In the past few months, I have been focusing my efforts on Cornerstone OnDemand’s Recruitment Module. Liaising with one of our prospective clients who was interested in the Recruitment module, I was immediately exposed to the complex nature of Applicant Tracking System (ATS) pricing.
Compared to Core HR, Performance Management, and Learning Management Systems, Recruitment ATS platforms have a lot more features and consequently, pricing variables. These features and additional add-ons can cause pricing to be very unpredictable. Therefore, as a Software Vendor, it is extremely difficult to give an accurate high-level quote without knowing the customer’s needs in-depth.
From our perspective, providing a high-level ATS quote at early stages of the procurement might incur the risks of customers:
- Discontinuing the enquiry after being scared off by the initial quote given, or
- Having an inaccurate estimate and mismanaged expectations when it actually leads to the eventual Request for Information (RFI)/Request for Proposal (RFP).
However, that is not to say that HR practitioners who are tasked with procuring an ATS software should avoid raising this issue and only engage in pricing discussion at the end stage. In fact, I would encourage procurers to engage with the vendors, and find out the general pricing range of their products.
In this article, I will be tackling this issue of Pricing for Enterprise ATS products, in attempt to make this thorny topic slightly more tangible and understandable for prospective buyers. To do so, I will elaborate on:
- The payment structure of ATS modules, and
- The main parameters that would affect the general pricing of an ATS product.
I. Payment Structure
The payment structure for an Applicant Tracking System (ATS) is similar to most cloud Software-as-a-Service (SaaS). It is normally divided into:
1. Annual subscription fee
- The software subscription fee is paid annually throughout the duration of the contract. These contracts usually last a minimum of 3 years.
- There is normally a 3-5% increase on subscription fees per year. This is to account for the costs of system maintenance and updates.
2. Implementation fee
This fee is usually a one-time fee payable to the project implementation partner.
II. Main Parameters for the Annual Subscription fee
1. No. of Full Time Employees
ATS products are generally priced according to the number of Full-Time Employees (FTE) within an organisation. For example, if your company has 1,000 employees, the pricing for the module will be based on that number. The more employees you have, the higher the cost.
However, the unit cost per employee becomes cheaper as the number of FTE becomes higher. For example, the unit cost per employee license might cost 40 USD for a company that has 1,000 employees. The total annual cost would then be 40,000 USD. On the other hand, the unit cost per employee license might cost only 10 USD for a company that has 5,000 employees. The total annual cost would then be 50,000 USD. Therefore, the more FTEs in your company, the cheaper the unit cost per employee license and vice versa.
It is worth noting that changes in FTE headcount throughout the duration of the contract will not affect the annual pricing of the ATS – Unless there is a drastic change in headcount levels (i.e. headcount doubles/triples in one or two years).
2. Enterprise Recruitment Sub-Modules & Additional Features
Enterprise ATS modules usually have more than one sub-module. The most basic recruitment module will include functions such as Candidate Sourcing, Job Posting Distribution, and CV Parsing. Additional recruitment sub-modules could include Talent Intelligence, Candidate Relationship Management (CRM), and Onboarding.
Depending on the customer’s needs, their module choices will constitute significant impacts on the eventual pricing.
A most recent client of mine was only looking for the basic recruitment functions as their main pain point was the lengthy period of time it takes to make a hire. Therefore, they chose to purchase only the basic recruitment module.
Apart from sub-modules, clients can also take up additional features which include various integrations with job boards and social media. In a recent article, we discussed the most common ATS features that our clients look out for.
Overall
In conclusion, there are two main fees that a customer must take note of for Enterprise HR SaaS:
- Annual Subscription Fee
- Implementation Fee
The annual subscription fee is dependent on:
- No. of FTEs
- Which modules the customer purchase
- Features & Add-Ons
In my experience, generating a precise pricing quotation will take a lot of back and forth between the vendor and customer. This happens as each side is ascertaining which needs and pain points are of higher priority.
The pricing quotation will become clearer as both sides communicate and reach a shared understanding of:
- what are the main pain points,
- how much the customer is willing to spend to solve these pain points.
By this stage, a proper RFP could be delivered as the customer evaluates the rest of the options.
Therefore, if you ever receive a pricing quotation at the start of an ATS project without having many rounds of discussions with your software vendor – do manage your expectations towards the final pricing quotation at the end!
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