Putting it into numbers

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Having considered the various functionality and services surrounding the CannaQA solution, it can be helpful to take a look at a real-world example of a quote for a more or less "typical" installation of the CannaQA cannabis testing laboratory information management system (LIMS). A variety of items are listed as line items in the sales agreement and constitute the statement of work (SOW). It is important to include exactly what is expected, being as specific as possible, since this will be the entire contractual obligation for both parties. Obviously, the line items may differ from system to system somewhat, according to what features and functions are included by default with the LIMS and which, if any, are additional. While any hourly amount in the the contract SOW is usually a best estimate, if sufficient attention to detailed requirements has been given, then it should be quite accurate, and in fact the final cost may even be below the quoted cost if you prioritize your own obligations so that the vendor's hours are used sparingly and efficiently. We'll take a look at an example of an SOW for a LabLynx CannaQA cannabis testing laboratory LIMS implementation in California, focusing on:
  • licensing or subscription rates;
  • required core items to meet state or national (e.g., Canada) testing requirements;
  • additional optional items and totals; and
  • services (implementation, maintenance/support, optional items).

License or Subscription

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There are two primary ways to price a LIMS itself: a one-time license fee or subscription rate (cloud-hosted software-as-a-service or SaaS). If you have your own dedicated IT department and staff, you may prefer the former (although many system administrators are just as happy to let it be hosted elsewhere rather than add to their workload). Otherwise, SaaS subscription may well be the better and more cost-effective way to go (no IT costs at all other than internet access). This item will be part of your up-front cost and, in the case of subscription, it will also figure into your first year and ongoing costs; otherwise only associated MSW (maintenance/support/warranty) will figure there. Typically, your first year's subscription costs will be due at signing. More often, the vendor may require three months or even the first year up front, so be prepared to factor that into up-front costs. However, it still is almost always less expensive at the outset (and over time if you factor in IT costs and annual MSW) than paying for a license fee.

A note about licensing/subscription: Number of users

In addition to the two types of software pricing, there are sub-types. Generally these are based on the number of users (or, in some cases, "nodes," which are simply any entities that access the LIMS, including other systems, instruments, etc.). How these are counted can vary:

  • Named users: This method bases pricing on the actual individual users of the system, even if they may only log in once in awhile. Users may not use each other's logins (this is a no-no regardless of pricing structure, for GxP and other standards/regulations reasons).
  • Concurrent users: This bases pricing on the maximum number of users who will be logged in at any given time. You can define an unlimited number of named users in the system, each with their own login credentials. However, only the number of (concurrent) users specified in the license/subscription may be logged in at any one time. For example, you may have 10 staff, but due to work processes, shifts, etc., only up to six might ever be logged in simultaneously. Whereas this would require a named user license for 10, it would only require a concurrent user license for six.
  • Unlimited users: In the case of very large labs (typically 30 to 50 and up), the license or subscription may simply be a flat fee that allows any number of users.

The costs can be a mixture of subscriptions (annual and/or monthly), fixed one-time costs (unit of "each") and/or hourly services. However, the reality is that they really are either license/subscription or services. Any fixed costs for other items are really for services, and represent one of two possible scenarios:

1. Final fixed cost: In this case, the cost has been figured by the vendor so as to cover their worst-case hourly labor total. If the item (typically interfaces) is not "worst case," then you are overpaying.

2. "Expandable" fixed cost: This is as bad as final fixed cost, and maybe even worse because it's almost a case of "bait-and-switch," popping up as a surprise. The initial "fixed cost" number is low, and additional hourly services are needed to actually deliver the item. This will have been provided for somewhere in the small print. The bottom line is that everything in a LIMS is really either licensing or hourly services. Just be careful if they are portrayed as anything else.

It is important to be clear which category each line item falls under when figuring costs, which can be divided into (1) up-front (due upon signing), (2) annual. and (3) ongoing (e.g., SaaS subscription). It is useful to clearly lay out each and compute initial costs, as well as first-year and subsequent years' costings. In this example:

1. Initial: Your initial layout may be as little as your first year's subscription plus the first 40 hours of services. Different vendors have different policies, however, and you may be required to pay for your first full year's subscription and all services, or some other combination. Normally, though, any instrument interface or other services charges aren't due until the they are implemented, which may be a few weeks or even a month or so down the road, depending on your budget, complexity of the SOW, and urgency.

2. First-year: Your first year's expenses will include everything, including initial license fees; all setup and training; any interfaces and additional configurations or customization; and first annual maintenance, service, and warranty (MSW). (If this isn't included in the SaaS subscription, then it usually commences on full system delivery).

3. Ongoing: Your subscription and MSW will be the only ongoing expenses (included as one in this example), unless you choose to have additional interfaces or other services performed at any time.


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The second major component of pricing your LIMS is services. No matter how pre-configured for cannabis testing, any professional LIMS will require some amount of standard setup to reflect your particular lab. This includes adding lab name and contact details for reports and certificates; entering users, their roles, and access permissions; adding and/or modifying tests and workflows; renaming fields; adding or hiding fields; setting up a web portal; implementing interfaces; etc. Equally indispensable is proper training for both users and administrators. And of course you may later find that you would like additional features or functions. The services here are listed in hourly units (again, be very careful if any items that are services-based are listed as fixed-price items).

Services can include:

  • Kickoff meeting (initial planning, identify delta, set schedule, etc.)
  • Project management
  • Requirements gathering and documentation
  • Setup
  • Training (user and admin)
  • Additional configurations and/or customization
    • Interfaces
    • Custom screens
    • Custom reports and labels
    • Additional triggers, alerts, etc.
    • Additional or custom functionality
  • Validation/Acceptance testing (either to a third-party standard or certification, or to manufacturer claims/specs/contract)

Ongoing Maintenance, Support, and Warranty

The third and final component of your LIMS cost is the ongoing coverage for maintenance, support, and warranty (MSW). There are of course three items rolled up into this, and we'll discuss each individually. Cost-wise, industry norms are anywhere from 15% to 25% of either the license fee or total contract, levied annually to provide this coverage. Alternatively, it may be simply included with your subscription. It will include a specified number of support hours and maintenance hours or guarantees. Warranty should be unlimited for as long as the MSW or subscription is kept current.

  • Maintenance: This is any and all work necessary to keep your LIMS working as designed. It includes any updates, patches, or fixes, and most if not all upgrades (a major upgrade to a totally new edition may not be covered, but it may come at a significantly lower cost).
  • Support: Support services generally consist of a specified number of hours and are for helping you in the operation of the system, rather than "fixing" anything. They include things like guidance on items related to training, password/login support, etc.
  • Warranty: With any professional application you expect to have a warranty.
A warranty covers:
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  • ... anything that doesn't work that should. That includes any standard features and functions, as well as any additional ones that were delivered and signed off on, and any other work performed by the vendor or its representatives.

A warranty does not cover:

  • ... anything that was working fine but you manipulated in such a way (beyond normal operation) that it broke. In these cases you'll probably have to pony up to get it fixed.

Total costs

Your total LIMS costs are tallied according to the licenses or subscriptions, core items, optional fixed items, and hourly services, plus any additional MSW. Two ways to help maximize affordability and success are (1) as stated before, make sure you plan as thoroughly as possible and set aside sufficient funding for the lab operation you envision, and (2) plan out your implementation, perhaps staggering some of the major non-central items to be phased in over time in favor of getting operational with your LIMS as early as possible.