Finding the right WMS solution itself is critical, and when the time comes to figuring out the right pricing model, it’s common that companies experience confusions in another level.
Lucky for you, today we share a few industry insider knowledge to help you find the right pricing model for your Warehouse management system easily.
Let’s start by getting a clear understanding of the pricing models usually offered by vendors.
Two Pricing models
There are two types of pricing models that you can opt for when you are purchasing your WMS. They are,
SaaS Licensing (For SaaS software solutions)
Known as SaaS or Software-as-a-Service licensing pricing model works as a monthly subscription fee combining of all the software license costs, hosting costs, maintenance and support fees.
SaaS Perpetual Licensing (For On-premises)
With perpetual licensing, you will have an annual fee followed by an upfront fee. The yearly fee will include maintenance and support fees. Here the hosting will be taken care of the client.
Before exploring the two licensing models further, let’s have a quick look at the two types of solutions, as the solution itself should be considered when selecting the right pricing model for your WMS.
| SaaS Model | On-premises Model |
| Web-based deployment | Installed in local servers located in the company premises |
| Can be accessed by any internet enabled location | Easy integration |
| Hosts in vendor’s servers | Immediate access to data backup and data recovery |
| Less customizable | Do not rely on an internet connection |
| Take lesser time to implement | Highly customizable |
Advantages and disadvantages of each model
Since now you have a clear understanding of the differences between SaaS and on-premises solutions, let’s dig into the differences advantages and disadvantages between the two pricing models.
Let’s start with the fees included in each license.
| SaaS Licensing | Perpetual Licensing |
| IT Services | – |
| IT Server/Infrastructure | – |
| Backup and Disaster Recovery | – |
| Database | – |
| Operation System | – |
| Software Licenses | – |
| Maintenance and Support | Maintenance and Support |
Advantages and disadvantages of SaaS Licensing and perpetual licensing
SaaS Licensing
| Advantages | Disadvantages |
| Lower initial investment | Includes separate license fee and monthly user license fees for each user |
| Can opt for an annual or monthly subscription | On-going costs could be higher in the long run |
| Typically approved as an annual operating expense | A license has to be purchased per user |
| Free-trial options | – |
Perpetual Licensing
| Advantages | Disadvantages |
| Only one license is required regardless of the number of users | Classified as a capital expenditure and require additional rigour to be approved. |
| No ongoing costs except for the maintenance and support fees | High initial value |
| Recurring costs are small and will depend on options, upgrades, and support | Have to pay for associated hardware for hosting |
What is the best Warehouse Management System pricing model will suit you?
- The best pricing model for your organisation mainly depends on 3 factors. They are,
- Your requirements
- Your expectations
- Your budget
Which is why we think, finding the right WMS pricing model for your company is a topic that goes hand in hand with finding the right WMS solution for your organisation. Here it’s essential that you don’t make choices based alone on the budget, out of desperation for some upgrade in your warehouse. Especially if you are a small business who is looking forward to benefiting from a WMS.
A warehouse management solution is an investment you make for 5 – 10 years, so you need to make sure you are getting the best out of your money turning your investment quickly into profit.
Below are a few other factors you need to take into account when selecting a pricing model for your WMS as these factors will vary your costs.
- Your total number of user licenses
- Features you require
- The complexity of your warehouse (more complexity it is more you’ll have to pay)
- The number of user licenses you plan to add over time
- Ability to maintain an IT environment for the system
- Desire and ability to manage the system
- Extra services required (implementation, training and support)
What gives you the best lifetime value?
The answer varies from organisation to organisation. For example, SaaS might make you up paying way over perpetual licensing over time, although its initial cost is low. But if you only have very few users, SaaS can be the best model for you in terms of financial benefits.
So we suggest you get a good idea of your requirement and both pricing models and calculate for yourself to find out what’s best for your organisation. You can use a WMS pricing calculator to get a rough estimate and make your decision. Or you can reach out to our WMS consultants.
