HR software pricing

Finding the right HR software cost for small businesses and medium-sized businesses

First published on Monday, Apr 22, 2024

Last updated on Wednesday, Jun 05, 2024

Are you tired of spending endless hours on employee management? Trust us, you're not alone.

Human resources (HR) are the backbone of any business, but managing all the processes required can be a daunting task. From employee onboarding and employee engagement to attendance tracking and payroll processing, the list of HR processes you have to manage is endless.

That's where HR platforms come to the rescue. However, with a multitude of HR software solutions out there, it can be difficult to determine which one is right for your business needs and budget.

Fear not, we've got your back.

In this article, we'll guide you through the different pricing models of human resources software, factors that affect HR software pricing, and give you tips to help you choose the best HR software for your needs.

What are HR software pricing models?

Looking into pricing models and industry trends in HR software will help make sure you're well-informed about competitive pricing structures while keeping your unique needs in mind.

So, let's take a look at the most common pricing models used by HR software providers. Each model has its pros and cons, and it's important to understand how they work before making your decision.

These HR software solution pricing models include:

Per employee pricing model

This pricing structure charges a set fee for each individual employee who will be using the HR software or service. This way, you only pay for the actual usage of the HR system, rather than a flat rate that may not be as cost-effective.

Some HR software plans under this pricing model may include features like 'employee self-service', enhancing the value offered to businesses.

Pros:

  • You can easily predict your costs and budget accordingly

  • It's a simple pricing model that's easy to understand

  • It can be more cost-effective if you're a small business owner with a limited number of employees

Cons:

  • Changes in your employee count could make your costs unpredictable

  • As your company grows, costs can quickly add up

  • You could end up paying for employee usage even after they leave your business

Monthly subscription pricing model

This payment option allows you to pay a fixed fee every month in exchange for uninterrupted access to the HR software. With monthly subscription pricing, you can easily budget for the cost of the service and never have to worry about unexpected fees.

Pros:

  • The predictable monthly costs can help with budgeting

  • You can easily add or remove employees as your needs change

  • It can be a cost-effective option for small businesses with limited budgets

Cons:

  • Ongoing payments can add up over time

  • You may end up paying for features you don't use or need

One-time licensing fee

A one-time licensing fee is a payment made for the right to use the HR software or technology indefinitely. The fee is typically paid at the time of purchase and gives you legal permission to use the product for as long as you need to, without any additional fees or charges.

Pros:

  • You don't have to worry about ongoing payments

  • The fixed cost can make billing and budgeting simple

  • You have more control over the software and can customize it to your needs

Cons:

  • You may need to pay extra for support and updates

  • As your company grows, you may need to purchase additional licenses

  • Limited scalability means you may need to switch pricing models in the future

  • The upfront cost can be high, making it difficult for smaller businesses to afford

Pay-as-you-go pricing model

In this flexible model, you only pay for the services you use, based on actual usage with no fixed fees or minimum usage requirements.

Pros:

  • You can avoid upfront costs and spread-out payments

  • You only pay for what you use, making it easy to adjust costs based on your needs

  • It can be a good option for businesses with fluctuating needs or seasonal businesses

  • You have more control over your costs

Cons:

  • Variable costs can make it difficult to budget and forecast expenses

  • It can be challenging to manage costs if your business grows quickly

  • The cost per use can be higher than other pricing models

Freemium pricing model

Freemium pricing models, offer you some free HR software solutions but blocks access to all additional features. This model is popular in the HR software industry but can be applied to other industries as well.

Pros:

  • Free software for any business to use

  • It's a low-risk way for you to try out your software before committing to a paid version

  • It can be a good option for startups with limited budgets

Cons:

  • Limited functionality in the free version

  • The upgrade to the paid version can be expensive—especially if you need additional features

While all these pricing models have pros and cons you will also find that HR software providers offer several different options to fit your business needs.

So, take the time to compare different pricing models and select the one that fits your budget and usage patterns best.

female business owner researching HR software pricing

Factors influencing HR software pricing for small and medium-sized businesses

Now we've covered the types of pricing models, we can look into one of the main concerns for any business owner looking to implement an HR software system—the cost.

