Karen Elaine Lewis

Experience the TCO calculator in action

This interactive demo shows how the calculator works with sample data. Try adjusting the parameters to see how different scenarios impact total cost of ownership and ROI calculations. The white-label version would feature your branding and industry-specific assumptions.

Ready to take the next step?
SaaS vs. On-Premise TCO Calculator

SaaS vs. On-Premise Software: Total Cost of Ownership Calculator

Understanding your total cost of ownership can be challenging. When you consider all the direct and indirect costs of software implementation, the differences between SaaS (cloud-based) and on-premise solutions become significant.

This calculator helps you analyze the key cost areas that determine your TCO:

On-Premise (Server-Based) Software

  • Higher upfront infrastructure costs
  • Requires internal IT resources
  • Manual maintenance and upgrades
  • Traditional licensing model

SaaS (Cloud-Based) Software

  • Lower upfront infrastructure investment
  • Reduced IT administration needs
  • Automatic updates and maintenance
  • Subscription-based payment model
Input Parameters
Results
Assumptions & Methodology

Infrastructure & General Setup

The factors that determine infrastructure costs are different for server and cloud-based solutions. Depending on the size of your organization, your infrastructure costs can add up significantly.

On-premise solutions require significant upfront hardware investments, while SaaS solutions shift infrastructure costs to the provider.

General Information

Analysis Time Period (Years)
The number of years to include in TCO calculation
Number of Users
Total number of users who will access the software
Discount Rate (%)
Discount rate used for NPV calculations

Infrastructure Costs

On-Premise: Server Hardware Cost ($)
Initial server hardware, networking equipment, etc.
On-Premise: Hardware Refresh Cycle (Years)
How often hardware needs to be replaced
On-Premise: Annual Infrastructure Cost ($)
Annual cost for power, cooling, facilities, etc.
SaaS: Initial Setup Cost ($)
One-time infrastructure setup costs for cloud solution

IT Administration

Managing software and related hardware can be one of the most significant costs of operating enterprise software.

On-premise solutions typically require dedicated IT staff for management and support, while SaaS solutions reduce this burden significantly.
On-Premise: Annual IT Staff Cost ($)
Annual cost for IT personnel to maintain the system
On-Premise: Implementation Cost ($)
Cost for installation, setup, configuration, data migration
SaaS: Implementation Cost ($)
One-time cost for implementation including setup, data migration
SaaS: Annual Admin Support ($)
Annual cost for internal administration of SaaS solution

Software Licensing & Subscriptions

How your software is licensed can have a huge impact on setup costs. When delivered as a cloud-based solution, you do not have to pay an initial lump sum upfront as you’re subscribing to the software instead of licensing it.

On-premise software typically requires higher upfront license costs with annual maintenance fees, while SaaS uses a predictable subscription model.
On-Premise: Software License Cost ($)
One-time cost for purchasing software licenses
On-Premise: Annual Maintenance (% of License)
Annual maintenance cost as percentage of license cost
On-Premise: Additional Annual Costs ($)
Any additional annual costs
SaaS: Monthly Subscription per User ($)
Monthly cost per user for SaaS access
SaaS: Additional Annual Costs ($)
Any additional annual costs (customization, premium support, etc.)

Training & Integration

Reducing the cost and effort of integration and training contributes to lowering your total cost of ownership (TCO) overall.

On-premise solutions often require more complex integration and training, while SaaS solutions are typically easier to implement and use.
On-Premise: Integration Cost ($)
Cost to integrate with other systems
On-Premise: Annual Training Cost ($)
Annual cost for training users
SaaS: Integration Cost ($)
Cost to integrate with other systems
SaaS: Annual Training Cost ($)
Annual cost for training users

Business Impact & Benefits

Beyond direct costs, it’s important to consider the business impact and benefits of your software solution.

Both SaaS and on-premise solutions can deliver business value, but the timing and nature of benefits may differ.
Annual Revenue Impact ($)
Estimated additional annual revenue from implementing the software
Annual Cost Savings ($)
Estimated annual cost savings from implementing the software

Total Cost of Ownership (TCO) Comparison

Year SaaS Cost On-Premise Cost SaaS Cumulative On-Premise Cumulative Difference

Return on Investment (ROI) Analysis

Metric SaaS On-Premise Difference

Calculation Methodology & Assumptions

This calculator uses the following methodology to compare Total Cost of Ownership (TCO) and Return on Investment (ROI) between SaaS and on-premise software solutions:

The Five Key Cost Categories

  1. Infrastructure: Includes hardware, facilities, power, cooling, and related costs.
  2. IT Administration: Covers personnel required to manage systems and implementation costs.
  3. Software Licensing: Covers upfront licensing costs vs subscription fees.
  4. Training & Integration: Includes integration, training, and technical support.
  5. Business Impact: Revenue and cost savings benefits.

Total Cost of Ownership (TCO)

  • SaaS TCO includes subscription costs, implementation, integration, training, and additional costs over the analysis period.
  • On-Premise TCO includes license costs, hardware, implementation, integration, maintenance, IT staff, training, infrastructure, and additional costs over the analysis period.
  • Hardware refresh costs are included based on the specified refresh cycle.
  • All costs are discounted to present value using the provided discount rate.

Return on Investment (ROI)

  • ROI is calculated as: (Total Benefits – Total Costs) / Total Costs × 100%
  • Net Present Value (NPV) is calculated by discounting all future cash flows to present value using the specified discount rate.
  • Payback Period is calculated as the time required to recover the initial investment based on net benefits.

Key Assumptions

  • The same revenue impact and cost savings apply to both deployment models (though this may vary in reality).
  • Implementation timeline is assumed to be the same for both deployment models.
  • Subscription costs for SaaS remain constant throughout the analysis period.
  • License costs for on-premise are one-time, with annual maintenance fees.
  • All calculations use the beginning of period convention.

Limitations

  • This calculator provides a simplified model and should be used for initial comparison only.
  • Actual costs and benefits may vary based on specific vendor offerings, implementation details, and organizational factors.
  • Some intangible benefits are not quantified in this model.
  • Tax implications of different deployment models are not considered.

For a more detailed analysis tailored to your specific situation, please consult with your financial advisor and IT specialists.

© 2025 Karen Elaine Lewis LLC • www.karenelainelewis.com • All rights reserved