This post was last updated on March 24th, 2022 at 11:36 am.
There Aren’t Many Things Free In This World
The age-old software question — to use free or paid software? There aren’t many things in the world that are truly free. For example, there aren’t free plumbers, contractors, cars, houses, lawn care, or even a dozen eggs. When computers came around and later offered free software, people quickly jumped on the bandwagon, so to speak. Free membership management software was not far behind the bandwagon.
A History Lesson For Free Software
Free software really got its start back in the ’50s when it was shared amongst academia. Keep in mind the general public rarely had access to the large computer systems of that day. In the following decades, software has had many evolutions in the pricing schema. Then with the evolution of free phone apps came ‘in-app purchases’ which help pay for that free app. This schema brings us to another age-old saying:
Nothing in life is free, you always pay in the end.Wayne Static
If the in-app purchases aren’t enough for a company’s revenue, phone apps and search engines consume large amounts of data from your usage. These tech companies then sell that personal usage data to marketing companies for large sums of money while you enjoy that free phone app and not realize what is going on without your knowledge.
The Free Phenomenon
Humans, by their very nature, want free stuff. People like the path of least resistance. When you have a product revenue schema where the program is offered free, it plays into human nature very well. However, the company still needs to make money and why things like in-app purchasing, marketing your phone usage data, or other revenue streams are important. A common revenue stream is the “processing” fees collected from online donations.
How Free Membership Management Software Is Paid For
Today, many church software companies came from the online payment processing market. These payment processing companies that transition to church management software give away their church software for free because they are collecting a 3% processing fee on every donation the church receives. How does it work?
Let’s base this example on what most churches pay for their church software which is about $50 – $100 per month.
For companies that give away their software, the church’s donors would need to donate about $2,000.00 per month online to get about $60.00 in processing fees. As you can see the $60.00 is between the $50 – $100 per month that’s needed for church software. Most churches collect much more than $2,000.00/month, so anything over this amount is icing on the cake.
Here’s a table to show how much that free software is costing the church in regards to a 3% processing fee on all online donations.
|Received Monthly Donations||3% Fee Cost (their monthly revenue)||Annual Cost|
|$2,000 — $4,900||$60 — $147 / month||$720 — $1,764|
|$5,000 — $7,900||$150 — $237 / month||$1,800 — $2,844|
|$8,000 — $10,900||$240 — $327 / month||$2,880 — $3,924|
|$11,000 — $14,900||$330 — $447 / month||$3,960 — $5,364|
|$15,000 — $18,900||$450 — $567 / month||$5,400 — $6,804|
The Invisible Issue That Churches May Miss
Like it was stated before — nothing is ever really free. In this case, the church is paying a lot of money in processing fees to get a free church software package. There’s yet another hidden cost that most churches overlook in the case of payment processors that offer church management software. Payment processors have a limited understanding of how churches work outside of the donation process. They simply move money between financial institutions and that’s their expertise. Payment processors don’t know about child check-in, taking attendance, recording sacraments, church fund accounting with payroll, hosting events, and so on.
A Divided House Falls
Have you ever heard the saying “a divided house falls”? A similar saying is in the Bible — Luke 11:17 & Mark 3:25 where they use the word ‘kingdom’ instead of ‘house.’ So what does this saying have to do with free membership management software?
Free software is always paid for in some way — either by profits from another revenue stream or ad marketing. In the case of online processors, it’s paid for using the 3% processing fee. Let’s stay with the online processing example and review how the two packages, the free and paid, vie for the company’s resources.
Paid vs. Free — Which One Gets The Company’s Resources?
Let’s say there are two features requested from clients, whereas one feature is for the free church management software and the other for the payment processor. The company only has the resources to implement one of these two features. Which software gets their feature developed? Most company presidents will tell you it’s the product that people pay for. In other words, the free church management software loses out on its features getting developed. Why? Because the company must stay profitable so they can keep offering the paid and free software.
So what does this mean in regards to the free church management software and its development? Because the free software brings no additional revenue, the feature goes to the back burner. The software company has to take care of the software that pays for their company’s operation — ie the 3% processing fee from online donations.
What does this mean to the church that the payment processing features get developed before the church software features? It means the free church software set of features gets further behind and only has the bare minimum added year after year. The company will always take care of the revenue-making solutions first and the free ancillary products second. In other words, the free product’s new feature requests are placed way down on the waitlist.
Free Membership Management Software Summary
Is there really anything in the world that’s truly free without some compromise? Probably not. Free software has been around for decades but how it’s paid for, has changed over time. In the case of online processors, they use the received revenue from processing transactions. The table shown earlier indicates it can be very large per month.
As we explained, online processors might have a lot of resources to spend on development, but the resources aren’t limitless. These companies can’t implement all the enhancements for both platforms — the free church management and the online processing software. There are other areas that we didn’t even touch on in this post; for example, how support would work for the free vs the paid system, what is done when the free system doesn’t meet the needs anymore, and so on?
It’s important to know when picking software, how the software company gets its revenue. Why? The revenue stream(s) tell a lot about how the company operates. It can tell you how fast they will be fixing or enhancing the free vs. paid software. It will tell you how their support model works when you need help. A company’s revenue stream will tell you how the company prioritizes its products and services. In summary, choose your church management software carefully.