My cell-phone service contract came due a few weeks ago, so I decided to upgrade my BlackBerry (RIMM) rather than replace it with a Droid phone. I thought it wouldn't cost more. I was wrong. I got three tickets to a Phillies game recently from a client and I went, thinking I was getting a free night of baseball. But I was wrong about that, too. I downloaded Justin Bieber's Favorite Girl from iTunes looking for some killer music for under a buck. And after listening to it a few times I wound up paying for the whole darn album. That kid's got some catchy tunes.
I'm always paying more than I plan. My new BlackBerry required me to buy a new car charger and screen protector and the other accessories that I used every day with my old BlackBerry but for some inexplicable reason are no longer compatible with the new version. And now I hear Justin Bieber's coming to town and good tickets are $150 and I desperately need to see him sing Favorite Girl live. Damn you, Justin Bieber! Look at what you're making me spend!
Frankly, I should be used to paying more than what I expected. That's because I've been buying technology for my small business for years. And technology always costs more than advertised. I call it the Justin Bieber effect.
PAYING UP FOR SEO AND ADWORDS
Take search engine optimization (SEO). Many consultants for this technology promise that they'll get my site listed high on a search engine, like Google (GOOG), if I fork over $5,000. That's not been my experience. Over the past five or six years I've paid multiple thousands of dollars to a myriad of SEO consultants to help me get my website ranked high on search engines. One firm out of five actually did … for about a minute. For the most part, I've never been able to get the pages I want ranked where I want them to be on a Google search. Now let me be clear: There are plenty of good SEO consultants out there. But don't believe that they'll cost you only five grand. That's like believing Lady Gaga is a good singer just because she wears a dress made out of meat. If you want high rankings, you'll be paying mucho dollars.
The people I know who have succeeded with SEO consultants recognize that getting their site ranked high and staying there requires someone who's an expert at search engines. And this requires a long-term investment of both time and money. The same goes for Google AdWords. Those are the keywords that you buy through Google so that, even if your site is not highly ranked, a search by prospective customers will still show a little ad on the side of the page promoting your products. The only success I've had with Google AdWords is scoring a really cool Justin Bieber shoulder bag for myself—um, I mean, for my daughter. Unfortunately my business hasn't been as successful.
I've spent thousands trying to make AdWords work for me. I've played with dozens of keywords. And before I know it, my money's been eaten by the Google machine because there were a bunch of views and clicks and whatever … but no sales. I've learned over the years that succeeding with AdWords, just like succeeding with SEO, costs more than advertised. This is an expertise all unto itself. The guys I know who see value spend a lot of time and money playing with their AdWords. They're big into analytics. They're big into website design. It's not something for the typical business owner like me who's just messing around.
Hosted applications cost more than you think, too. I should know. We sell them. For some clients, a hosted app is the perfect solution: Web-based, quick to set up, accessible from anywhere, low infrastructure investment. And all for a monthly user fee. But many of my clients, particularly established businesses, are finding that these hosted apps can cost more than advertised. There's the cost to migrate from one application to the other.
There's the cost to continue maintaining workstations and a secure Internet connection. There's the cost of integrating a hosted database with other databases. And then there's the cost of the hosted application itself: When you add up the monthly fees over a few years, you suddenly find that you've spent a lot more than if you just purchased a system and kept it in-house.
Video technology has been much overhyped for the small business owner, too. Not because it doesn't work but because it costs more than you would think. I've got an awkward informational video of myself on my company's site. That little gem, I'm embarrassed to admit, cost me thousands. Why? Well, I tried making my own video and it wound up looking as bad as Justin Bieber's haircut.
Making good videos takes professional equipment and lighting and technicians who know what they're doing. And then it needs editing and formatting, which require specialized software and high-powered workstations. I don't have all that. So I paid for the service. And I paid to have it hosted for me, too, because my site couldn't handle the file size and streaming adequately.
NO SIMPLE UPGRADES
Are you one of the millions of small business owners who still use Microsoft (MSFT) Office? Thinking of upgrading to Office 2010? That's going to cost you more than you think, too. Sure, the upgrade to its Small Business Edition is advertised at about $350 per user. And the benefits can be significant: improved navigation, more features, better collaboration with programs like Exchange and SharePoint.
But as certain as I am that Justin Bieber will one day be touring with Hanson, O-Town, and 98 Degrees, I know that buying an upgrade to Microsoft Office is just the tip of the iceberg. Because next you'll find yourself upgrading your old Windows workstations to Windows 7. And you'll suffer initial losses in productivity when everyone is scratching their heads figuring out how to save a friggin' Word file because some dope in Redmond hid that button inside a new menu. And you'll realize that to really benefit from the collaboration tools you'll need to hire outside consultants at $8 million an hour to bring it all together.
So here's some good advice. If your cell phone works, then save some money and stick with it as long as you can. Watch more baseball games on TV. If you're going to buy technology for your small business, expect to pay more than what you're told. It's the Justin Bieber effect. And by all means, you gotta listen to Favorite Girl. You'll be hummin' that tune all day long.
Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsize businesses. Marks is the author of four best-selling small business books and writes the popular "Penny Pincher's Almanac" syndicated column. He frequently speaks to business groups on penny-pinching topics. More penny-pinching advice from Marks can be found at www.quickerbetterwiser.com.