Virtually every HR software supplier today claims to be in the Cloud. So why is pricing from one HR solution to the next so radically different?
The answer is relatively straight-forward. Today, it’s largely about the technology. Older solutions, like older houses, cost a lot more to run than their modern equivalents.
HR software suppliers can be divided into two camps: those that have invested in building Cloud-native HR software and those that simply moved their existing ‘legacy’ software from in-house computers to servers that are based in the Cloud.
While the latter are saddled with the same high development, deployment and maintenance costs as in the past, their Cloud-native cousins are increasingly taking a new approach. They are opting to pass on to the benefits of the lower costs and greater flexibility of modern Cloud computing environments to their clients. That generally means lower prices, shorter contracts, automatic (and regular) updates and no hidden extras.
Here are the top five out-dated pricing approaches to avoid:
Multi-year contracts
Unless you get a double digit discount and are confident that your business needs aren’t going to change, signing up to a long-term contract for HR software should be banished. Your supplier should be confident enough in their solution not to try to tie you into a two, three or even four-year contract.
Fixed user or employee-based pricing
Surely your fees should be adjusted automatically in line with your usage – just like your gas bill? Why should you have to pay for capacity you don’t use? Is it because your supplier can’t scale in line with you? This is another approach that’s fast being eradicated in place of a more flexible approach. consigned to Room 101!
Data storage costs
With vendors paying so little for data storage, why should they feel it’s appropriate to hike your fees if you want to use their HR software in way it was designed: as a central, secure repository of all of your HR records? Check their approach to data storage before you commit to their software. Is there a set amount included in your fee? Is data storage unlimited? Make sure there are no surprises lurking in your agreement.
Upgrade fees
While pretty much every HR software vendor now guarantees to update your software for you, not every update is seamless. Older vendors often expect you to run tests to make sure they’ve not “broken” any of your own configurations, or will charge to reapply configurations or customisations they’ve developed for you. Cloud-native solutions based on a multi-tenanted approach, are specifically designed to enable seamless, cost-free updates.
“Contact us for pricing”
Is this an offer to provide you with the best possible pricing base on your requirements? Or, is the vendor holding all of their cards, so can charge you what they think you can afford? Apart from an extensive survey of their other customers, how can you tell? I know which one I think it is! Most modern Cloud HR software suppliers publish their pricing on their website, so you can be sure you are getting a fair price.
Sue Lingard, Cezanne HR.
Further reading on HR software
Nominations are now open for the British Small Business Awards, the leading event celebrating the brightest stars in the SME sector. Click here to enter, and make sure you get involved today using the hashtag #BSBAwards. Good luck!
