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What You Need To Know About Employee Rewards Software Pricing

BY -

Phil Strazzulla

June 17, 2019

employee reward software on a computer

Employee rewards software pricing can be challenging to understand.  Beyond the complexity, there are actually different pricing models that different vendors use, along with a few common pitfalls that HR teams need to avoid when getting new employee rewards software.

The goal of this post is to demystify the various employee rewards pricing models, given you insights into how much you should budget when buying a new employee rewards platform, and help you avoid the various pitfalls you may stumble into when setting up a perks program.

This information was gathered as part of our research on the best employee rewards software which details the vendors we like the most, questions to ask on demos, best rewards to give to employees, pitfalls to avoid when setting up a new program, and much more!

Ok, here is the explanation of how this pricing works:

Per Employee Per Month

Like a lot of HR Software, there are employee rewards and recognition platforms that charge based on the number of employees you have at your company.  Many HRTech vendors use this as a way to price discriminate larger customers who have more budget and thus willingness to pay.

However, we believe that in the case of employee rewards programs, this methodology makes a lot of sense as it aligns nicely with value based pricing methodology where the more employees you get on the platform, the more value you’ll get from the solution.

Most of the vendors that use the per employee per month pricing are offering not just a perks marketplace, but also things like employee recognition, and even performance management.

To give you a sense for what to expect here is a guideline on employee rewards pricing:

Data table showing number of employees (100/1,000/10k); Price/Employee/Month ($10/$9.50/$5.70); Total Fee ($12k, $114k, $684K)

Employee Rewards Pricing Based on Spend

The second main pricing model is based on the amount of money your organization spends on a given marketplace.  So, if you spend $1k and the fee is 10%, you end up paying $100 to the HR vendor who is facilitating the transaction.

This pricing scheme also aligns with value based pricing as your overall spend correlates with the value your organization will get out of the platform.  Here’s what you can expect for rewards vendors that charge as a percent of your overall spend:

Data table showing number of employees directly correlates with Annual Spend and Vendor fee, but inversely correlates with Fee as % of Spend

Pricing Pitfalls

We’d also like to point out two pitfalls when thinking about pricing for rewards platforms.  First off, there are companies that will charge you a flat subscription fee regardless of usage and employee size.  This means they are not aligned with your program’s success as they get paid no matter what.  They will be incentivized for you to get value in order to renew, but otherwise not so much.  

Secondly, there are companies that are completely free of charge.  This can work out to be a good deal for HR teams, but overall seems to lack transparency.  These vendors get paid a marketing fee to send you to a vendor, or markup the merchandise your employees get through their platforms.  But, it’s not always clear how large of a markup this is.

Hopefully this is a helpful overview of employee rewards platform pricing.  Please let us know what questions you have in the comments!

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