Constructed figure, assumptions listed

The proposal fits on one page. Forty thousand euros a year, first-year discount included, signature before the end of the quarter. Finance looks at the line, finds it reasonable against the budget, and approves it.

Three years later, no one in the company can say what that signature will have cost.

The four lines the signature opens

Department concernedWhat the signature commitsOver three years
Financethe contract, with its annual revision€142,925
Human resourcesone person to run it€235,638
Legalan audit clause and an exit clauseexposure, not costed here
Operationsa dependency on a vendor and on a person€4,954 per month of vacancy

Total committed over three years: 378,563 euros. The quote showed 40,000.

The ratio is nine to one, and it comes from no bad faith. It comes from the fact that each department only saw its own line, and none of them added them up.

Why the human line exceeds the contract line

This is the most counter-intuitive result in the table, and it fits in one sentence: a tool is paid once a year, the person who runs it is paid every month.

A person paid at the market median costs 78,546 euros a year once the employer coefficient is applied. Over three years, that is 235,638 euros, that is 65 % of the total committed. The contract, despite its 9 % annual compounded increase, accounts for only 38 %.

In other words, the negotiation you spent six weeks having with the vendor was about the smaller of the two lines.

The two exposures that are not expenses

They do not appear in the total because they may never happen. They are provisioned anyway.

The audit clause. A 250,000 euro claim settles between 25,000 and 75,000 euros according to the only public figures available. This exposure is born the day of the signature, it does not depend on your good faith, and it belongs to legal, not to the technical team.

The position vacancy. If the person who runs the tool leaves, covering it with an external service costs 4,954 euros more a month than the salary it frees up. Three months of vacancy is 14,862 euros. This exposure belongs to operations and HR, not to finance.

What you will be told, and what to answer

“The person already exists, they don’t cost more.” They cost the time they will no longer spend elsewhere. If their schedule was full before the signature, the question is not cost but trade-off: which activity stops to free up this time. If no one can answer, the human line will be paid in overtime or in delay on something else.

“We’ll deal with legal at signature time.” By signature time, the clauses are the vendor’s. The only useful negotiation window sits between selection and signature, and it lasts a few days.

“Three years is speculative.” It is the depreciation period your own accounting would apply to an equivalent investment. Refusing to project three years out amounts to deciding with no horizon.

“We don’t have time to bring four departments together for a 40,000 euro contract.” That is correct, and it is the real point. A 378,563 euro decision deserves a meeting. A 40,000 euro decision does not. The whole question is knowing which of the two you are actually making.

To check for yourself, in twenty minutes

Take your last software signature. Apply the four lines. Compare the total to what appeared on the decision memo.

Count the departments that signed off on that memo. If the answer is one, you know the cause of your next budget gap.

Find out who runs the tool today. If it’s one person, and their name comes to mind immediately, you’re looking at the “operations” line.

Check the renewal date. It is the only moment when the four lines can still be discussed together.

The sentence to remember

A quote commits one department. A technical decision commits four, and only one of them read the contract.

Open in a spreadsheet · The four lines, as a spreadsheet (1,045 bytes)

Sources

Last reviewed: 19 August 2026

Figures to review before 19 August 2028