Brian Quinn

There is more to calculating your software's ROI than meets the eye.

At first glance, the formula to calculate ROI seems straightforward:

ROI = (Value Added - Price Paid) / (Price Paid)

However, calculating this is surprisingly difficult because there are several factors that must be considered — some of which are easily quantifiable, and some that are more qualitative.

When calculating the ROI of your software system, it’s important to first understand what the price is. The price includes the monthly fee of the system (or the one-time license fee), setup fees, support fees, and the price of any additional hardware or servers that might be required.

Many server-based systems charge a one-time license fee (which is often thousands of dollars), and will also charge you for software upgrades. In this case, you’ll want to estimate how much you’ll spend on the software license and any subsequent software upgrades over the next X years, and translate this to dollars spent per month.

Another cost to tack on is the time it takes to train your staff to use the system and any downtime that might occur as a result. Every system has a learning curve, which means that you and your employees will likely be less productive than usual while learning how to use the new system. It’s also possible that you’ll make some mistakes when onboarding, which can incur a (hopefully small) cost.

Certain types of software systems, such as 

, are designed to help reduce no-shows and improve patient recall. These are examples of quantifiable metrics that shed some light on the value that these systems provide. For example, if you’ve noticed that the system has reduced X number of no-shows per month, you can multiply X by your average production per appointment in order to estimate how much value this particular feature is adding.

Most dental software systems are designed to save you and your staff time, either by making certain processes more efficient or by completely automating certain mundane tasks (such as appointment reminders). Though it’s a bit harder to assign a dollar amount to the time that software has saved your staff, it’s an important factor that must be considered when evaluating a system’s ROI. To account for this, you can estimate how many hours per month the system saves your staff, and multiply it by their hourly wage.

Quantifiable metrics, such as a reduction in no-shows, are some of the most obvious ways that software can help you save money, but they’re only part of the equation.

Software can also help provide a better patient experience, but it’s tough to put a price tag on the value added in this area. For example, 

 enable patients to book appointments without having to call your practice. This is important, since it reduces the overhead in scheduling appointments, and offers your patients an additional level of convenience, especially for anyone who is not able to set aside time to call your practice and schedule an appointment during business hours.

To truly understand the value of these intangible benefits, consider the following thought experiment: What would your practice be like without the software? If your practice would become more hectic, and your patients would be less satisfied with their experience, then there’s a good chance that the software offers a substantial level of intangible benefits.

Ultimately, you’ll want to take into account all the factors we discussed above. Though it can be difficult to precisely calculate how much value your practice management software provides, these factors provide a solid foundation to help you determine whether or not the system delivers a positive ROI, and can help give you the confidence that the software you’ve selected is a worthwhile investment.

, which provides in-depth product reviews and resources to help business owners make well-informed decisions. From highlighting industry-specific trends to delivering extensive software guides, ValuePenguin Software helps businesses select the best software for their needs.

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Dental software can be one of the best investments for your dental practice, but it can also be an unprofitable investment if you select a system that doesn't deliver enough value. How can you tell if your software has a positive ROI (Return on Investment) for your dental practice?


How to Calculate the ROI of your Dental Software

Always maintain control of any demo by coming prepared with questions. 

Demoing dental software is an important step in determining if a system is suitable for your practice. One of the major pitfalls you’ll want to avoid when doing a demo is letting the sales representative drive the entire conversation.

This is a big mistake because it lets the representative walk you through the strongest features of the product while glossing over its weaknesses. For this reason, it’s important to play an active role in the demo and to come prepared with a list of questions beforehand so you can collect the necessary data to make a well-informed decision.

In this article, we’ll walk you through some of the key questions you should ask when demoing dental software.

1. How can the software help me with ____?

During the demo, it’s important to emphasize the capabilities that matter to you the most — and ask the sales representative to show you how the software helps address those needs. This helps ensure the system you purchase is solving an actual pain point in your practice.

By prioritizing specific pain points you’re trying to solve, you can make sure the conversation stays on track and focuses on the functionality that you’re most interested in, as opposed to the features that the sales rep wants to highlight (which may not be relevant for you).

2. Does it integrate with the other systems I use?

If the system you’re demoing is going to interact with other systems you currently use, you’ll want to make sure that they integrate with each other. If they don’t, you’ll have to enter data into both systems, which can be a headache and increases the chances of manual error. Compile a list of every type of software or service you currently use that may interact with this new product, and make sure they integrate with each other. If they don’t, find out what the implications are.

Taking the time to confirm the exact integrations it supports upfront — before signing any contracts or commitments — can save a lot of time and effort in the long run.

Many software vendors don’t publish their full pricing schedule, which often means the price is negotiable. For a competitive price, It’s important to demo and speak with multiple vendors before you make your final decision. This also helps provide extra leverage when negotiating the price.

Many software vendors will charge a one-time startup fee, and some will also charge for additional modules or capabilities on top of the quoted price. You may be able to negotiate the cost of this setup fee or get add-ons included at a lower price. It may also be possible to receive a lower monthly cost by negotiating a longer-term contract.

In addition to negotiating the quoted price, it’s also important to understand what the total “all in” price will be once you factor in the extra cost of any additional modules that you’ll need. You’ll also want to make sure that you’re not paying extra for functionality or modules you don’t plan to use.

4. Do you offer a Service Level Agreement?

One of the most common concerns associated with cloud-based practice management systems is that if the provider’s servers are unavailable, your software will be unavailable, too. Ask about the provider's track record of uptime or if they offer an SLA that promises that you will be able to access the software no less than X percent of the time. Some cloud-based software providers even publicize their uptime statistics. For example, Curve Dental maintains a live status page 

, which states that, as of August 2017, it delivered 99.997 percent uptime over the past 90 days.

Even if the system you’re demoing isn’t on the cloud, there are other types of SLAs that you may want to consider asking about. For example, they may offer a support SLA, which guarantees that high-priority issues are resolved within a certain timeframe.

Even the most thorough demo has its limitations. Ideally, the software vendor will be able to provide you with a free trial of the product. This will give you and your staff a chance to actually try out the software in your own environment, with your own data, and determine if it’s suitable for your practice.

If the company doesn't offer a free trial, you can ask if they are able to provide access to a demo account that is pre-populated with fake data, which enables you to get a sense of how its various features work. This frequently works with companies that provide a web-based software system.

6. What will happen if I ever decide to switch to another software provider?

It’s impossible to predict how your practice's needs will evolve over time. In order to prepare for the possibility that you will someday need to switch software systems, you need to make sure that you’ll have access to your data after you switch, and that it will be accessible in a format that’s easy to port over to your next software provider.

Many providers will either charge you for the data or give it to you in an encrypted or proprietary format that is virtually unusable unless you pay them to convert it. Therefore, we encourage you to ask the software provider what will happen to your data in the event that you end your relationship with them.

Asking just a few specific and targeted questions during each software demo can save you a lot of time and research in the long run. Once you get all the answers you need, you will be fully prepared to determine which option is the right choice for your practice.

Salesmen will be salesmen, so when you have one in your office demonstrating software, be sure to come prepared. ValuePenguin, a product-review website devoted to giving insight to small business owners, provided a series of questions to help you do the most in your research. Continue below to find out more. 