How Much Does a Staffing VMS Cost? Get the Facts Here

Discover the actual cost of implementing staffing VMS software and how it can benefit your business.

Typically, a manager's first question when implementing a new process or system is the cost. This is a fair question, as the benefits-to-cost ratio must be weighed to ensure the ROI is worth implementing the new system. 

So, while a Vendor Management System (VMS) presents great benefits for your staffing company, is it worth it for the cost? To save you the trouble now, it is worth it. However, further understanding the pricing structure, additional costs, and cost strategy tips is important to maximize your VMS's benefit.

Read below to learn more about the breakdown of typical VMS pricing costs. 

Understanding VMS Software Costs

When selecting a Vendor Management System VMS solution to implement, cost is the most crucial aspect to consider.  A VMS is a comprehensive system with many intricate components and features that will streamline your staffing process and manage the contingent workforce seamlessly for managers. This highly analytical and detailed system, however, comes with significant cost factors. As the software gets more advanced and has stronger capabilities, it is safe to assume the cost of the solution increases. A VMS software costs can vary depending on several aspects, including the size of your company, the complexity of your staffing requirements, and the specific features and functionalities you need from the system.

When evaluating VMS software costs, it's essential to understand the total cost of ownership. This includes not only the upfront expenses but also the ongoing costs associated with the implementation and maintenance of the system. These costs may include software licensing, customization, integration, training, and support and maintenance fees. By having a clear understanding of the total cost of ownership, you can make an informed decision about the VMS solution that best fits your business needs.

For a comprehensive understanding of your business's VMS software costs, it's advisable to reach out to different vendors and request detailed pricing information. This will enable you to compare the costs and benefits of various VMS solutions, empowering you to make an informed decision.

The Traditional Pricing Model

A typical VMS solution will typically charge a percentage of every dollar processed through the system. However, the problem with this pricing structure is that vendors often charge a high percentage, which is manageable only for large enterprises to afford a single piece of technology, but a smaller company may be unable to.  Therefore, the amount of money driven through the system will change the price of the VMS. Thus, depending on the size of your company, you select a pricing model that will reflect what you can spend on technology.

Although most staffing companies do this pricing model wrong, many VMS providers offer a cheap percentage-per-dollar structure that is highly beneficial for companies of all sizes. Ensure if you select a VMS solution with this pricing structure that the cost reflects the value the system will provide. 

VMS providers have developed new pricing structures or cheaper structures that are inclusive of companies of all sizes. This inclusivity is a step towards democratizing the VMS market. Dive deeper into this blog to understand the different pricing structures. 

Factors Affecting VMS Pricing

There are several factors can influence the pricing of a staffing VMS. It's important to consider these factors when evaluating the cost of implementing a VMS for your business:

Size and complexity of your company: Larger companies with more complex staffing requirements may require a more robust VMS solution, which can result in higher costs. This is often due to the increased spend going through the system. If a company follows the traditional cost model, the larger the company, the greater the costs. 

Number of users: The number of users accessing the VMS can impact the pricing, as some vendors charge per user. More users equals greater costs. This is an important feature to consider if you plan on growing your business and adding users to your system. 

Features and functionalities: Different VMS solutions offer various features and functionalities; the more advanced or specialized the features, the higher the cost. Additional features with artificial intelligence (AI) or machine learning (ML) capabilities may affect the pricing structure as they require more advanced capabilities that are difficult to program. 

Customization requirements: If your company requires or prefers extensive customization of the VMS software to align with your specific workflows and processes, it can increase the overall cost. This feature is important to consider, as having a VMS completely tailored to your business logos, themes, and layouts will make the system feel like it was created specifically for your business. 

Integration needs: The complexity of integrating the VMS with existing systems, such as applicant tracking system (ATS) or payroll systems, can affect the pricing. Choose a VMS solution that seamlessly integrates with your current systems to safeguard data integrity and facilitate smooth information exchange across platforms, even if it entails investing in a slightly pricier system.

By considering these factors and evaluating your company's specific needs, you can better identify features that will benefit your staffing process and estimate a reasonable pricing structure for your VMS solution.

Hidden Fees to Watch Out For

It would be nice to say that all VMS vendors explicitly state their prices on their websites; however, most do not. Often, there are additional hidden fees that staffing agencies will not know about until they are billed and left wondering where the hidden cost came from.

