Total cost of ownership is everything a piece of software costs you over the period you use it, not only the subscription line. For business software that means the subscription, the add-ons, the one-off charges, the staff time spent administering it, the workarounds you pay for because it does not quite fit, and what it would cost to leave.
The idea applies equally to software you rent and software you own. The same sheet works for both, which is the point of doing it.
The six lines that make up the total
- Subscription: the base plan, multiplied by seats, units, bookings or whatever the vendor meters. Use the invoices, not the pricing page.
- Add-ons: modules and integrations billed separately, such as extra channels, text messages, reporting packs or additional locations.
- One-off charges: setup, onboarding, data import, training, paid support incidents, custom report work.
- Admin time: hours your staff spend on user accounts, exports, reconciling reports and correcting records.
- Workarounds: the spreadsheet beside the system, the second tool that fills a gap, the manual re-keying between two systems that do not talk to each other.
- The cost of leaving: exporting data, retraining, running two systems for a while, and any notice period or early termination charge in the contract.
Laying it out over three years on one sheet
Make one column per year and one row per line above. Three years is long enough to catch renewal increases and growth.
Year one carries the one-offs. Years two and three should carry whatever you know is coming: a renewal increase written into the contract, more guides or more departures if you plan to grow, a second location. For the subscription rows, a free calculator that turns a per-seat, per-unit or per-ticket bill into yearly and three-year totals saves the arithmetic.
For admin time, pick an hourly figure for the person doing the work and multiply it by a measured week, not a guess. Suppose the office manager spends 3 hours a week reconciling bookings between two systems and you cost that time at 25 an hour. That is 75 a week, and the sheet should carry it across every operating week of the year. Both figures are invented, so replace them with your own.
What tour and activity operators should watch for
Seasonal businesses pay for software in months when it does very little. Check whether your plan can be paused out of season, and put the real off-season cost on the sheet.
Keep marketplace commission and card processing off this sheet, or on separate rows marked as not replaceable. They are payments for distribution and for moving money, and they follow you to any system. Our page on what tour and activity operators rent and which parts can be rebuilt goes through that split.
Doing the same sheet for software you own
Owned software gets the same six rows. The subscription row becomes hosting and maintenance. One-offs become the build and the data migration. The cost of leaving becomes a question of whether you hold the code and the data, and whether someone else could run it.
Be fair to both columns. Rented software is often the right answer, particularly when you use a large share of what it does and the price does not scale with your headcount. Our guide to renting versus owning business software covers when going custom is the wrong call.
Reading the result
Look at which row is largest and which row is growing fastest. A flat subscription with a growing workaround row is a fit problem. A growing subscription row with a small workaround row is a pricing model problem. Those call for different fixes, and only the second is about price. Where it is about price, we at Hiro quote after seeing the bill and rebuild only the parts in use, for one flat monthly price with no per-seat fees.