On-premise vs. cloud CRM: what drives the cost over five years?
Over five years, a cloud CRM costs mostly the subscription plus usage such as AI credits. An on-premise CRM with a perpetual license costs the license once, plus servers, backups and the people who run them. Which is cheaper depends on team size, how long you keep the system and whether you already operate servers.
What are the cost blocks of a CRM?
| Cost block | Cloud subscription | On-premise, perpetual license |
|---|---|---|
| License | Recurring, per period | One-time |
| AI usage | Credits in the subscription, or your own model key | Your own model key |
| Infrastructure | Included | Server, storage, backups, monitoring |
| Operations | Run by the vendor | Updates, backups and restores by your IT |
| Setup and migration | Configuration and data import | Same, plus installing the stack |
| Exit | Export and migration | Export and migration |
I left prices out on purpose. They change, and every quote depends on your team, so a table with made-up numbers would be worse than none.
How do you compare the two over five years?
Write both down as the same sum. For the cloud: subscription per year times five, plus usage. For on-premise: the license once, plus five years of infrastructure and operations time, plus the one-time setup. The operations time is the line people underestimate. Someone has to patch, back up and test a restore, and that's real hours every month.
NIST's definition of cloud computing lists measured service as one of its essential characteristics [1], which is exactly why cloud cost grows with use. A perpetual license is the opposite, the license cost is fixed and the running cost is yours.
When is a perpetual license cheaper?
- You plan to use the CRM for many years
- You already run servers and have people who operate them
- Policies or customer contracts require the data in your network anyway
- The team is large enough that per-user subscriptions add up
When is a cloud subscription cheaper?
- The team is small or you want to start quickly
- You don't operate servers today and don't want to
- You're not sure yet how long you'll use the system
- Usage based billing for AI fits how you work
With a cloud CRM the vendor usually becomes your processor under the GDPR, which needs a data processing agreement under Article 28 [2]. That's paperwork, not a cost driver, but it belongs in the decision.
How do you choose between subscription and perpetual license?
You choose by how long you'll keep the system and who runs it, not by the first-year price. At JadenX we offer Sigma CRM both ways on purpose: in our cloud as a subscription with monthly or yearly plans and credits for AI usage, or as an Enterprise license that is perpetual and runs on-premise or in the cloud. Both run the same product, so the choice is about cost and control, not features. Details and quotes are on Sigma CRM pricing.
Frequently asked questions
Is on-premise always cheaper in the long run?
No. It depends on operations time and team size. If you'd need to hire people to run servers, cloud is often cheaper.
What does a perpetual license mean?
You buy the right to use the software without an end date. In Sigma CRM, the Enterprise license is perpetual.
How is AI usage billed in the cloud?
In the Sigma CRM cloud version, AI usage is billed in credits as part of the subscription. You can also bring your own model key.
Can we switch later?
Both run the same Sigma CRM, and every object can be exported as CSV or Excel. Talk to us about moving.
References
- Mell, Peter and Grance, Timothy, "The NIST Definition of Cloud Computing", NIST Special Publication 800-145, 2011. https://csrc.nist.gov/pubs/sp/800/145/final
- European Union, "Regulation (EU) 2016/679 (General Data Protection Regulation)", Official Journal of the European Union, 2016. https://eur-lex.europa.eu/eli/reg/2016/679/oj
About this article: I work with a set of AI agents that research sources and turn my notes and the Sigma CRM documentation into a draft. The product facts come from our own documentation and code. The opinions are mine.
If you want to put your own numbers into this comparison, talk to me at JadenX and we'll go through both options with a real quote.