From automating certain HR processes and increasing employee engagement to helping manage administrative tasks more efficiently, there are numerous advantages associated with using modern HR software. Selecting the right HR software is an essential process in helping you meet compliance requirements (such as the GDPR) and overall performance objectives. If you’re considering upgrading or purchasing new HR systems, one of the first decisions will involve pricing; how much should you budget to obtain the tools your business needs? In this article, we’ll explore some key factors that impact HR software pricing, which are:
- Features and functionality offered by the HR software
- The size of the organisation and the number of employees
- Deployment method (cloud-based vs on-premise solutions)
- Level of customer support and training provided
Features and functionality offered by the HR software
One of the key factors that affects HR software prices is the complexity of the product. More complex products tend to have more features and functionalities, which can make them more expensive to develop and maintain. For example, a simple HR software product might include features like managing holiday requests, document storage, rota scheduling, and basic employee data management. A more complex product might include additional features like performance management, benefits administration, and compliance tracking. The development and maintenance of more complex features requires additional resources and expertise, which can drive up the price of the product.
Another factor that can impact the price of HR software is the level of customisation that is available. Some HR software products are highly customisable, allowing organisations to tailor the product to their specific needs and requirements. On the other hand, some products may be more limited in terms of customisation, which can make them less expensive.
Integration with other software systems such as payroll, HR recruitment software, employee onboarding software, and learning management systems (LMS), can also impact the HR software price. Many businesses use a variety of software systems to manage their operations, and having the ability to integrate HR data management software with these other systems can be highly beneficial. However, developing and maintaining these integrations can be complex, which can drive up the price of the HR software product.
Additional reading: What is HR software?
The size of the business and the number of employees
HR software pricing can also vary depending on the size of your organisation. This is due to several factors including the scale of operations, the number of users, customisation and integration needs, support and training requirements, and contract length. It’s important to carefully evaluate your own business needs to select the most appropriate HR software solution at a fair price.
Larger businesses tend to have more employees and require more extensive human resource management systems, with functionality covering all aspects of the employee lifecycle, such as onboarding, training, performance management, payroll management, and benefits administration. As such, larger businesses may require more comprehensive solution that offers a wider range of functionalities and features of HR software, which can result in higher costs.
Another important factor is the number of end users. HR software vendors may charge per user or offer pricing tiers based on the number of employees using the software. The more users, the higher the cost may be. HR software for SMEs typically come in an off-the-shelf solution, while larger businesses may require more customised solutions that complement and integrate with their existing HR systems and processes, which can lead to higher costs. Want to know more about how organisation size affects your HR system needs? Read this handy article: How do HR systems differ in small or large firms?
Deployment method (cloud-based vs on-premise)
The overall price of software for HR can vary depending on whether it is cloud-based or on-premise. Cloud HR software – which is hosted on remote servers, with the vendor responsible for maintaining the server environment and deploying all software updates – is typically priced using a subscription model. Customers pay a monthly or annual fee for access to the software, and will also likely be charged one-off fees at the start of the contract for implementation-related services. The monthly or annual subscription fee is based on the number of users, and there are often different pricing tiers based on the number of users and the features included. The subscription fee for cloud-based HR software usually includes software updates, maintenance, and support. This means that businesses don’t need to worry about the cost of hardware, infrastructure, or IT support.
On-premise HR systems, on the other hand, have a one-time licence fee, but businesses are responsible for the cost of hardware, infrastructure, and IT support, which can make it a more expensive option upfront and in the long run. Most modern HR software is cloud-based, because it’s more suited to how organisations typically access and administer their systems.
Level of customer support and training provided
The level of training and support you can expect from an HRMS software provider can vary depending on the vendor and the specific software solution you choose. Some vendors may offer a basic level of support, such as a helpdesk or online chat, while others may provide more extensive training and support services, such as personalised training sessions, dedicated account managers, and unlimited phone and chat support.
The level of support you receive can impact the price of the software in a few ways. Vendors that offer more extensive support and training may charge a higher price for their software to cover the cost of providing those services. Additionally, the perceived value of the software may be higher if it comes with a higher level of support and training, which can also justify a higher price.
Vendors that offer a more basic level of support may charge a lower price for their software. It’s important to consider the value that you will get from the HR software and the level of support that is required for your business to use it effectively. In some cases, paying a higher price for an HR system with more extensive support and training may be a better long-term investment than opting for a cheaper solution with limited support.
Ultimately, when considering HR software pricing, choose an option that fits the needs of your organisation and provides the level of support and training you need to use the software effectively. Otherwise, if you aren’t able to use the software to its full potential because of a lack of training and support, you won’t get your desired return on investment (ROI).
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The cost of HR software varies widely depending on the vendor, the features offered, the size of your business, and the level of support and training provided. When considering HR software solutions, it’s essential to carefully evaluate your own needs and select a solution that provides the functionality required to manage your HR processes effectively. While cost is undoubtedly an important factor, it shouldn’t be the sole deciding factor. Investing in a comprehensive HR software solution that offers the necessary features and support can help your organisation save time and resources in the long run.
Modern, comprehensive, yet customisable HR software such as Ciphr HR might not be as expensive as you think. To find out how our solution might meet your organisation’s needs – and understand if it fits with your budget – get in touch today to request your personalised HR software demonstration.