HR Software Pricing Considerations: What to look for

When looking for new HR software, it is essential to finalize your company’s budget and then seek to find a software package that best meets the needs with the allotted funds. Unfortunately, many vendors make it difficult to figure out exactly how much software will realistically cost. Also, there may be hidden costs that should definitely be discussed before the final contract is signed.

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Before selecting a HR software vendor and package, the following factors should be considered:

Transparency of Software Pricing

HR software vendors often insist that you call them to obtain a quote. By doing so, the vendor can try to “sell” you when you call, thereby foreshadowing the future. For example, if a vendor is not transparent with software pricing from the get-go, chances are good they will also hide future costs that may influence your decision to go with someone else.

While vendors often claim that they cannot accurately quote the price for software without understanding the details of a business, most of these factors can be easily entered into a form so that you can receive a quote online. This allows you to quickly obtain a quote without any hassle, so as to propel your search simply by having a point of comparison to other vendor prices.

Charges for Contract Renewals

Companies possess the most leverage for negotiating contract renewal prices before they ever commit to implementing software in the first place. When it comes time for renewal, vendors know that they have an advantage due to the considerable costs of acquiring and implementing different software. Negotiating contract renewal terms at the beginning of the relationship with a vendor can help your company lock in the best rate.

Software Update Charges

Good HR software service plans include the costs of updates, as these are often necessary to maintain efficiency. Unfortunately, some vendors charge extra for updates, which may not be obvious until the updates become absolutely necessary. When reviewing update charges for a new software package, it is also important to consider necessary training costs to keep the staff educated on needed software updates.

Expansion or Reduction Costs

Most businesses try to plan for future growth, but it is also wise to plan for future downsizing. Many software vendors charge per employee and per month fees, which can be very useful in the event of expansion or reduction. If a vendor charges a flat fee based upon assumed needs or the size of the company at implementation, it may be best to consider another vendor.

Exit Fees in the Event of Dissatisfaction

Before signing a contract with SaaS, there should always be an exit strategy in place. Sometimes, despite the best of intentions by both parties, HR software fails to meet a company’s needs. If there is not an exit strategy in place, the vendor may attempt to make as much money as possible before losing your company’s business.

Authored by: Dave Rietsema