Guide to HR Software Pricing Models

Pricing plays an important role in choosing any software, especially HR software. HR software pricing plans vary from vendor to vendor depending on different factors such as features, mode of deployment, number of users, and integrated systems.

There are vendors in the market that offer transparent pricing information on their websites, and others offer a specialized quote based on business needs and requirements.

With that in mind, we’ve put together this comprehensive guide to help you compare the prices of top-rated HR solutions, find out how much HR tools cost, and what additional costs a business needs to consider.

How much does HR software cost?

The cost of HR software varies depending on several factors such as the number of employees/users, the features chosen, the type of deployment, the exact needs of the business as well as the results. Deciding on these aspects of investing in HR software will benefit your business.

Here are some questions to consider when evaluating the different types of HR software on the market:

1. What features do you need: basic or advanced?

2. Which pricing model can you afford: per user/employee per month or fixed monthly price?

3. What will the implementation look like: is there an additional cost or included in the base price?

4. Is the software flexible and scalable: can it scale as the business grows?

5. Does the software easily integrate with existing HR systems?

6. Is the software cloud-based or on-premises?

Depending on how you answer the questions above, the cost of the same HR software may differ for two different buyers. For example, Zenefits can cost as little as $8 per user per month or as high as $3,500+ per month depending on the features you choose.

HR software price ranges

HR solutions primarily come with a subscription pricing model that does not require the purchase of the license. Instead, users pay a recurring monthly or yearly fee to the software vendor.

The cost of HR software starts at $3 per user per month and goes up to $1,239 per month. For advanced HR systems with more employees/users, you can expect to pay anywhere from $688 to over $3,500 per month.

We can classify the different tariff plans according to the number of employees as basic, high-endand Advanced. The pricing of these three price ranges ranges from low to high as the basic plan only covers a few basic HR software features while the premium plans cover advanced features in addition to basic functionality. Moreover, the advanced plan is the most expensive among the three due to more advanced features that support large teams or businesses. For your reference, below is an overview of some popular HR software.

Cost of some popular HR software

Only products with publicly available pricing information have been included. We’ve summarized publicly available pricing sources, including vendor websites, as of January 2022, starting with the lowest monthly prices (excluding annual discounts) for packages that include the basic features of a class of software. We list prices for more advanced packages (per user, when available) that also include basic software features. As always, your specific business needs may differ and the final price will vary.

A note on features:

Human resources (HR) software serves as the employee data recording system. It helps managers and HR staff to attract, recruit, manage, engage and develop their employees. Core or basic features include employee profiles, employee database, and reports.

Upfront and recurring HR software costs

Providers typically offer both types of pricing models: perpetual (on-premises) licenses and subscription (cloud) hosting plans. You may already have a basic understanding of these options, but let’s consider the full up-front, recurring, and hidden costs of each:

Initial and recurring costs

1. Perpetual License

This pricing model is more common for on-premises software licenses because the company hosts the data on its own servers. With this pricing system, you only have to pay for the software upfront. This can be a recurring cost, an optional annual support fee, or the ability to purchase other add-ons a la carte. You can choose this pricing model if you have already tried the free trial versions of the software, since you make a larger initial investment.

If your company is a large company or a company with more than 100-500 employees, you may want to opt for a one-time fee or a subscription that offers a one-time annual fee, as most HR software vendors offer a discount for the initial payment for a large number of users.

2. Subscription License

The second most common pricing model is subscription (also known as software as a service), where the vendor hosts the software on their servers. With this program, you usually pay a monthly or annual subscription fee. Even the price is for a specific subscription period regardless of the number of users and subscriptions can be renewed monthly, semi-annually (every six months) or annually. Annual subscriptions are advantageous for businesses because they allow you to save five to ten percent on the monthly subscription.

Also, do not confuse user with employee, especially the standard pricing structure is per employee per month, which covers active employees of the company. Sometimes some vendors use per user per month, which specifies corporate administrative users (e.g. HR) to use the system. However, if employee self-service is included as a feature, employees can be categorized as users.

3. Free and open source license

This type of pricing is more popular when you don’t have a budget but your needs are met with a free HR tool. These types of licenses generally provide basic HR software functionality for free. However, you can add additional features for an additional fee.

On the other hand, open source software is built with open source code that you can download (and sometimes modify) for free, especially if you are a software developer.

Often overlooked costs

No matter what type of business or buyer you are or whether you choose a subscription plan or a perpetual license, it is unlikely that you will not encounter other costs necessary for the HR software in which you have invested.

Often overlooked cost
  • Data migration: If you’re moving from a legacy system to a cloud-based platform, data cleansing and migration may incur additional costs. Be sure to check with the supplier for these potential additional costs.
  • Coaching: Some providers may include basic training services for free, but others may offer them at an additional cost, especially if the training is conducted at the customer’s site.
  • Maintenance and updates: Basic maintenance and upgrades (eg necessary modifications, some updates, fixing and fixing problems) are usually included in the price. However, vendors may offer plans that include advanced maintenance.
  • IT support: Troubleshooting technical issues can become a bottleneck for your business when implementing new software. Make sure that the HR software you are considering buying provides some type of technical support, either through a help desk or at least user guides and online tutorials to troubleshoot any issues that arise. .

It’s important to consider these often overlooked costs before you start evaluating vendors. This way you can add them to your budget initially.

What are the best HR software packages?

Ultimately, choosing HR software isn’t as tricky as it seems. But it depends on the business needs of your company. Do the HR tools listed in this guide fit into your software budget? If so, you might want to compare their features and read user reviews of over 120 similar products listed on our Human Resources (HR) category page.

To note: This article is intended to inform our readers about the concerns related to doing business in the United States. It is in no way intended to provide financial advice or endorse any specific course of action. For advice on your particular situation, consult your accountant or financial advisor.