How Much Should a Virtual Data Room Cost?

19 September, 2020

cloud computing If you’ve ever evaluated virtual data room (VDR) providers, you’ve probably noticed that pricing structures can vary widely, even among platforms that appear to provide very similar features. You might find yourself scratching your head and wondering: how much should a virtual data room cost?  To help understand why virtual data rooms are not all priced the same, and to help evaluate what you’re getting for your money, we’ve identified five questions to pose when considering the cost of a virtual data room.

#1 How do virtual data room solutions base their pricing?

Generally, virtual data room providers charge a monthly fee for their services. This fee is determined in one of three ways, each of which might be attractive based on the type of project you are conducting.

documents flying Some VDR providers will base their fee on the number of pages uploaded to the virtual data room. This option might be an attractive fee schedule if your project is small or if the files you are uploading are limited in number, but large in size, such as videos, graphics or other multimedia files.

Other providers will charge based on the size of the data room, or the megabytes of information uploaded. This might be a good option for projects that consist primarily of text files, as text files are relatively small. Providers that charge based on megabytes will typically define a range of data room sizes, but will make it easy to upgrade if the need arises.

Alternatively, some providers can charge a flat monthly fee. This fee may provide for unlimited storage and an unlimited number of users, or it might be based on the number of users given access to the data room. VDRs that allow for unlimited storage and an unlimited number of users are obviously beneficial for extensive projects with extended timelines. Also, providers that charge a flat monthly fee normally provide discounts for longer term subscriptions, such as annually. So, when evaluating cost, it is important to consider both how many users you’ll likely have and how long the project will last. Some providers might seem to be less expensive at the outset because they only charge so much per user or so much per megabyte, but if the project suddenly balloons, those costs could skyrocket.

#2 How does virtual data room pricing affect the offered features?

There are two distinct classes of virtual data rooms: Legacy data rooms, that are highly feature-rich in terms of security and functionality, and budget data rooms that are more limited regarding functionality. When evaluating the cost of virtual data rooms, ensure you are getting the security and functionality that your project requires. It’s never a good idea to sacrifice key features just to save some money. Additionally, many data room providers offer more than one level of data room functionality. For example, a provider might have one pricing plan for its full-featured data room and a less expensive plan for a pared-down version that does not include some advanced features, such as the ability to remotely shred documents or block screenshots.

#3 How scope of your project(s) affect VDR pricing?

project scope Projects can vary both in size and duration, but it is also important to take into consideration the possibility that you might have multiple projects that require multiple data rooms. Most full-featured data rooms have advanced permission features that make it possible to conduct multiple projects within the same data room.

However, this can sometimes get complicated for administrators. What did I put where? What groups did I give permission to? When evaluating virtual data rooms for multiple projects, examine what is most cost-effective. With some providers, it may be more cost effective to have multiple data rooms for various projects. With others, it may make the most sense to run multiple projects concurrently in a single data room.

Some providers will not charge for an additional data room, only for total storage. For example, if your pricing plan allows for up to 20GB of storage, you could have 10GB in one data room and 10G in another data room for no additional cost. On the other hand, if your plan provides for unlimited storage, that would only apply to that data room, and additional data rooms would cost extra.

So, if you have multiple projects, you should decide if you want them housed in one data room or individually in multiple data rooms and which is the most cost-effective based on the fee structure of the provider.

#4 What is the total cost of ownership (TCO)?

iceberg When evaluating the cost of virtual data rooms, it is important not to limit the evaluation merely to the VDR’s short-term price, or purchase price, but to take into consideration its long-term price, which is the total cost of ownership. The total cost of ownership includes both the purchase cost, as well as opportunity costs that can be incurred or saved along the way.

Consider a virtual data room that costs $100 per month, but that is slow, clunky and hard to use, versus a fast, efficient VDR that significantly accelerates document review, but that costs $200 per month. A project housed in the cheaper VDR might run on for six months or a year, whereas a project in the more efficient data room might wrap up in 60 days. Although priced higher, the more efficient data room has a lower total cost of ownership.

#5 What is the VDR solution provider's reputation?

Virtual data rooms that have been around for a long time and have rock-solid industry reputations are likely to be priced higher than providers that are new to the market or have not established themselves as industry leaders. The companies with the best reputations have them for a reason: they were hard-earned and well-deserved. They have a large client base with a high satisfaction rate.

When evaluating VDR providers, take the time to visit third-party review sites and read testimonials. Talk to colleagues. The extra money you spend on a reputable VDR provider might be money saved in the long term.

Wrap Up

Neither all virtual data rooms are priced the same, nor do they offer same features and capabilities. When evaluating the cost of a VDR, it is critical to understand the features your project requires, what you are getting for your money, and what the total cost of ownership will be in the long term.

To learn more about what to look for in a virtual data room, download our free white paper, "The Seven Habits of Highly Effective Data Rooms."