by Michael G. Brandt - BrightMove Recruiting Software
This is Part 2 in a series of articles I am writing to help companies in their efforts to select recruiting software and applicant tracking systems. In this article, I want to cover how to navigate your pricing options in recruiting software packages and at what point you can negotiate the pricing for your solutions.
Product Pricing Options
There are typically a few key pricing methodologies in recruiting software you should consider. I have outlines the three most common and the implications.
Per Recruiter/Manager Pricing
Many vendors don’t offer this anymore in HR Recruiting software but this is the ideal option for companies who don’t intend to implement an employee portal. This would be a much lower cost over other pricing models when you only need to license your recruiters but this typically means you won’t have licenses for your employees to log in. If you intend on allowing employees in at a later date, negotiate the per employee pricing up front allowing you to move to it later.
Per Employee Pricing
Per employee pricing is the most common pricing model for HR departments aka corporate recruiting. This is great for scenarios where you will have employees and managers in the system. This pricing model does not typically require you to name the number of recruiters either, which might be great for companies who do seasonal recruiting but don’t want the cost of adding recruiter licenses.
Per Hire Pricing
This is not as common in the space but lets you pay only for what you hire. BrightMove offers this as an option for our RPO Software Quantify. Pay as you go is quickly becoming common. Keep in mind, if you plan on a big upswing in hiring, this is probably not the option and could get very costly over other pricing options.
Implementation Strategy and Costs
One critical part of cost can be the implementation strategy that you want to adopt. I personally am a big fan of SaaS OnDemand deployment and absolutely think this is the way to go if you are coming off paper. I have seen companies make the critical mistake of lengthy implementations when coming off paper only to completely change that configuration and hiring strategy within only a few short months of actual use. Many SaaS out of the box solutions come with a baseline configuration that will provide a great starting point for companies. Once you have an understanding of your usage of a system, you will be in a much better position to make sensible configuration decisions.
SaaS OnDemand Deployment
This is typically a no cost deployment for small to mid-size companies wanting an ATS solution. OnDemand deployments require little to no initial setup and they are typically at no cost to you depending on vendor or can typically be negotiated to free as part of the sale cycle. Make sure that when you check references (discussed in a later article), ask about costs during implementation that came up. There are several vendors out there that say they have no upfront costs only for customers to find that there are small one off costs that add up.
This is what you would typically call a standard implementation for companies seeking assistance from the vendor in deciding key configuration requirements. This type of implementation is ideal for companies that have been using a system but want to analyze their data and identify some best practice configurations for their specific type of recruitment. Before engaging in an implementation ensure you identify your specific needs. Vendors can provide both configuration consulting and best practice consulting and they will need to fully understand your goals here before you get any estimates. Most vendors quote configuration consulting up front and you could find your project costs doubling if you don’t have all the expectations set up front.
Key Implementation Points to Consider
Negotiate Rates for All Work – You can typically negotiate project rates down on any given project but make sure you set standard rates for the duration of your contract. You will normally set per role rates but I am a big fan of setting a blended rate which is a flat rate for any project work regardless of roll.
Fixed Bid Implementations –Fixed Bid means you have a set price for the implementation. In my opinion, there aren’t many true fixed bid implementations when you read the fine print. Make sure if you negotiate a fixed bid implementation that you have fully read the assumptions and change control documentation.
Ask References Questions – Make sure you ask your references questions about overages on the project. Ask specific questions how rates, duration, on-time completion, and overages. If there were overages, find out if it was something that was not communicated clearly up front.
To Contract or Not To Contract
Contracts are part of the business and many vendors require you to enter into a term contract. One of the main reasons for this is ensuring the revenue stream over a period of time. When they can ensure the revenue, you can absolutely negotiate the rate. However, you could get your company stuck with a lot of licenses you don’t use if you have a lot of waves in your recruiting. I am not personally a big fan of being stuck in a contract for several years and this is not something we require but you will have to decide if this is important for you.