The pricing of HR software support varies widely depending on several factors, some of which are:

The number of users

Generally, the HR software costs will be based on the number of users in your business. As the number of users increase, the complexity of HR tasks and processes increases, leading to higher HR software costs.

The features and functionalities

The more features and functionalities the HR software provider offers, the higher the price. For example, if you need more than basic HR management, like performance management and payroll management, you'll pay more for the additional features.

So, you'll need to determine which features you require and whether you’re willing to pay for additional functionality.

The customizations and integrations

Some HR software providers offer customization and integration options. If you require a customized solution and integrations with your current system, the cost could be higher.

The implementation and training process

Implementation and training costs can vary depending on the HR software provider. Some HR system providers offer a self-service option, while others require a more hands-on approach.

The support and maintenance requirements

HR software providers may offer different levels of support and maintenance. The level of support required will depend on your business needs and may affect the overall cost.

All to say, it’s hard to nail down a direct answer to the question, "How much does HR software cost?" Because the answer depends on so many factors.

So, you'll need to do your research and compare different software providers to determine which solution best meets your needs and budget.

BrightHR Software on laptop and mobile phone

Tips for selecting the right HR software

By considering a few key factors, you can make an informed decision and select the perfect HR management software for your business.

Here are some tips to help you:

Assess your business needs

Before you start looking for the best HR software around, it's crucial to evaluate your business-specific requirements for an HR system. This includes considering factors such as:

  •  Your current HR processes

  •  The features you need

  •  Scalability

  • The number of users who will access the system

It's important to determine whether basic features like shift scheduling or time tracking will meet your needs, or if you require more advanced features such as talent management or an applicant tracking system.

By understanding your needs, you can make an informed decision when selecting the right HR software for your business.

Determine your budget for HR tools

This will allow you to set realistic expectations and narrow down your options to software that you can afford. By taking the time to carefully evaluate your budget, you can choose an HR software that aligns with your financial goals and sets you up for long-term success.

Consider your future growth

As your business expands, your HR software requirements to manage employee data may follow suit. It is important to choose an HR software that can scale with your future growth so that you don't have to switch to a new system later on.

Focus on value

Evaluate the benefits and return on investment (ROI) of the HR software systems you're looking at. This will help you justify the pricing and ensure that it aligns with the value that the software brings to your business.

How could this look for your business?

Discover your savings with BrightHR’s payback calculator

Return on your investments

for every $1 you spend

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Sources: The cost of HR documentation, recording staff lateness and absence to recording staff overtime is based on...

Gather feedback on HR systems

Don't hesitate to seek feedback from other businesses using the HR software you're considering, as well as from potential vendors, to inform your decision-making process and ensure you're making the right choice for your business's needs.

Looking at customer testimonials and reviews is a great place to start.

Account for integrations

Remember to include any potential costs associated with integrating the HR software with your existing systems or other third-party applications in your pricing considerations.

For example, if you already have payroll software, you should check if the HR software you are considering allows for seamless integration with your payroll software.

Seek flexible options

Look for HR solutions and software providers that offer flexibility in their pricing, such as different payment plans or customisation options, to accommodate your business's budget constraints and specific needs.

Calculate the Total Cost of Ownership (TCO)

Look beyond the upfront costs and consider ongoing maintenance, support, and training expenses to get a clearer picture of the total cost of ownership over time.

By considering these factors, you can select the right HR software that not only benefits your administration process and meets your current needs but also aligns with your future growth plans.

How much does BrightHR's software solution cost?

At BrightHR, we understand that every business has unique HR needs and different financial constraints. That’s why our pricing packages are designed to save you money while providing you with the best value for your investment.

Whether you're a startup or want to improve your existing HR processes. Our solution is not just a set of HR tools; it’s your partner in your business journey. From essential features for efficient HR task management to complete software with enhanced support, we've got you covered.

Interested in learning more about our customized pricing options? request a quote today. Our team is always ready to help you find the right people management solution for your business.


Jenny Marsden

Associate Director of Service

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