Table of contents:
What Is a Warehouse Management System?
Choosing a WMS Pricing Model for Your Business
What Features Are Included in the Cost of a WMS?
Types of Warehouse Management Software
Installation and Customization Costs for Your New WMS
Custom warehouse management systems (WMS) help today’s companies succeed in the competition for customers, reduce costs and deal effectively with chronic warehouse problems such as long inventory, re-sorting, picking and receiving errors.
For a long time, warehouse automation systems were the domain of large companies. But now automation is coming to medium and small companies as well. Developers of WMS solutions have paid attention to these businesses and begun offering ready-made solutions and integrations for their warehouses.
How much will it cost your company to automate a warehouse? What features are included in WMS software costs? What hidden WMS costs should be included in the budget? You will find the answers to these and other questions in our article.
What Is a Warehouse Management System?
A warehouse management system is a software solution that helps companies manage their daily warehouse operations, from the moment goods or materials arrive at a distribution or fulfillment center until they leave the warehouse. A good WMS optimizes all aspects of warehouse management: from receiving, picking, packing and shipping to tracking and replenishment. And all of these operations are managed through a single interface.
Why do you need a WMS? Because using one increases the efficiency of warehouse operations. After its implementation:
- the speed of order picking increases;
- warehouse processes for placement and acceptance of products are optimized;
- accurate information on the location of product groups is available;
- goods with limited shelf life or other indicators are used efficiently; and
- warehouse capacities and areas are optimally utilized.
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Choosing a WMS Pricing Model for Your Business
The vast majority of warehouse management systems fall under one of two pricing models: perpetual software license or SaaS software subscription. The biggest difference between them is that a perpetual license is typically used with on-premises solutions, while the subscription model uses the cloud for storage and processing, with users accessing the software through a web browser.
Now let’s take a closer look at each of these two models.
Perpetual software license
For a long time, perpetual licensing was the standard method of purchasing software. This means that you pay for the license up front and get the right to use the software forever. It sounds very simple, doesn’t it? But in reality it often turns out to be more complicated than that. This is because software needs to be updated regularly.
Typically, software developers update their programs at least once a year. Perpetual license buyers must pay for software updates if they want access to the latest features. Choosing not to upgrade often means loss of technical support and potentially a security risk. Sometimes you will also be required to pay an annual maintenance fee, which can be 15-30% of the original license cost.
Prices for a perpetual license for on-premises WMS software range from $2,500 to $200,000 per facility. Prices depend on factors such as WMS category, company needs, functions, capabilities, integrations, etc.
Advantages of a perpetual software license:
- One-time upfront cost
- Greater control over the software and data
- Potential for extensive customization
SaaS software subscription
SaaS stands for Software as a Service. It means that you acquire the right to use the software for as long as you pay a recurring subscription fee. Monthly or annual subscription options are the most common. Software updates are included and do not require a separate fee. All users automatically get access to the latest functionality and security updates.
SaaS solutions are usually hosted in the cloud, which means you don’t have to worry about installing, updating, or maintaining them. This makes SaaS solutions convenient and cost-effective.
According to WMS pricing research, you can expect to spend about $10,000 per user on your system. This is the average budget per user for companies of all sizes over five years. That comes out to about $167 per user per month.
In general, the monthly cost of a cloud-based WMS varies from $100 to $500 per user, depending on the organization’s size and complexity.
Advantages of SaaS software subscription:
- Lower upfront costs
- Regular updates and maintenance included
- Scalability and flexibility
- Reduced IT infrastructure requirements
| Aspect | SaaS Subscription | Perpetual License |
| Initial cost | Low | High |
| Ongoing costs | Monthly/annual fee | Maintenance and support |
| Scalability | High | Moderate |
| Customization | Limited | Extensive |
| Updates | Automatic | Manual/scheduled |
| IT requirements | Minimal | Significant |
| Data control | Vendor-managed | In-house |
| Implementation time | Quick | Longer |
When considering WMS solutions, it’s important to understand the varying costs associated with different levels of functionality. The pricing structures for SaaS and perpetual licenses can vary significantly based on whether you need basic, advanced, or enterprise capabilities.
| Basic functionality | Advanced functionality | Enterprise | |
| SaaS (per user/month) | $100 | $350 | $500 |
| Perpetual license (per facility) | $2500-$15,000 | $15,000-$50,000 | $50,000-$250,000 |
What Features Are Included in the Cost of a WMS?
The features included in the warehouse management system cost depend on the vendor and price level. Typically, WMS solutions are offered in various packages, which are often divided into basic, advanced and enterprise levels. Let’s take a closer look at these features:
Basic features
- Inventory tracking: Real-time monitoring and management of stock levels, locations, and movements within the warehouse.
- Order management: Processing and tracking of customer orders from receipt to fulfillment.
- Barcode scanning: Utilization of barcode technology for quick and accurate data entry, item identification, and inventory updates.
- Basic reporting: Generation of standard reports on inventory levels, order status, and basic performance metrics.
- Receiving and putaway: Management of incoming inventory, including logging receipts and guiding operators on where to store items in the warehouse.
- Picking and packing: Coordination of order fulfillment processes, including creating pick lists, guiding pickers through the warehouse, and facilitating the packing of items for shipment.
Advanced features
In addition to basic features, advanced WMS packages often include:
- Multi-location support: Inventory management across multiple warehouses.
