Which software option is optimal for EV charging CPOs of different scales in 2023: Custom or SaaS?
Businesses of every size and industry share much in common, and one of those is the necessity of the software component.
EV Charge point operators (CPOs) are not an exclusion. From the very first station installed, their business simply cannot run without software that helps them keep track of the stations’ condition, calculate revenue and collect data about the station usage.
Spend analyses show that software is one of the major CPOs’ items of expenditure. The majority of aspiring businesses invest in SaaS products at first. No wonder, as with SaaS you have all the innovation and efficiency of software, without paying the costs of building or hosting the tool.
Yet, many other EV charging businesses opt for custom software, as it helps them develop unique features, keep their data private, customize UI and UX, and simply maintain their independence from 3rd-party vendors.
But which way is optimal?
A year ago, we already tried to figure it out. Since then, drastic changes took place in the energy market, which affected the pricing of public EV charging in many countries all over the world. The price of IT services has also changed, in connection to the IT talent shortage and therefore global salary increases.
Hence in this article, we will make updates to our almost 1-year-old mini-research. Considering the above-mentioned changes, we will calculate the 5-year cost of different software options for CPOs of different scales, and compare them to find out which solution is optimal in each particular case.
Enjoy reading.
When choosing the software platform for their business, CPOs usually have three scenarios: SaaS, custom, or white-label. As white-label options are not as abundant on the market, we focused on SaaS vs. custom.
Here are a few formulas we defined to estimate the cost of each option.
To calculate the approximate 5-year cost of SaaS, we take that each operator’s station sells 50 kWh of energy daily at an average rate of $0,39 (for the US), $0,65 (for Germany); $0,74 (for the UK). The SaaS spending amounts to 12% of the operator’s daily revenue.
We also take into account that the number of these stations grows exponentially over the 5-year period (1,2,3…1000 etc.).
Finally, we assume that stations start bringing profit to their owners after 6 months after installation, so 0,81 is a coefficient that shows these changes.
Here is a formula we used:
It would be incorrect to consider custom software development as a standard-based process because numerous characteristics make bespoke software unique.
So in our research, we assume that the CPO needs both the back-office admin panel and application, but we consider 3 various options. In brief, the development process will be divided into 3 stages, tailored to the needs of each business.
Below you can see the features available for each stage.
Therefore we estimate the 5-year cost of the custom software development, presuming that the cost of each stage’s development is equal to $180,000; and the monthly maintenance cost for the part-time team is around $15,000. We took into account the hourly rates of the Eastern Europe market (Ukraine in particular). Speaking of duration, we accounted that the active development phase at each stage takes 6 months.
So, what is the 5-year cost of each software option, and when is it more reasonable to invest in custom/SaaS?
The numbers say the following:
Hence if you’re planning to install the following number of stations (or more) over the 5 years, custom software is a more profitable option:
– in the UK – 304 – 357 stations (60-71 stations per year)
– in Germany – 344 – 406 stations (68-81 stations per year)
– in the USA – 573 – 677 stations (114-135 stations per year)
Last year, these numbers were the following:
– in the UK – 361 – 406 stations (72-81 stations per year)
– in Germany – 452 – 478 stations (90-96 stations per year)
– in the USA – 371 – 417 stations (74-83 stations per year)
In conclusion, despite the increased cost of IT services, it became profitable for a broader circle of CPOs to develop custom software in those markets, where energy prices soared over 2022 (like the UK and Germany).
The reason is simple – the average session cost almost doubled, which impacted the expenditure on SaaS (as the majority of SaaS providers charge a certain % per session).
In markets with more or less stable energy prices (like the US), the situation is vice versa – it is more profitable to use SaaS unless your business is scaling by more than 114 stations per year. As the session cost hasn’t changed, (unlike the custom solution cost), SaaS certainly seems a more attractive option.
However, it should be noted that the majority of today’s SaaS providers are tailored for the European market, so the choice of SaaS solutions in markets like the US might be limited.
Let’s keep an eye on the matter though – who knows what 2023 will bring?