When budgeting for a staffing VMS , it's crucial to be cautious and proactive in identifying any potential hidden fees that could significantly impact the overall cost. Some common hidden fees to watch out for include:

Implementation fees: Most vendors charge additional fees for the initial setup and implementation of the VMS. This is because the implementation process often requires multiple VMS experts to ensure that the software is properly integrated into the existing business components.

Customization fees: If your company requires or desires extensive customization of the VMS software, additional fees may be associated with developing and implementing these customizations. Customizing key features such as workflows, branding, themes, and layouts or integrating specific functionalities, such as investing in customization, will increase costs. Choosing a white-labelled solution may also increase the cost; however, most companies find this strategy and decide to take on the added cost.

Support and maintenance fees: Ongoing support and maintenance services may come with additional costs. It's important to understand the level of support and maintenance included in the initial pricing and any associated fees for extra support. Many VMS vendors provide 24/7 customer service teams to assist you when problems arise. 

Training fees: If training services are required to on-board your team and ensure they can effectively use the VMS, it's crucial to understand that there may be additional fees for these training sessions. Investing in training and development is often beneficial to ensure that all staff understand how to properly use the system, which leads to enhanced productivity and efficiency. 

By carefully reviewing the pricing details provided by vendors and asking about any potential hidden fees, you can avoid unexpected costs and make a more accurate budget for your VMS implementation. You must know all the costs that will arise in the future to stay on top of your pricing and ensure you are making the most cost-effective decisions for your company. 

Comparing Different VMS Pricing Models

When evaluating the cost of a staffing VMS, you must compare different pricing models vendors offer. We have previously mentioned the traditional pricing model above. Here are some alternative VMS pricing models include:

Subscription-based pricing: This model involves paying a recurring fee, typically on a monthly or annual basis, for access to the VMS software. The cost may vary based on the number of users or the features included. This model is advantageous for businesses looking to explore the VMS solution without a long-term commitment.

Usage-based pricing: Some vendors may offer a pay-per-use model, where you are charged based on the volume of staffing transactions or the number of job postings.This model is beneficial for smaller staffing agencies that operate with a lower staff volume, making it unnecessary to invest in a comprehensive VMS pricing model. These companies can effectively manage their operations with fewer VMS features and capabilities, ensuring cost-efficiency without compromising on functionality.

Tiered pricing: In this model, the pricing is structured in tiers based on the size of your company or the number of users. Each tier offers different features and comes with a corresponding price. This model proves beneficial for businesses looking to expand in the future, as it allows for a seamless transition to a new VMS framework with enhanced features tailored to meet evolving staffing needs.

Custom pricing: For larger companies with unique requirements, vendors may offer custom pricing plans tailored to their specific needs. This is specific to the VMS vendor and thus needs to be further discussed with the vendor you select. 

By comparing and understanding the different pricing models, you can choose the one that aligns with your budget and provides the best value for your company. Again, you must research and communicate with different VMS vendors to ensure you are selecting a solution that is the most beneficial for your staffing agency. 

Strategies for Budgetting Your VMS 

Implementing a staffing VMS involves financial planning and budgeting to ensure your company can implement the technology solution that best fits your staffing needs. Here are some tips to help you budget effectively for a VMS implementation:

Determine your staffing needs: Before evaluating VMS software costs, assess your companies staffing needs and define the specific features and functionalities you require from the system. By conducting this assessment, you guarantee that the VMS aligns with your specific needs and prevents unnecessary spending on features that may not be utilized.

Research and compare different vendors: Reach out to multiple VMS vendors and request detailed pricing information. Doing this lets you compare the costs, features, and customer reviews to learn more about the VMS industry and find the best fit for your company.

Consider the total cost: In addition to the upfront costs, consider the additional ongoing expenses mentioned above. These include extra features, support and maintenance fees, training costs, and potential hidden fees. Considering this, gives you a more comprehensive overview of the actual cost of implementing the technology.

Allocate for additional costs: Plan your budget accordingly to account for potential hidden costs, ensuring that you have the necessary funds available to cover any unexpected expenses that may arise, allowing you to fully utilize the features of your VMS.

By following these tips and taking a comprehensive approach to budgeting, you can ensure a successful VMS implementation while managing the associated costs.