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How much should I budget for a new HR system?

The cost will depend on several factors, including your company size, required features, and vendor pricing models.

Choosing a new HR system is a big investment, and budgeting for it correctly is crucial. The cost will depend on several factors, including your company size, required features, and vendor pricing models.

Key cost factors:

  • Licensing fees: HR software is often priced per employee, per month.
  • Implementation costs: Setup, configuration, and data migration can add up.
  • Customisation & integrations: If your HRIS needs to connect with payroll, benefits, or finance software, expect additional costs.
  • Ongoing support & training: Some vendors include this, while others charge separately.

Key Budget Considerations:

  • Transparent Pricing: SME vendors often publish clear costs on their websites with little room for negotiation.​
  • Negotiable Pricing: Larger vendors may require detailed discussions to determine costs and often allow for negotiation.​

How to estimate your budget

  1. Start with your business case – Define what you need from an HR system.
  2. Get quotes from multiple vendors – Prices vary significantly, so compare options.
  3. Consider total cost of ownership – Factor in ongoing fees, not just upfront costs.
  4. Plan for scalability – If you’re growing, your HR tech should grow with you.

 

Budgeting Steps:

  1. Request Employee-Based Pricing: Ask vendors for the typical cost per employee per year to gauge affordability.​
  2. Engage in Negotiations: Leverage industry benchmarks and consider consulting experts to assist in negotiations.​
  3. Consider Total Cost of Ownership: Factor in implementation, training, and potential integration costs.​

Next Steps: Book a free consultation for further insights: Free Advice Sessions

Recommended Reading: Your HRIS Business Case: 10 Questions to Prepare For

Article: How to budget for HR software