Warehouse Management Software Cost Guide 2023

WMS Price Guide 2023: What features do you need?

Warehouse operations rely heavily on warehouse management system (WMS), which are essential tools for inventory management, orders, and overall warehouse operations. However, with the multitude of features available in WMS software, it can be challenging to determine which ones are crucial for your business. To help you decide which features to prioritize in a WMS, here are some tips to consider.

Firstly, take into account your current business needs and the most essential features required for efficient operations. These may include order management, inventory tracking, and pick-and-pack capabilities.

Secondly, identify areas where you can improve warehouse operations, such as streamlining manual processes or reducing inventory discrepancies. Look for WMS software that can help you address these challenges and reduce errors.

Lastly, consider the possibilities that advanced WMS features can offer, such as new business opportunities. With advanced features, you can improve efficiency in routing trucks or handling kitting and packaging for new clients.

Once you have assessed your needs, evaluate the available features of different WMS software vendors. While most WMS software will offer the essentials, you may need to pay for additional upgrades or capabilities. Some key features to look for include advanced reporting, labor management, and integrations with other software. When making a decision, consider the WMS systems costs and ensure that you choose a vendor that meets your business needs and budget.

Once you have a good understanding of your needs, it's time to evaluate the features available in different WMS platforms. While most WMS will have the essentials, you may need to pay for additional upgrades or capabilities. Some key features to look for include:

• Receiving and Put-Away: This feature allows you to place purchase orders and check-in products, allocating them to specific locations within the warehouse.
• Inventory Management: Look for a WMS that can keep track of products, kits, item inventory, pallet-case-single relationships, and multiple SKUs per bin.
• Order Management: A WMS should enable you to connect your various sales channels and combine orders placed within the system.
• Pick and Pack: This is a core feature of a WMS, allowing employees to pick products as part of an order batch. Look for a WMS that can allocate orders across your employees, sort picking into wave/batch/zone, and provide location and quantity information with RFID or barcode scanning.
• Address Validation and Shipping: Most WMS will integrate with third-party shipping services to offer multiple shipping options, label printing, and tracking. Consider whether you need custom carrier options or multi-step shipments.
• Returns: While many WMS include some sort of return functionality, you may need to buy a separate module for advanced products.
• Reporting: All WMS will have some sort of reporting dashboard or exports, but you may need to pay for in-depth reports or make a connection with your accounting or business intelligence software.
• Employee Management: A WMS should allow you to allocate people to specific tasks within the warehouse, but it's more the job of ERP/accounting and payroll software to manage time and payments.

Perpetual License vs. Subscription License

Which license type to choose: perpetual or subscription? While the cloud vs. on-premise vs. hybrid section already covers this topic, it is still a big consideration for many. Here are a few points to consider:

Perpetual licenses involve buying the software outright and paying for yearly upgrades made by the company. The model requires an up-front customization fee, a license fee, and yearly maintenance fee. Tier 1 WMS license fees usually range from $30,000 to $60-$100 thousand, and the yearly maintenance fee typically amounts to 10-15% of the license costs. While this license type may lead to more initial wms cost, it can be cheaper in the long run (over 5-10 years). The only real reason to choose a perpetual license is if you have an in-house team that will make changes to the warehouse management software source code. This license type makes the software your own, and you have more control over it. Plus, you don't have as many variable costs as you grow in size, since a subscription model will add costs as you add people.

Subscription licenses, on the other hand, are the most popular type of purchase for WMS solutions in 2023, especially the cloud model. It requires lower up-front fees and provides more frequent updates. Monthly costs are usually reasonable and vary depending on the size of your business and how many people are using the system. Subscription models may also offer different tiers with varying capabilities. The base tier could support up to 5 wms users and 1000 orders per month, while the premium tier will offer unlimited users and orders. Subscription costs can start around $5,000 (or $0 up-front) and can be as low as $200-$800/month for up to 5 wms users. With $0 down, customization options are limited, and you will have to rely on the existing functionality of the system. However, modern systems usually provide the option to connect with their API to extend the system's functionality with an in-house development team.

Cloud, On-Premise or Hybrid Hosting

This may not be a big factor for your company. However, for others, it is a major consideration. If you have been used to running software on-premise this may actually be a great time to move toward a cloud deployment. Some companies get nervous about this since they are no longer directly in control. However, the advantages of a cloud-based model are recovery speed (from a disaster), deployment simplicity, innovation, and access. If you’re looking toward the cloud but still want the peace of mind that on-premise provides, perhaps you would consider a hybrid deployment. This will still give you the advantages of a cloud server, but you will also have a server in-house to sync data back and forth with. An on-premise deployment generally is more expensive since the provider will need to provision a license and launch the application locally. This may involve having someone come to your location. It will also likely require your own in-house resources to keep the server and software updated. So, with a brief introduction to those three elements, let’s take a look at how the price of your new warehouse management systems varies with the type of deployment.

