that's a lot of money to spend at one time.
It all boils down to two simple facts: you need technology to keep your company and brand current, and you must be able to afford it. By doing the math and treating your technology like a utility, you'll always stay one step ahead of your competition with phenomenal technology.