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 similar features. You might wonder: 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?
Virtual data room providers generally charge a monthly fee for their services. This fee is determined in one of three ways. Each of these ways could be attractive based on the type of project you are conducting.
Some VDR providers will base their fees on the number of pages uploaded to the virtual data room. This option might be an appealing fee schedule if your project is small. It's also a great option if your files are limited in number but large in size, such as videos, HD graphics, or other multimedia files.
Other providers will charge based on the size of the data room or the megabytes of the 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.
Some providers charge a flat monthly fee. This fee may provide 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 facilitate unlimited storage and users are beneficial for extensive projects with extended timelines. Providers that charge a flat monthly fee typically provide discounts for longer-term subscriptions, such as annual deals.
So, when evaluating cost, consider both how many users you have and how long the project will last. Some providers might seem less expensive because they only charge per user or 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, which are feature-rich in terms of security and functionality, and budget data rooms, which are more limited in functionality. When evaluating the cost of virtual data rooms, you'll want to choose a solution that offers the security and functionality your project requires.
There's no need to sacrifice key features just to save money. Many data room providers offer more than one level of data room functionality. A provider might have one pricing plan for its full-featured data room and a less expensive plan for a pared-down version. A simpler, more affordable VDR may not include some advanced features, such as the ability to shred documents or block screenshots remotely.
#3 How Does the Scope of the Project Affect VDR Pricing?
Projects can vary both in size and duration. You also might have multiple projects that require multiple data rooms. Most full-featured data rooms have advanced permission features that make it possible to conduct several projects within the same data room simultaneously.
With multi-project VDRs, keeping track of locations and permissions can sometimes get complicated for administrators. If you're looking for a virtual data room that can accommodate 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, running multiple projects concurrently in a single data room may make the most sense.
Some providers will not charge for an additional data room, only for total storage. If your pricing plan allows for up to 20GB of storage, you could have 10GB in one data room and 10GB in another for no additional cost. On the other hand, if your plan provides unlimited storage, that would only apply to that data room, and additional data rooms would cost extra.
If you have multiple projects, decide whether you want them housed in one data room or individually in multiple data rooms based on the provider's fee structure.
#4 What Is the Total Cost of Ownership (TCO)?
When evaluating the cost of virtual data rooms, do not limit the evaluation merely to the VDR's short-term or purchase price, but consider its long-term price, or the total cost of ownership. The total cost of ownership includes the purchase cost and any opportunity costs that can be incurred or saved along the way.
Consider a virtual data room that costs $100 per month, but is slow and hard to use, versus an efficient VDR that significantly accelerates document review but costs $200 per month. A project housed in the cheaper VDR might run for six months or a year, whereas a project in the more efficient data room might wrap up in as little as 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 well-established industry reputations are likely to be priced higher than providers that are new to the market. The companies with the best reputations have them for a reason: They were hard-earned and well-deserved. They likely 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.
Choosing a VDR
Not all virtual data rooms are priced the same, nor do they offer the same features and capabilities. When evaluating the cost of a VDR, you'll want to understand the features that your project requires, what you are getting for your money, and what the total cost of ownership will be long-term. VDRs are a highly effective modern solution for project management, so it's worth doing your research and finding a solution that best fits your needs.
To learn more about what to look for in a virtual data room, download our free white paper, "8 Habits of Highly Effective Data Rooms."