Cloud

This is by and large ‘the’ way to launch a new WMS. This is for a variety of reasons as I mentioned, but certainly one of the bigger reasons is it’s just cheaper to do it. With a cloud deployment(SAAS, otherwise knows as Software As A Service), there are no added costs of having someone on-site. There are no servers to maintain. And, you have access wherever and whenever you need it. Typical cloud deployment is going to include 6-12 months of your monthly amounts in the up-front amount. So, if you are implementing a WMS, and the monthly amount for your system will be $1500/month, you should expect in the neighborhood of $9,000-$18,000 in up-front setup costs. Much of the up-front amount is simply for the setup, customizations (which I’ll go through after), and training.

On Premise

This method is still widely used in the enterprise. Whether a security reason or simply because this is the infrastructure already in place. While there is nothing particularly wrong with an on premise solution deployment, it simply requires more resources that may or may not be available. Another reason many companies are switching from this deployment model is the need to acquire a perpetual license. This can be quite expensive, though the longer-term costs may end up being lower. A scenario might look as such: you buy the license for $75,000, pay your initial setup fees of $20,000, and have an annual maintenance fee of 10-15% of the cost of the license ($7,500-$11,250).

This is more expensive up-front, but over time it becomes more affordable and eventually, it will level out while actually becoming cheaper than a cloud deployment. Of course, this is only taking into account the software costs. What’s not included here is the in-house IT staff needed to keep the servers running and security updated. This also assumes you already have the servers needed to make it happen (which could run into the 10s of thousands for a large business). As you can see, there are benefits to an on-premise deployment, and at a certain size, it may be the best option. But, that comes with drawbacks that you will want to fully plan for.

Hybrid

A hybrid deployment will give you the benefits of both cloud and on-premise warehouse management software without some of the costs associated. A hybrid environment uses an on-premise server to communicate with (typically) a virtual private server in the cloud, making it a popular supply chain solution. This is used to have the data stored locally, but then it communicates with the cloud server to sync data between your other on-premise servers. This also helps with backup and recovery as well as scaling up during heavy loads. The drawbacks of hybrid come with many of the same issues faced with on-premise since you will still need the servers themselves, and you may still need to buy the perpetual license for the on-premise servers. In this case, you may end up paying for a mix of cloud and on-premise warehouse management software costs. It comes with benefits but at the cost of having to maintain both the cloud and the on-premise infrastructure.

How much does a Warehouse Management system cost?

What is the cost of implementing a warehouse management system? The cost of a warehouse management software (WMS) can vary depending on several factors, including the deployment model (cloud, on-premise, or hybrid), the size of the business, the specific features needed, your budget, and the wms providers selected. Generally, cloud-based WMS software tends to have lower upfront costs and ongoing monthly fees, while on-premise warehouse management system may have higher upfront costs due to hardware and software licensing requirements.

According to a recent survey about WMS software costs system pricing model, the average cost for cloud-based WMS software ranges from $50 to $200 per user per month, with a median price of $110, translating to an annual cost of $600 to $2,400 per user. For on-premise WMS software, the cost can range from tens of thousands to hundreds of thousands of dollars, depending on the size of the business and the number of users.

It's important to note that these estimates are general and may vary based on the specific needs of the business and the features and services offered by the vendor. Some vendors may offer flexible pricing models, such as per-transaction or pay-as-you-go pricing, which can be more cost-effective for businesses with variable demand.

The cost of implementing a warehouse management system includes several key components such as initial setup, support costs, integration with the current ERP system, training for employees, customization if needed to meet specific business needs, and go-live support to ensure a smooth transition to the new system. Wms implementation costs can vary widely, depending on the size of the warehouse, the complexity of the operations, and the specific features and functionality required, but typically range from $50,000 and up.

When considering the cost of implementing a warehouse management system, businesses with multiple warehouses should also factor in the additional expenses associated with managing and coordinating across multiple locations. This can include costs associated with integrating the software across multiple sites, as well as the cost of training and support for employees across all locations.

In addition, businesses may also need to consider the ongoing maintenance and upgrade costs  outside of implementation costs associated with a WMS, which can vary depending on the vendor and deployment model. For example, annual maintenance costs for a cloud-based right WMS software can range from $1,000 to $10,000, while upgrade costs for an on-premise WMS software can range from $5,000 to $50,000.

It's important to factor in these costs over the long-term to ensure that the chosen WMS solution is both cost-effective and sustainable. Overall, while the cost of implementing a warehouse management system may seem daunting, the benefits of increased efficiency, accuracy, and visibility can far outweigh the upfront and ongoing costs. By carefully evaluating the specific needs of the business and selecting a WMS solution that aligns with those needs, businesses can achieve significant improvements in their warehouse operations and overall supply chain management.

How can inecta Food ERP help?

Inecta Food ERP offers a complete solution for food manufacturers that includes a Warehouse Management System (WMS) module. The WMS module helps streamline inventory management, reduce manual data entry, and improve accuracy. It allows users to track inventory levels, manage lot numbers and expiration dates, and automate the replenishment process.

With Inecta Food ERP's WMS module, users can easily manage multiple warehouses, set up location-based rules, and create picklists for efficient order fulfillment. Additionally, the module provides real-time data to support better decision-making, such as identifying which products are moving quickly and which are not.

If you're a food manufacturer looking to improve your inventory management and streamline your operations, consider implementing Inecta Food ERP's Warehouse Management System. Contact us today to learn more and schedule a demo.