There are a lot of smart reasons to use cloud services. You get what you need immediately, without waiting for your IT group to set up a server and client software. There's no up-front capital expense and you can scale what you order up or down as circumstances dictate. You often get innovative capabilities that larger providers haven't thought of. And many times the offerings are free.

But, depending on your need, free may not be so cheap. And the biggest brand may not have the best deal for you. Before clicking any sign-up buttons, do some smart competitive shopping.

Should you go with freemium?

One example where free may not work out so well in the end, depending on your needs, is online cloud storage that gives you access to files from multiple devices and platforms. One paid vendor, Livedrive, pointed this out in a blog post by CEO Andrew Michael, where he argues that so-called freemium providers that give you free services up to a limit may charge more than a paid-only service to cover the free accounts.

For example, Dropbox accounts start free, and go up to 100 gigabytes of storage (with a potential additional 32 gigabytes if you refer enough new customers) for $19.99 a month or $199 a year. Livedrive offers 2 terabytes of storage in its Briefcase service for $15.99 a month. And yet, Dropbox has larger pools of shared storage available for a group of people, though you need to get a custom quote. Which one to get? It depends on how much you and your people need to store and what you're using the space for.

How much service do you need?

How about customer relationship management? is the big name in cloud-based CRM, though there are other choices as well, such as Sage CRM and SugarCRM. If you need only contact management for a group of five or fewer, Salesforce might be the way to go, with pricing starting at $5 per user per month. The vendor also has "basic sales and marketing" for up to five users at $15 a head monthly.

But again depending on what you need, others may be a better choice. The Salesforce "complete" CRM for any size group is $65 per user per month. Sage CRM's full offering is regularly $45 a month per user, or $39 if a new customer and paying for time up-front. SugarCRM charges between $30 and $100 per user per month for its various editions. You need to carefully read the various abilities to see how you might get the best buy.

5 factors to consider when you shop for cloud services:

  • Consider how many people you have and whether there are licensing arrangements that might be more favorable to you.
  • Don't forget to take growth into account. Will you get a cheaper price today only to pay a lot more six months from now after you've expanded?
  • Ask about the ability to get your data out of their system and into your hands. In case the company changes its terms or is acquired, you want to be sure that you can get to your own information.
  • Are there capacity constraints that could help narrow your choice for you? If the best price doesn't cover you, then it doesn't matter how low it is.
  • Look carefully at the comparative capabilities and rethink what you really need to do business today and what you might want in the future. Many entrepreneurs buy more capabilities than they need.

Just like any other investment in your business, don't purchase cloud services on impulse. After you do contract one, see how often you use it. If you've bought more than you need, it's better to admit a mistake and scale back than it is to pay an effectively inflated invoice every month.