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Human Resources Software Cost: What You Need to Know

Last Updated: January 24, 2023 note: Need an HR software solution at an affordable price? Fill out the 30 second questionnaire below and our HR software partners will send you free price quotes.

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Systems that help a business carry out its Human Resources work may go by many names including human resource management software (HR software), human resources information system (HRIS), human resources management system (HRMS), and human capital management (HCM). No matter what you call it, the primary aim is the same - to help organize your employees and streamline their operations.

Modern workforces are in flux like never before due to factors such as globalization, freelancing, remote workers and alternative work schedules. This makes the task of managing them a real challenge. The use of HR software, however, makes organizing your business' human capital much simpler. It will allow you to spend less time on trivial tasks and more time creating and implanting progressive strategies. This buying guide provides a rundown on HRIS software costs and basics.

An Overview of HRIS Systems #

HRIS software can perform pretty much any human resource function that you need it to. But, you'll find that they all, more or less, provide the following base features:

  • Payroll: HR management software can aggregate employees' work times, make the proper deductions, and issue paychecks.
  • Labor resources management: Keep track of what employees are actually spending time on so you can better manage their labor.
  • HR management: Effectively manage employee data such as contact information, education, job history, and much more.
  • Benefits administration: An HRMS system allows you to easily keep track of which employees are enrolled in which benefit programs and reduce the amount of time your company spends on processing forms and answering questions about benefits owed.
  • Worker self-service: One of the ways HR software helps simplify human resources is allowing employees to access company databases, update their information, enroll in and check benefits online, and much more.
  • Other features: Additional functions that human resource management software can perform include recruiting, hiring, training, and development.

Aside from deciding which HR software features your company would benefit from, another important consideration is whether the HRIS system will operate locally via software or be hosted remotely and accessed through the internet. The benefits of each are as follows:

  • Locally hosted: An HRMS system based on traditional software is completely in-house, meaning that the program runs on your office computers. In this configuration, your company's IT staff is responsible for server maintenance, backing up data, and security. So called client-server systems have higher initial fees, but cost less to maintain and upgrade.
  • Vendor hosted: If your business chooses an application service provider (ASP) for its human resources software solution, its application and data will be hosted remotely on the vendor's servers. ASP systems are managed by IT professionals, so you need not worry about security and data backups. You could encounter problems, however, if your company's internet connection goes down. Online HR software has lower up-front costs but you'll pay more in monthly fees.

Human Resource Software Average Costs #

There are huge variations in HR software prices based on the size of your business and the specific human resource functions it needs. Not to mention the cost of hardware, support, employee training, and other factors will affect prices greatly. Furthermore, price alone is a poor predictor of whether a particular system is right for your business. That is, if you opt for a package that costs less than comparable ones, there's a good chance it won't perform as well. With these factors in mind, the following pricing information should give you a rough idea of how much HR software costs.

  • The cost of locally hosted (client server) HRIS systems are based on software license fees. Each employee that will be using the system requires a license, which could cost around $40 to $100 per user for a company with 50 employees.

  • These prices are likely to go down for larger companies purchasing a system with similar capabilities. But, because they may require a more complex system, costs could actually go up to around $200 to $300 per user.

  • Companies with only a handful of employees might be able to buy a very basic HR software package for as little as around $1,000.

  • The costs of remotely hosted HRMS systems (ASPs) are based on monthly fees that work out to somewhere around $5 to $10 per user, per month.

  • Additional HR software costs include installation, setup, and consulting, which could be anywhere from $2,000 to $50,000 or more depending on the scope of the job. Training also costs extra in most cases. Some vendors may additionally charge for support if you exceed a monthly limit.

Watch: Introduction to HR Software | HR Software for Beginners #

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