Document Management Software: From Calculating Costs to Purchasing Tips

Business.com / Business Solutions / Last Modified: February 22, 2017

Know what to expect to pay for on-premises document management software versus an online system.

So you are in the market for a document management solution - it's about time! For an on-premises DMS solution that charges for a software package rather than the number of users or the amount of data stored, expect to pay about:

  • Basic Software $60 - $200
  • Advanced Software $500 - $1,500
  • Custom Software $2,000 and up

For an online DMS (or a hybrid online and on-premises DMS), expect to pay from $15 to $40 per user, per month, depending on how many fancy features you require. Discounts on multi-user licenses are usually available. A typical five-user license is $1,000 to $5,000 per year.

In addition to per-year fees and per-user fees, many DMS charge storage fees based on the amount of data you keep stored on the system. Storage fees can run from as little as 5 cents per gigabyte per month to as high as 10 cents per gigabyte per month. The cost of storage space has declined at a rate of 50% every couple of years for decades now, so you can expect this price to continue dropping.

DMS users with stringent compliance requirements, such as securities firms, medical-records handlers, and government agencies, may require a custom solution that is beyond the scope of this guide. Such compliance-heavy systems can cost tens of thousands of dollars to install and maintain. Not too much? Let us help you with tips on making a purchase and terms you need to know in order to negotiate. 

Purchasing Tips for Document Management Software

  • Look for a specialist first. If you're in an industry that has intense documentation regulations, it would be best to find a provider with experience in that same field. If there is no DMS specialist for your field, then try to find a provider with clients in your industry whom you can call upon for a reference.
  • Negotiate a multi-user package. If your needs require a large number of users, investigate multi-user discounts. For example, if you have 8 people who need to access the system, it might be cheaper to buy a 10-user package than pay for just 8.
  • Avoid long-term contracts. If your DMS is priced mostly based on the amount of storage space you reserve or use, then stay away from long-term contracts that don't allow you to renegotiate the rate. The cost of file storage has consistently dropped by 50 percent every 18 months for the past several decades. The rate per terabyte you're paying for storage should be cut in half every couple of years. Make sure you don't get locked into a long-term contract that doesn't take this factor into account.

Glossary of Terms

  • Capture: The process of entering existing data into a DMS (as opposed to creating it inside the DMS). Capture includes such issues as what languages an OCR will read; what languages a DMS will translate into; and how images, tables, and other graphic elements are dealt with.
  • Digital Rights Management (DRM): The science of managing the intellectual property rights associated with documents, images, and other media exchanged digitally. DRM software can include such features as anti-copy features, anti-print features, timed access, login-logout access, encryption, digital watermarking, and other access and duplication restrictions.
  • Digital Watermarking: A string of code added as a marker to a digital file to give it a unique identity. It is used not only to combat unauthorized duplication or distribution of documents, but also to track their legitimate migration over time. Digital watermarks are usually hidden in the code of a file and difficult to identify by anyone other than the document's legitimate owners.
  • Document Management System (DMS): The term for a filing system for documentation, usually in the form of computer files. The DMS may contain capture and creation features for adding documents to the system, as well as assembly and distribution features. Most systems include tracking features as well.
  • Electronic Document Management (EDM): An earlier name for a DMS that is still in use today. It usually refers to an on-premises DMS as opposed to an online DMS.
  • HIPAA: The Health Insurance Portability and Accountability Act of 1996. Among other things, it specifies the actions medical professionals must take to safeguard patient privacy. DMS for medical professionals is basically built around these rules for tracking document access and revisions.
  • Metadata: Bibliographical information that travels along with a document in most document management systems. Metadata includes such information as creation date, modification date, author name, document format, document language, document location, title of document, subjects, categories, keywords, summary of document, etc.
  • Optical Character Recognition (OCR) Software: Enables scanning a printed document by recognizing the letter shapes and converting it into text or other formats that can be manipulated using word processing or publishing software. OCR software works in conjunction with a mechanical scanner that parses the document as the original passes across the bed of the scanner.
  • Revision Control (also called Versioning): Refers to the ability to store and restore previous versions of a document. Some systems will record every change made to a document; others will record all the changes made in one editing session, but not each individual change. Some systems will store these revisions forever, while others may only show revisions made in the previous year, for example.
  • Wiki: A specialized DMS that allows website users to easily create, collaborate on, and manage documents.
  • Workflow: Allows for the automation of some aspects of document management. For example, a set of rules can be established as to who has access to a document first, where it is sent when that person is finished with it, how approvals are handled, how the document will be released, and how it will be stored. Workflow is usually integrated with calendar software. The look and feel of the workflow application is a major distinguishing feature among different vendors.

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