Costs and pricing
Seven cost groups to price before a marketing automation project is approved
Price marketing automation in England across seven cost groups: licence, delivery, labour, VAT and exit, with a worked example from £42,374 to £69,498.
What to take away
- Seven cost groups need a price before approval: licence and usage, discovery, implementation, integration and migration, training and cover, operation and assurance, and exit.
- The worked example totals £42,374 to £69,498 over 12 months, ex VAT, for 4,000 contacts and five seats.
- Every figure is an illustrative assumption until a dated GBP quote arrives.
- Non-recoverable VAT stays in economic cost, while recoverable VAT becomes a later cash receipt.
- Internal hours are priced from payroll data, employer on-costs and a stated productive-hours convention.
Example: seven cost groups priced for an England SME
Assume an England SME with 4,000 marketing contacts, five named users and a 12-month term. Delivery day rates are assumed at £550 to £850. The bands below are illustrative planning ranges in pounds sterling, not supplier quotes.
| Cost group | Basis for the example | Illustrative 12-month range, ex VAT |
|---|---|---|
| Licence and usage | Assumed annual payment for 4,000 contacts and five seats | £4,800 to £12,000 |
| Discovery and scoping | 15 delivery days | £8,250 to £12,750 |
| Implementation and configuration | 20 delivery days | £11,000 to £17,000 |
| Integration and data migration | 8 days, plus £0 to £700 of tooling | £4,400 to £7,500 |
| Training and staff cover | 6 days, plus £0 to £900 of backfill | £3,300 to £6,000 |
| Operation and assurance | 208 hours at £28 to £31, plus 3 assurance days | £7,474 to £8,998 |
| Exit and parallel running | 5 days, plus one month of licence at £400 to £1,000 | £3,150 to £5,250 |
The low ends add up to £42,374 and the high ends to £69,498, so the midpoint is about £55,936. Stress the contact and seat counts upward, because most suppliers scale on those units. Compare charging units using how each model charges.
Loaded hourly rate, worked through
Internal time is the cost most often left out. Estimate hours by role: data preparation, journey design, configuration, review, training, monitoring and incident handling. Then price each hour at a loaded rate, not at salary alone.
As an illustration, take a £35,000 salary and assume on-costs of 20% for employer National Insurance, pension and benefits. That gives £42,000. Dividing by 1,500 productive hours gives £28.00 an hour, and 1,350 hours gives about £31. Four hours a week over 52 weeks is 208 hours, or £5,824 to £6,448.
Employer National Insurance is paid to HMRC as part of the PAYE bill, as the HMRC employer rates and thresholds guidance states, so your finance team should take the current rate from it. State the productive-hours convention, because it changes the rate.
VAT treatment in the cash schedule
Quotes arrive ex VAT, so the cash schedule needs a gross figure. The standard VAT rate is 20% on most goods and services, per GOV.UK. Put the gross invoice in the payment month and let a tax adviser confirm the rate on each supply.
For example, a £10,000 net licence invoice carries £2,000 of VAT, so £12,000 leaves the bank. Recoverable VAT becomes a later cash receipt once eligibility and timing are approved. Non-recoverable VAT stays in the economic cost. A five-sheet budget template keeps these rows apart from sign-off.
Supplier pricing units
A low headline can hide a high total, since suppliers charge by contacts, seats, sends or credits. Request a dated GBP quote for the edition, volume and term you intend to buy, and record whether it is net or gross.
Where a supplier prices in US dollars, record the exchange rate and the date used, and re-run the case when the rate moves. The monthly price comparison shows how indicative tool fees look in pounds.
Exit charges and parallel running
Exit is the group buyers most often leave blank. Notice periods, data export, licence run-off and one dual-run month all consume cash. Parallel running means paying for two platforms in the same month, so budget the exit inside the approval case.
Ask whether the supplier quotes exit as a fixed fee or a daily rate, and get the answer in writing. Test one data export before signature. The migration checklist lists the consent and suppression data to protect on the way out.
Before you approve
- Give every row a currency, tax status, payment date, quantity, unit, owner and evidence link.
- Set a quote gate for unknown charges instead of entering zero.
- Obtain a dated GBP quote for the chosen edition, volume and term.
- Record recoverable VAT as a later cash receipt only when eligibility and timing are approved.
- Build the loaded hourly rate from payroll data, employer on-costs and the productive-hours convention.
- Halt approval if a material unit, VAT treatment, labour source or exit charge is missing.
Our review of marketing automation contract issues lists the clauses worth pricing before signature.
Common questions
What must each budget row contain?
Currency, tax status, payment date, quantity, unit, owner and evidence link. An unknown charge gets a quote gate rather than a zero, so the gap stays visible.
How should VAT be handled in the cash schedule?
Put the gross invoice in the payment month. Recoverable VAT becomes a later cash receipt once approved, and non-recoverable VAT stays in economic cost.
What if a supplier will not quote?
Set a quote gate with an owner and a date, and hold approval until the figure lands. Use the top of the plausible range as your working number meanwhile.
Do I need more than one case?
Yes. Run current volume, operating and stress cases. They are sensitivities, not predictions, so assign no probabilities without evidence.
