“FREE” is the most expensive price you’ll ever pay

After 28 years working in enterprise software, I’m moving on to a new chapter in a different sector. Before I do, there’s a conversation I keep having that deserves to be said loud and clear.

Right now, across boardrooms in APAC’s water sector, executive teams are being pitched an attractive offer: “We’ll implement our platform for free – you just pay for the ongoing subscription.”

It sounds like a win. No upfront capital expenditure. Reduced perceived implementation risk. A vendor so confident in their product they’ll absorb the deployment costs.

But here’s what 28 years of enterprise software deployments have taught me: when a vendor offers “free implementation,” they’re not being generous, they’re being strategic.

And the strategy isn’t always in your favour.

I recognise at least these four hidden costs in “free” implementation:

1. Your organisation becomes the beta tester

Often, it’s because

• They’re new to your market and need case studies
• They’re unproven in your sector and need reference customers
• They’re testing their product in a new vertical (e.g., expanding from energy to water)

In simple terms, you’re not receiving a favour – you may be providing one.

“Free” implementations are typically stripped-down versions that defer critical features to Phase 2, which isn’t free. Too many members of your team end up dedicating 6-18 months to a deployment that hits every edge case first. Research suggests free pilot programmes can require two to three times the expected internal resources due to unforeseen integration complexity.

2. Vendor lock-in by design

Free implementation can create an asymmetric relationship from day one. The pattern is familiar: absorb implementation costs to get you on the platform quickly, customise extensively during deployment to create unique dependencies, integrate deeply with your data architecture using proprietary formats, wait two to three years until you’re operationally dependent, then raise subscription prices by handsome percentages at renewal.

By the time the Total Cost of Ownership becomes unsustainable, switching costs can exceed the original implementation cost several times over. Industry data suggests enterprise software switching costs typically run at 2.5 – 4x annual licence fees, with data migration alone consuming 30 – 50% of total replacement project cost.

When you don’t pay upfront, you often pay later.

3. Core vs. premium – and you only find out in month 6

“Free implementation” rarely means implementing everything you need.

You’ll typically receive core billing, a basic customer portal and standard reporting. What may not be included, until later, are advanced analytics, regulatory reporting, multi-jurisdiction support, deeper API integrations and data export tools.

The reality is that organisations often underestimate the full cost of freemium enterprise software once premium functionality and internal resource commitments are factored in.

4. Vendor ambition as your liability

Here’s the uncomfortable question: why is a vendor so eager to enter your market that they’ll forgo significant implementation revenue?

Sometimes it’s because they’re backed by investors demanding rapid market share growth. Sometimes they’re expanding beyond their core competency and need proof points. Sometimes they’re loss-leading to disrupt incumbents with no clear path to sustainable margins.

For critical infrastructure, vendor stability isn’t optional. A vendor offering free implementation in a new vertical or new market may, in effect, be asking you to share in their learning curve and subsidise their R&D.

Questions worth asking before you say yes

If you’re evaluating one of these offers, consider walking into the room with the following questions: 

On scope:
What specifically is included in “free implementation”, line by line, in writing? What modules and integrations are excluded? What’s the typical ratio of free to paid components for a utility of our size?

On long-term costs:
What are your subscription pricing terms for Years 3-5? Can you provide a detailed five-year TCO model including all anticipated premium features and internal resource allocation? What has been your average price increase at first renewal?

On vendor stability:
How many implementations have you completed in our specific sector? Who owns your company and what is your path to sustainable margins? Can you provide references from customers who completed “free implementation” and are now three or more years post-deployment?

On exit:
If we decide to migrate off your platform in Year 3, what are the data export capabilities and associated costs? Do you use proprietary data formats, or do you support industry-standard exports?

What a genuine partnership looks like

For almost three decades, I’ve been fortunate to work alongside great utility customers as their software partner. I’ve always prided myself on doing this the right way – honest upfront pricing, clear implementation scope, a proven track record in the specific sector (not “adjacent” markets), financial transparency, no conflict of interest with their competitors, contractual price escalation limits, and demonstrably low customer churn.

Utilities are choosing a 10-15-year strategic partner for mission-critical infrastructure. That’s not a decision that should be made because the initial price was pitched as zero.

The bottom line

I’ve seen this play out more than once. Organisations that saved millions upfront and spent significantly more migrating a few years later. Authorities that accepted free deployment only to discover they were early proving grounds. Retailers that locked in attractive Year 1 pricing and faced substantial increases by Year 3.

“Free” in enterprise software rarely eliminates cost, it reallocates it.

If you’re a CFO, CIO, or procurement leader evaluating enterprise software for critical infrastructure, demand five-to-ten-year TCO models, engage independent consultants with no vendor affiliations, negotiate contractual price protections, ensure data portability from day one, and always speak to customers who are several years post-implementation – not just recent wins.

Utilities manage essential services. Water doesn’t flow because of aggressive sales tactics. It flows because of proven, reliable, battle-tested infrastructure. Software should be held to the same standard.

Twenty-eight years is a long time to watch this industry evolve. And, I must admit, the freemium behaviour currently emerging gives me pause.

What has your expereince been with “free implementation” offers? I hope these reflections contribute to a wider industry discussion.