Figuring out how much to pay for an applicant tracking system, and how to drive that price down, shouldn’t be a pain in the neck. And while choosing the right one could certainly save you lots of time in the future (86% of recruiters say that an ATS decreased their time-to-hire) it shouldn’t be a months-long decision process either.
If you’re picking up the slack from a literal lack of a human resources department, or you’re the HR department and perhaps can’t devote much time to this, we’ve got you covered. This is an ultra-compressed guide on everything you should know about ATS pricing models, budget-range, communicating ROI internally, and negotiating a price once you’ve picked vendors.
If you were confused by the talk of cost models above, or you’ve checked out a couple of vendor websites and haven’t been able to find a simple and concise pricing page, that’s because most systems tailor their rates according to factors like business size, number of job openings, integrations, modules, and many other things.
However, most of them start with one of the following models before they adapt their price to you. For that, it’ll help to know which are the main ones and how they work:
Whether you’re confused about recruiting software pricing models or not, it will help little to understand them if you’re unsure about how to set up a budget in the first place.
While some professionals might say that you should pick a system and then budget for it, we would argue that it makes more sense to create a business case for the tool, so we can then understand the scope of the project and its desired impact, and budget accordingly.
This will also make the process of selling the tool internally much easier, instead of running into pushback from the finance department after you’ve already demoed a solution or two.
For this to work, the business case should truly communicate the objectives of the new software, what problems it will solve, and how fixing those issues will result in value for the company at large.
Naturally, the objectives and expectations will vary from one company to another, but there are certain price ranges for an ATS that you can consider depending on business size:
The main thing to know here is that all the prices that a vendor originally quotes for you are negotiable. This is particularly true if you’re going to sign a year or multi-year contract. But how do you start negotiating?
To begin, we recommend taking the advice of Neville Postwalla, AVP of Talent Management at the Harbinger Group. Neville says that you have to know exactly what you need so that you can talk about getting rid of certain features, modules, add-ons, integrations or any optional functionality that might just be inflating your costs unnecessarily.
Coupled with that, you should also evaluate more than one vendor to compare costs and make sure that you are not just looking at the priciest end of whatever spectrum you’re in. Also, many vendors start off their pricing with a margin to be able to bring it down in case they get word of you possibly going with the competition. This is when discounts for a multi-year contract or pre-payment can be a strong possibility.
Lastly, when gearing up to present the business case to the finance department, you should prepare some stats or projections of what the tool can do for the business. This should help justify the cost you now have in mind and should looking something like this:
Stats can get more and more specific depending on your business context. The software vendors you’re considering will likely be able to help out with estimating those. They could also present to you some of the results that similar businesses to yours have derived thanks to their solution.
Conversely, you can also use our free and customizable ATS ROI calculator to help build up your business case.
An ATS can be a massive decision in terms of bringing value and savings for a business. Why else would 98.2% of Fortune 500 companies use one?
However, it is precisely for that reason that so many things can go wrong. While we hope you now have everything you need to be on your way to purchase the right software solution and, maybe even save money while you’re at it, be sure to take your time. Remember to involve every stakeholder in the process, and draft a hell of a business case before vetting the best ATS solutions out there. In the long-run, it may very well be worth it!
This post originally appeared on SelectSoftware's blog where we write about the latest in HRTech.