HR software pricing explained

Quick guide to HR software pricing

If you’d prefer to just quickly compare some of the major providers, here’s a chart to help you understand their pricing models at a glance – as of January 2024.

If you’re looking for HR software, you might be wondering how much it costs. But HR software pricing can be a tricky nut to crack – different vendors have different pricing strategies, and some of these can be quite difficult to understand. What makes this even more difficult (and very bloody annoying) is that many HR software suppliers won’t even publish their prices on their website!

So in today’s article, we’re going to outline exactly what you should expect to pay for an HR system – complete with the various pricing models you’ll find, and how HR software pricing is generally calculated.

By the end of this article, you should have a pretty good overview of HR software pricing, as well as how HR information systems work – of course, you might already know most of this. And if that’s the case, just use the table of contents below to skip to the section you want!

Contents

• What is an HRIS?
• Why do some providers hide their pricing?
• HR software pricing models
• HR software licence types
• How much should an HR software subscription cost?
• Things to consider when comparing HR software providers
• Ready to start searching?

What is an HRIS?

When we talk about HRIS, we’re talking about an “HR Information System” – sometimes called an HRMS, or an HR Management System. And even though there’s a wild difference between all the different HRIS’s, they are all designed to basically do one thing – help you manage your human resources information.

Therefore, at the core of each HRIS, there is the concept of an employee database. This is where you store all of your essential HR information, such as employee name, job role, contract details, etc – the list goes on.

Beyond this though, most HRIS’s these days go way beyond simply storing employee information. Most of them actually serve as your workforce’s interactive portal with HR – and even with their line management. Most HR systems allow employees to book holidays, track training data, record 1-2-1s, complete performance reviews, provide feedback, and so much more.

And of course, some of the newer systems like SenseHR even have integrated AI capabilities, helping you to search your HR database faster, run more challenging reports, and even write HR documentation and letters.

There are different types of HR system, too. For those of you who can remember the early naughties (or, yes, the 90’s, 80’s and so on), HR systems were huge, complicated behemoths that you would install in your office’s server room. Those systems still exist, although these are mostly only used by huge enterprises who require highly customised systems. The most common type of system these days – and in fact, since around 2010 – is the SaaS-based HR system. I.e. a system you access via your internet browser, and for which you’ll normally pay a monthly subscription.

Of course, we’re getting ahead of ourselves – more on that later!

Why do some providers hide their pricing?

Have you ever searched for HR software, clicked on the pricing page, and found a message that says something like “bla bla bla, we have competitive pricing, bla bla bla, please contact us for a quote”? Yeah, it’s annoying – but loads of providers do it.

The reason most of them will say that they do it, is because they say each customer is unique and they need to calculate pricing that reflects their needs. In our honest opinion? It’s probably more likely that they want to get you on a call with a sales rep who can try to sell you the product.

Which is fine… if you know that it at least fits your budget (and if the sales rep isn’t too annoying). But not everybody wants to waste 45 minutes in a demo, only to find out that they can’t afford it anyway.

But there you go, it is what it is, and some HR software pricing is hidden behind a sales wall. You can’t change it, so you can either swallow the pill and get a call back, or look at providers who publish their pricing – either way, let’s look next at what pricing models you might expect to find.

HR software pricing models

There are two common HR software pricing models, and you’ll probably find that whoever you’re talking to will use one of these. They are:

1. Perpetual licence – where you pay a lump sum to effectively “buy” the HR system
2. Subscription (SaaS) – where you pay a monthly or annual fee to “lease” the HR system

Both are valid options, although a perpetual licence tends to be far less common since the rise of secure cloud-based software services.

Perpetual licences

With a perpetual licence, you’ll be paying for the software upfront, and then hosting it on your own servers. This may still be an attractive option for you if you have particularly complex needs, or if you have very specific security needs that you feel may not be met by a cloud-based provider. However, bear in mind that these types of licences require a huge internal IT burden for maintenance, are very expensive to purchase, and will normally still require ongoing maintenance or support fees, which you can expect to pay annually.

For example, Oracle still provides HR systems for large enterprises on a perpetual licence basis – although, like most vendors these days, they also provide subscription-based HR software, too.

Subscription (SaaS)

By far the most common HR software pricing model these days, is an on-going subscription delivered via the cloud. Nothing to install, and generally speaking, there are no upfront costs involved – you simply pay your monthly or annual fee, and you get your login for your system with nothing to install or maintain from a technical perspective.

When comparing providers, check if they will tie you into any minimum length of contract, or whether you’re free to move on a monthly rolling basis. If you want to get a discount, ask if you can have it cheaper for paying annually in advance – this is a great way of locking in prices without locking yourself into a long contract.

A few warnings with a subscription service, however – many suppliers will try to tie you in to longer-term contracts, which automatically renew several months before they finish. So check your terms carefully! And most will charge you up-front fees if you need help with training or implementation, with some suppliers even charging you a premium rate if you want access to any sort of customer service.

(Psst. Vendors like SenseHR offer free implementation, free training, and free customer support – check out our HR software here.)

HR software licence types

There are different ways of charging for HR software subscriptions. These tend to be on a per-user basis, or a fixed cost basis.

With a per-user basis, you could pay anything from £2 per person per month, right up to £100 per person per month – yes, really. Are you starting to see why some suppliers hide their pricing now? And this will get you a full range of functionality, starting with a basic HR information system for managing employee information and basic documents, right through to a fully-functional and integrated HR, payroll, recruitment and benefits system.

A per-user price model is great for companies with a few dozen, a few hundred, or even a few thousand users. However, larger enterprises may benefit from a fixed pricing model which does not necessarily look at head count so strictly, and which can cost in the region of £3,000+ per month.

How much should an HR software subscription cost?

Let’s cut the crap and talk about what you should expect to pay, and what you might get.

If you just want the basics, with no bells or whistles, you should be looking for something that costs you less than £5 per person per month. This should get you an HR information system that lets you store and manage HR data, upload contracts and documents, and book holidays or time off.

If you want something more advanced, with more integrations, newer features like AI assistance, access to additional modules such as recruitment or performance management, then don’t be afraid of looking in the region of £5-10 per person per month.

Things to consider when comparing HR software providers

Before you take the plunge, look for the hidden costs. Often, the subscription price itself is just the tip of the ice berg.

Here are a few questions you could ask your supplier, which may save your neck down the line:

• How much do you charge for training?
• Is customer service free, and can I speak to a real person if I need to?
• How do you migrate my old data, and is there a charge for this?
• Are there any cancellation fees if I change my mind in 6 months?
• How long will it take to get started?

These are the kinds of questions that can sometimes get overlooked, meaning you are lured in with a low cost, then hit with a big bill at a later date.

Ready to start searching?

If you’re in the market for HR software, then a great place to start is by watching this short, two-minute demo of our own system right here on our website – or, just have a poke around the website and see what you think. You’ll notice that we have an entire page dedicated to pricing, so you can find out how much we’ll cost if you like what you see.

Or, if you’re still in research mode, why not look at our comparison article of several different vendors, which includes looking at which HR software supplier is best based on the type of business you run?