Prices are expected to decrease with a greater shift toward cloud deployments and lower-priced SaaS subscription pricing, benefitting buyers.
Los Angeles, CA (PRWEB) November 19, 2013
Accounting software has a Buyer Power Score of 3.6 out of 5, where higher scores indicate greater buyer power. “The score reflects positive trends for buyers such as stable license prices, declining total ownership costs, improved software functionality and a growing number of suppliers to choose from,” says IBISWorld procurement analyst Hayden Shipp. “To a lesser extent, this score reflects trends that favor suppliers, such as high switching costs, high market share concentration, strict single-source maintenance policies and the lack of a secondary market through which buyers could resell their software.”
While there are about 200 accounting software suppliers in the market, buyers have a limited choice of suppliers for premium enterprise resource planning (ERP) financial management suites and middle-market stand-alone accounting software applications. “Top vendors have significant pricing power and large and midsize enterprises, which typically use their products, have less room to negotiate on price,” says Shipp. Smaller businesses have more flexibility and choices for niche and basic accounting offerings at the lower end of the market; however, these solutions have significantly less functionality. Additionally, interoperability issues between legacy IT systems and new software reduces buyer leverage.
However, buyer leverage is increasing in the accounting software market. Underlying technology trends have opened the door to new market entrants and spurred the adoption of cloud-based deployment models and Software-as-a-Service (SaaS) subscription pricing over the past three years. These trends are expected to drive down average license prices and reduce total ownership costs.
To reduce licensing costs, buyers are encouraged to seek discounts on bulk license purchases. Also, they can negotiate for fixed license pricing and lower cost read-only access licenses for limited system users. Additionally, switching to subscription pricing may offer more room to negotiate with vendors on price based on actual computing time and storage use. Buyers should also negotiate for the ability to cap and suspend maintenance and support costs to keep total ownership costs down. Major vendors include Intuit Inc., Microsoft Corporation, Oracle, Sage PLC and SAP AG. For more information, visit IBISWorld’s Accounting Software procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of accounting software. Accounting software automates the processing, recording, storage and access of financial transactions to improve the efficiency of finance and accounting operations. It includes a range of modules and may be sold separately or as part of a broader enterprise resource planning (ERP) system.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.