According to Deloitte, 75% of executives use some sort of technology to facilitate their due diligence. In this regard, virtual data rooms are the most optimal choice, as they facilitate thousands of transactions every year.
When choosing a virtual data room, pricing is a fundamental matter that needs to be a vital segment in any data room review. Most data room users, especially first-timers, are not aware of how virtual data room pricing works and end up paying more than they should.
That’s because there are at least 100 virtual data room providers serving globally, and they set their prices differently. Also, every pricing model has its perks and drawbacks, which every buyer should be aware of.
Here is a detailed guide to data room pricing models, the factors affecting VDR prices, and how much you should expect to pay for data room services in 2023.
How much do virtual data rooms cost in 2023?
With the virtual data room market estimated to reach $3.66 billion by 2027, it is no wonder virtual data rooms are considered a pricey solution.
However, it is simply impossible to estimate how much virtual data rooms should cost.
That’s because there are less known or relatively new data room providers that may charge $100 a month. On the other side, there are tales of businessmen who ended up paying over $100,000 for one-time business transactions like mergers and acquisitions.
However, $100,000 for a single transaction is way too much, and it mostly happens due to choosing the wrong pricing model.
Common virtual data room pricing models
Currently, there are four VDR pricing models in the data room market — per-page pricing, per-user pricing, flat monthly charges, and data storage-based pricing.
Per-page pricing
“Data room software is supposed to be a cost-effective solution. However, failing to choose the right virtual data room pricing method can cost way more than was initially expected. Flat monthly fee with transparent pricing and no hidden costs is an optimal choice for good ROI, while per-page, per-user, and storage-based pricing are considered less universal”, — says Terry Ronald Hernandez, Founder of data room-providers.org.
In the per-page pricing model, the electronic data room charges for every single page uploaded in the VDR. It is important to note that you will be charged per page, not per document. For example, if the company charges $0.20 per page and one document has ten pages, the total cost will be $2. However, only a few data room providers charge per page nowadays.
The average cost in per-page pricing is $0.40 to $0.85. Per-page pricing is not suitable for large-scale transactions like M&As. Otherwise, you may get an invoice of over $100,000 for a single transaction. Also, this pricing model is recommended for short-term use.
Per-user pricing
Per-user pricing works in different ways. That said, the vendor may charge a specific amount for every user added to the online data room software. Or, the service provider may allow you to add a specified number of users at a fixed price. However, there will be additional charges in case you add more users than the allowed limit.
You can expect to pay between $100 to $250 for every administrative user. Per-user pricing mostly suits small businesses or teams. Board members or executives may prefer using this pricing model as there will be few users.
Flat monthly charges and fees
The flat monthly fee is the most common approach among current-day virtual data room market leaders, including iDeals, Caplinked, Merrill, etc.
In this pricing model, the vendor charges a fixed monthly amount, and in return, you can:
- Consume allocated data storage
- Add a specific or unlimited number of users (both administrative and guest users)
Also, the vendors offer multiple packages that suit small, medium, and large businesses. For instance, iDeals Data Rooms’ package for small businesses or teams allows unlimited regular users, up to 5 administrative users, and flexible storage of up to 10 GB.
Depending on the package you choose, the average cost may range from $400 to $2000 a month. Vendors may bill you monthly, quarterly, or even yearly.
Storage-based pricing
Pricing based on storage size is more like the first two approaches and is only recommended for smaller businesses and short-term usage.
In this approach, you have to pay for every GB (gigabyte) you consume, or the vendor will charge a specific amount for a limited data storage capacity. You will be charged extra if you consume more storage space than your maximum limit. You can expect to pay up to $75 per GB.
Factors affecting virtual data room pricing
The cost of virtual data room services also depends on the features provided by vendors. Here are a few important factors that affect VDR prices.
Security
Security features vary from vendor to vendor and even package to package. For example, two-step verification, NDAs, and document access control are generally standard features. However, VDRs have features like fence-view mode, view-only mode, digital watermarks, and 256-bit SSL data encryption, which may cost extra.
Document management tools
Generally, the greater the ease, the higher the cost of data room services. Full-text search, smart-text search, electronic signatures, document linking, bulk uploads, and drag-and-drop features improve usability and thus affect the prices.
Apart from that, the quality of customer support services and flexibility in integrations also affect virtual data room pricing.
Final words
Data room pricing is a key factor when choosing a data room service; uninformed decisions may cost you more. Per-user, per-page, and storage-based pricing models are suitable for smaller businesses or short-term usage, while the flat monthly fee approach is recommended for long-term, large-scale usage. As Hernandez puts it, flat-fee pricing is considered the most universal and cost-efficient one.
Use pricing as a guiding criterion for your data room comparison and make an optimal choice of a VDR solution.
A Comprehensive Review of the Best Virtual Data Room Platforms for Your Business
A Comprehensive Review of the Best Virtual Data Room Platforms for Your Business