Editorial
How much does a digital asset management (DAM) system cost? As with all things tech, the answer is "it depends." But in an effort to keep abreast of current pricing trends and to offer end users an idea of what sort of cost ranges to expect if they planned to purchase a new (or replacement) DAM system, my firm, DAM News, recently conducted a survey to update the prices from our first survey, conducted in 2016.
The survey turned up some interesting data points outside of the average pricing in terms of both user numbers and the ambiguity around setup fees.
Vendors were not paid for their involvement, nor were any additional fees requested from them. The data submitted was anonymized using numbers to represent each firm (based on chronological order of submission). A profile of each participant was included in the appendix of the report.
The survey process for this edition differed from 2016 in two ways:
- An anonymity waiver for those vendors who wanted it. We offered the opportunity for full transparency so a firm’s name would appear next to its figures.
- A full anonymity option for those vendors who only wanted the data and did not want to be listed as having participated at all.
Of the approximately 100 vendors invited to participate, 13 vendors supplied data. Four vendors selected complete transparency, one asked to not be named as a participant (full anonymity). The 12 vendors that took part (who did not request complete anonymity) were: Brandworkz, Bright Interactive (Asset Bank), Filecamp, Image Relay, Intelligence Bank, MediaValet, Meriworks (ImageVault), ResourceSpace (Montala), PicturePark, Swivle, Wedia Group and Widen.
A prominent theme that emerged from the 2016 and 2018 surveys are the reasons given by vendors for not participating, which include suspicion, confusion over the survey's purpose and general apathy. This further reinforces the sense that vendors have a guarded attitude concerning their pricing strategies.
A Microcosm of the Diversity in the DAM Marketplace
Although a larger sample size would have been ideal, the range of vendors involved reflects the diversity of the DAM marketplace, from low-cost systems to those targeting enterprise users (with pricing to match that market). As in 2016, vendors were invited to complete a questionnaire spanning various pricing scenarios and deployment models. The five were as follows:
- Graphics Studio DAM
- Department DAM
- Midsize Company DAM
- Enterprise DAM
- Average Customer
The last scenario is the pricing charged, on average, by each vendor to new clients. This was a control variable to allow comparison analysis with the others and to benchmark what kind of clients the vendor usually deals with. For each scenario, respondents were asked to supply figures for a 12-month pricing plan for hosted and/or non-hosted solutions (if they offered them) including any additional licensing, setup and support costs.
Related Article: DAM Expands Its Reach in the Enterprise
The Average Cost of a DAM System
One of the objectives of the pricing survey was to provide a single average price of a DAM system by taking the average of all five scenarios across all of the vendors. While this could theoretically be used to give end users an idea of average costs, a more useful benchmark is to compare 2018 with 2016, as seen below:
Overall Average Cost 2018
1 year hosted: $51,999
1 year non-hosted: $71,746
Overall Average Cost 2016
1 year hosted: $37,846
1 year non-hosted: $71,930
Non-hosted refers to on-premises systems, as opposed to hosted solutions which comprise SaaS/Cloud and any deployment option where the vendor supplies the hosting service via a dedicated physical or virtualized server.
The survey revealed an overall increase in the price of hosted solutions of 37 percent, but suggests little significant increase for non-hosted plans. The number of vendors offering non-hosted vendors dropped dramatically from 10 in 2016 (of 16 respondents) to just four in 2018. The decline in non-hosted has been widely predicted for the last six or seven years at least, and is arguably now merely a statement of fact rather than a prediction, so this outcome wasn't a major surprise.
Average User Characteristics
In addition to pricing, some further data points were derived from the figures collected in the study. Of particular interest were the user number figures:
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2018
1583 read only users, 89 edit/upload users and 10 administrators
2016
850 read-only users, 101 upload/edit users and nine administrators
There is an apparently dramatic increase in read-only users, while little change in edit/upload or administrator users. The numbers hint at enterprises at least aspiring to get more end-users actively engaging with their DAMs, but further analysis is included in the report. That user adoption has become a hot topic in DAM over the last five years is not in doubt and the quantitative data validates the anecdotal evidence.
Related Article: The Next Steps of DAM Consciousness
Getting to the Bottom of Pricing Discrepancies
The 2016 survey revealed a large differential between what the lowest- and highest-priced vendors charged. In 2018, this gap has grown even wider: there were huge differentials across all five scenarios, in some cases running into tens of thousands of percentage points. This poses a question as to whether prospective clients are being charged substantial premiums for no other reason than that pricing is considered part of a brand strategy by the vendors. If the intent of the vendor is to acquire large enterprise accounts, then they may feel they must apply pricing which appears to paint themselves as serious players in the minds of their target prospects (and therefore justifying the higher cost).
