What is TCO and why does it matter?

There are many things to consider when choosing a new CMS for your organization. The cost of a new platform is one of the major influencers in the decision. It's tempting to shortlist your preferred solutions and then compare just the license and subscription fees. But those numbers alone don’t paint a complete picture of the costs (and savings) of a new CMS.

So what does TCO mean? In a nutshell, TCO provides a framework for a financial analysis of IT investments. It can help you understand the value and ROI of new software for your business.

Key TCO Components

We've compared the TCO of a headless CMS (Kontent.ai) with traditional enterprise CMSs and DXPs hosted in the cloud (such as Sitecore, Adobe Experience Manager, and SDL Tridion). Based on our research, we have created a TCO calculator that evaluates five key components and compares the costs of each platform. We run through each of those components below. 

1. Content Production

The essence of every digital project is content. CMSs with collaboration features, such as Kontent.ai, can aid your content production process. A CMS with the right content management capabilities can save digital teams valuable time, which can lead to increased productivity and higher ROI.

2. Initial and Ongoing Development

Development costs represent one of the most significant costs on every digital project. Headless CMSs can be significantly more efficient compared to traditional CMSs or DXPs thanks to:

• Flexibility: True headless CMSs are technology-agnostic, which means developers can use any programming language they choose. 
• Accessibility and control: With a headless CMS, content is accessible to any channel or device via API, including web, mobile, kiosks, chatbots, AR/VR, and wearables. It allows companies to innovate faster, as they deliver content components or blocks, not pages. 
• Speed: A headless CMS has a super-fast API, delivering content to any device in almost no time. Content and development teams can also work simultaneously, without being a bottleneck for each other. And sites can be built using modern frameworks, which can provide significant speed boosts.
• Low maintenance: With a headless CMS, developers can focus on delivering new features and improving projects instead of focusing on upgrades and maintenance, since these are managed by the vendor.

3. Server, Infrastructure, and Web Hosting

When choosing a CMS, you must consider all the costs of:

• Infrastructure and storage
• Security
• Backups
• Performance and scaling
• Development support, support for deployment, and testing

For large-scale projects, infrastructure costs can start at, and easily surpass, 50,000 USD per year. Imagine paying that just for running the infrastructure!

With a headless CMS, all of these elements are managed by the vendor, which leads to significant cost savings. The customer only chooses where they want to host their application.

4. Initial Installation and Setup

It can be costly and lengthy to install and set up a traditional CMS and run it in the cloud, compared to a  truly cloud-native headless CMS. TCO calculations should include the time it takes to manage the installation, system administrator costs, and developer costs, and consider how these costs may evolve over time.

5. 24/7 Support

24/7 support is not typically included in the cost of a CMS license. Headless CMS vendors, such as Kontent.ai, include 24/7 support as part of their enterprise plans. Customers only pay for an SLA on response times, if requested. The support packages for traditional CMSs, such as Sitecore, Episerver, and Drupal, can start at, and quickly exceed, 10,000 USD per year.

TCO Example

The anticipated enterprise costs of Kontent.ai for a large organization can be more cost-effective than other CMSs, which offer license fees that start at 100,000 USD or more.

TCO for the first year may look like the below if we assume the following:

• The company has an in-house team of five developers.
• They plan to spend three months on initial development.
• The content team will produce 400 content items in the first year, and 100 blog posts and other content pieces each following year. 

TCO for the first year is much more favorable with a headless CMS, but it's also important to look at the long-term TCO. Here's a snapshot of implementing a new CMS for a large manufacturing company over three years:

As you can tell, the most significant differences in the TCO of CMSs is created by content production and development costs, not by the license or subscription fees. If there is one thing you should remember, it's that you should always include more components than just software costs when calculating TCO.

Get Your Free TCO Calculator

We understand that organizations have to invest considerable resources to maintain talent. By choosing your next CMS carefully, you will be able to find a solution that saves your teams time and better equips them with the features that will make their lives easier.

Want to calculate TCO for your next project? Check out our TCO calculator to better understand the bigger picture!