How to Calculate a Team's Software Cost per Person

Per-person software cost is a month's total subscription spend divided by the people who actually opened the products that month. Miss the annual tools and idle seats, and the number comes out too low.

Per-person software cost is one month's total subscription spend divided by the number of people who actually opened the products that month. If the monthly share of annually billed tools and the seats nobody uses are left out, the figure comes out below reality.

The four items most often left out

Most early-stage teams just total the monthly card statement. Four costs never make it into that table.

Annually billed tools. Divide the yearly amount by twelve and write it on the monthly line.

Idle seats. A departing employee's license doesn't switch itself off in most products — it stays on the invoice.

Add-on fees. Extra storage, extra environments, single sign-on, and usage packs are billed separately from the base plan.

Tools bought on personal cards. These arrive as expense reports, so they never show up in the subscription list.

Why the denominator is critical

Use total headcount as the denominator and the cost looks low. The denominator should be the number of people who opened the product at least once that month. The gap between the two numbers directly shows the size of your unused licenses.

A worked example: an eight-person team paying $640/month across five tools sees an $80 per-person figure. But if only three people ever open one of those tools, that tool's cost should be divided by three, not eight. A per-tool table shows at a glance which subscription is earning its keep for whom.

Attributing software spend to owners and reading it as unit cost is defined in the FinOps Foundation framework. For a small team, all it takes is one table kept with the same formula every month.

How Lodos shortens this table

When one subscription replaces separate chat, video, task board, file storage, and API testing subscriptions, the numerator and the denominator are read from the same system. The startups page lists which modules cover that consolidation, and the pricing page spells out the plan limits.

Here's the limit: the free Standard plan is zero dollars per person, but you can't invite anyone else into your workspace on it — invites come with Basic at $30/user/month. On storage, Basic gives 30 GB, which won't be enough for teams keeping large video archives.

For how team capacity turns into a bill, see the annual billing breakdown.

FAQ

What should software cost per person be? There's no fixed target. What matters is measuring with the same formula three months in a row and watching the trend.

How do I spot an unused license? Compare the seat count on the invoice with the number of people who opened the product that month. The difference is your idle licenses.

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Put it into practice.

Everything covered in this article is built into Lodos - one workspace, zero extra subscriptions.

Switching from another tool? Slack · Notion · Zoom · Jira · Postman · Toggl · Google Drive

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