While there are differences in terms of quality, functionality and service delivery, the fact remains there is a great deal of homogenization across DAM solutions and the value differential is not commensurate with its pricing counterpart. Some end-users are arguably not getting sufficient value from some vendors who are eager to cash in on the demand for DAM products which is occurring currently. With such huge, seemingly unsubstantiated differences in price, buyers risk finding themselves involved in an infuriating game of price-tag piñata. As economists like to say, if a situation is unsustainable, it will not be sustained. The end result if the situation continues might be over-supply and disillusionment with DAM offerings on the part of end-users. This has happened previously in other markets like CRM, so it is not without precedent.
Yet I have regular discussions with a number of the vendors who participated in this survey and know this is not universally the case. However, decoding who is offering value for money as opposed to engaging in a branding exercise using a price list is not easy. My recommendation for those buyers who are unable to assign budget for consulting assistance is to ask detailed questions and get vendors to explain why they charge the prices they do. Like anything else, obtain comparative estimates from competitors and probe sales personnel as to why another vendor is able to deliver something that appears to be equivalent at a lower cost. Credible vendors (and they do exist, despite appearances to the contrary) can demonstrate the value they offer and buyers should be able to fine-tune the deliverables to arrive at an optimal balance that fits their budget.
The ‘Setup Fees’ Conundrum
The other issue which arose in the report is the wide and often ambiguous range of interpretations of what constitutes additional setup fees. Vendors may levy a charge for many aspects of implementing a DAM system, which can at times have a substantial impact on the final cost. Tasks such as building metadata schemas, server configuration, migrating assets from a legacy system and applying branding to your software are all likely to incur costs.
A few vendors in the survey describe having zero setup charges, while others have fees that appear to be quite high. Much depends, however, on what each vendor’s interpretation is of setup, configuration and implementation work and (critically) their own involvement in that process. For example, one firm might say they charge no setup fees but then end users are expected to do all the implementation themselves, or costs will be applied by the vendor. Another common scenario is that the vendor does not charge setup fees nor deliver those kind of services, but they do have preferred implementation and professional services partners whose business model is predicated solely on fee income from implementing solutions.
The value proposition of professional services work is slightly easier to compare since it is essentially based on the time required for someone with expertise in the chosen platform. Nonetheless, you need to be certain you are comparing apples with apples: a vendor who offers zero setup fees might not be cheaper than one who has indicated a cost. In some cases, vendors may actively discount and bundle these services to make their overall offer more attractive to prospects — and may even find themselves penalized as a result.
As you can see, some careful dissection of the vendor’s chosen pricing strategy is essential and you cannot rely alone on simple numerical comparisons. The pricing survey provides the raw data to reality check quotations and cost estimates, but they are a tool to aid an analysis, not something you can exclusively rely upon (as with many other decisions when it comes to digital asset management).
Related Article: DAM Innovation Is Finally on the Horizon: From Value Chains to Blockchain
Key Takeaways
A number of conclusions can be drawn from the 2018 survey:
- Non-hosted solutions are continuing to decline in popularity, most likely due to the increased adoption of cloud-based solutions and faster internet connectivity.
- The average number of read-only and administrative users has almost doubled.
- Average storage capacity has increased significantly (by almost 300 percent). The proliferation of higher resolution video formats might account for the increase.
- Many vendors still exhibit a great deal of sensitivity bordering on paranoia surrounding pricing.
- The difference between the least and most expensive solutions has increased even more (from an already substantial baseline).
- Hosted solutions have increased in popularity and price, whereas non-hosted prices have mostly remained static.
- With little variation in the technology offered by DAM vendors, the price differences have become harder to justify, suggesting that cost has more to do with marketing strategy rather than the services provided.
Although the survey provides some indications that the DAM industry is starting to formalize its approach to providing clearer pricing policies, there is still far too little transparency and an opaqueness about the issue of costs and charging models.
To what extent this is due to vendor insecurity about whether the value they provide will be considered commensurate with the fees charged; is an intentional strategy by some DAM vendors to target a particular type of clientele; or a symptom of an already-fragmented landscape, the net result is the same. Potential DAM end users are frequently still left in a state of indecision, unable to accurately measure value for money and make informed comparisons. You can read more information about the 2018 DAM Vendors pricing survey.
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