There are a number of factors to consider when assessing the right pricing model for your freelancer management system.
In this guide:
The first major factor to consider when selecting your FMS provider is the primary pricing model - what does the platform cost and how this is cost calculated.
In the main, there are two main pricing models:
The transactional model works by applying a fee to a repeatable process. Some examples of a transactional pricing are:
Organisations who use a very small number of freelancers infrequently benefit the most from transactional pricing models. In some instances, the transactional fee is applied to the freelancer's side of the transaction (e.g., deducted as a service fee) so can be virtually free to the organisation.
The major negative with transactional pricing is that this model doesn't reward scale or high-volume users. As soon as your organisation starts to use a moderate number of freelancers or engages regularly in projects, the transactional costs can start to stack up.
Transactional models are normally accompanied by other revenue models, like premium fees for technical support.
As the name implies, the license-fee model is based upon charging a fee for use of the platform. License-fee models are very popular amongst software-as-a-service products because they offer you, the end customer, simplicity and as usage increases the effective 'transactional' cost decreases.
The most common type of license fee pricing model you'll find with Freelancer Management Systems is 'price per user' - in other words the number of administrators and hiring managers wishing to access and use the system.
The price is simple and doesn't go up as the number of 'transactions' increases. A license fee is also usually inclusive of other associated or implied services like technical support.
For organisations who use freelancers very infrequently, there may not be the full opportunity to get the most value out of a regular license fee.
The second consideration is the cost for any bespoke requirements you may have. Depending on the frequency and complexity of your freelancer engagement, it is likely you'll want to be able to support a bespoke integration or custom workflow process.
Before you begin to estimate cost, you need to consider whether your bespoke requirements will be supported at all.
If your FMS is a heavily templated platform used by multiple clients, it may not be possible to support your bespoke requirements.
Assuming your choose an FMS provider who can support bespoke integrations, you will either pay an hourly rate for bespoke integration work, or be quoted fixed prices.
It would normally be easier to control costs with a fixed price agreement, as it is easier to handle scope creep and changing requirements over time.
Depending on the size of your organisation and the volume and frequency of your freelancer engagement, getting started with an FMS can take a degree of planning and organisational change.
Firstly, you should look for an FMS provider who has experience of, and is able to offer, strategic support and consultancy. Being able to utilise the skills and know-how of experienced professionals during the setup of your freelancer management system can shorten the time it would normally take to get up and running.
The cost for support and consultancy is typically charged at an hourly/day rate, which can become costly depending on the complexity of your implementation, so look for providers who will offer support and consultancy for either set price or as part of an initial implementation project.
When evaluating the choices of freelancer management systems available to you, it is important to look at the total cost of ownership. For example, don't immediately choose a platform with transactional pricing because it seems cheaper than a monthly license fee. When you consider the level of integration you require and any consultancy or strategic support, your total cost of ownership may be lower, even with the seemingly more expensive license fee.
Use this pricing option calculator to get an idea of what pricing option may be better for you in the longer term:
Number of freelancers
Types of integration required:
Level of strategic support required:
Running two seperate systems when managing a workforce that contains both permanent employees and freelancers might not be ideal.
However, it is possible to integrate the two for complete end-to-end visibility of an entire workforce. The diagram below shows the minimum required integration points to effectively share freelancer engagement information with a VMS.
Integrating FMS with VMS: Cloud-based platforms make integration simpler.
To shortlist the right vendors in your RFI process, you should look for the following must haves:
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Freelancers are not employees. They are not bound, or managed, by the same rules and it is common for hiring managers, line managers and operational teams to experience challenges as they start to engage a larger number of freelancers.