- Advanced analytics: Detailed insights and reporting on warehouse operations and performance.
- Mobile access: Warehouse staff can access and update information using mobile devices.
- Integration capabilities: Seamless connection with other systems like ERP, CRM, and e-commerce platforms.
- Automation tools: Repetitive tasks are streamlined by automating processes and workflows.
- Labor management: Optimizing workforce efficiency by tracking and managing labor activities.
- Advanced inventory management: Sophisticated methods for tracking, replenishing, and forecasting inventory needs.
- Returns management: Efficiently handling the process of receiving, inspecting, and restocking returned goods.
Enterprise features
Enterprise-level WMS solutions offer the most comprehensive features for large-scale operations. These systems usually include AI-driven slotting optimization, integrated yard management, and sophisticated labor management tools. They are excellent at handling complex cross-docking operations and provide extensive customization options.
Advanced integration capabilities enable real-time data synchronization across multiple systems, while powerful business intelligence features offer predictive analytics for strategic decision-making.
Here’s an expanded comparison table of WMS features across different tiers:
| Feature | Basic | Advanced | Enterprise |
| Inventory tracking | ✓ | ✓ | ✓ |
| Order management | ✓ | ✓ | ✓ |
| Barcode scanning | ✓ | ✓ | ✓ |
| Receiving & putaway | Basic | Advanced | Optimized |
| Picking & packing | Basic routes | Optimized routes | AI-driven optimization |
| Reporting | Standard reports | Customizable reports | Business intelligence and predictive analytics |
| Mobile access | Limited | Full feature set | Full feature set + offline mode |
| Multi-location support | – | ✓ | ✓ with global optimization |
| Advanced analytics | – | Limited | Full suite with AI insights |
| Integration capabilities | Limited APIs | Extensive APIs | Full ecosystem integration |
| Labor management | – | Basic tracking | Advanced forecasting |
| Yard management | – | – | ✓ |
| Slotting optimization | – | Basic | AI-driven continuous optimization |
| Cross-docking | – | Basic | Advanced with real-time allocation |
| Quality control | Basic | Advanced | Full quality control suite with quarantine management |
| Customization | Limited | Moderate | Extensive |
| Global inventory visibility | – | Limited | Full multi-currency, multi-language support |
Types of Warehouse Management Software
Understanding the different types of warehouse management software is crucial when considering WMS costs. Each type has its own pricing structure and implications for your overall investment.
Cloud based
Cloud-based warehouse management systems are hosted on remote servers and accessed via the internet. These solutions provide flexibility, scalability, and reduced upfront costs compared to on-premises alternatives.
Cloud-based WMS solutions usually follow a subscription-based pricing model. Costs can vary widely based on factors such as the number of users, warehouse size, transaction volume, and required features.
According to many experts, this is the “best” way to launch a new WMS. One of the main reasons is that it’s cheaper. With cloud deployment, there are no additional costs for having a human on-site. You don’t have to maintain servers. And you get anytime, anywhere access.
Typically, a cloud deployment includes 6-12 months of your monthly expenses as an upfront cost. So, if you are deploying a WMS and the monthly amount for your system is going to be $1500 per month, you should expect about $9,000–$18,000 as upfront setup costs. Most of the upfront cost is for setup, customization, and training.
Cloud-based warehouse management systems are hosted on remote servers and accessed via the internet.
On-premises
On-premises warehouse management systems are installed and run on the company’s own servers and infrastructure. This type of WMS typically involves a perpetual license model and offers greater control over data and customization options.
On-premises WMS solutions usually involve a significant upfront investment for the software license, hardware, and implementation. Ongoing costs include maintenance, support, and periodic upgrades.
As an example, let’s consider the following scenario: a company buys a license for $75,000, pays an initial setup fee of $20,000 and an annual maintenance fee of 10–15% of the license cost ($7,500–$11,250). Initially, this type of WMS is obviously more expensive, but over time it becomes more and more affordable and eventually cheaper than cloud deployment. However, it’s important to note that only software costs are included here. This doesn’t account for the IT staffing needed to maintain the servers and perform security updates.
Hybrid hosting
Imagine using both cloud and on-premises warehouse management software, but at a lower cost. That’s the idea behind hybrid deployment. It combines a local server with a secure cloud server. Your data stays on-site, but the local server talks to the cloud to keep things in sync with other locations. This helps with backups, disaster recovery, and handling busy periods.
Hybrid warehouse management systems offer a blend of on-site control and cloud-based convenience. This allows businesses to gradually move towards the cloud if desired. It provides flexibility in where data is stored and processed. However, setting up and managing a hybrid system can be complex and might require specialized IT skills. Additionally, the overall cost might be higher compared to a single deployment option.
![andrei kazakevich - Warehouse Management Software Cost Guide]( "Warehouse Management Software Cost Guide")
Andrey Kazakevich
Head of Production
at HQSoftware“Investing in warehouse management software can streamline operations and boost efficiency, but it’s essential to consider all associated costs. By evaluating both upfront expenses and long-term fees, businesses can ensure they select a solution that delivers optimal value and performance.”
Installation and Customization Costs for Your New WMS
WMS implementation cost
On-premises software requires installation, while cloud-based software requires implementation. WMS software requires professional implementation/installation, the cost of which depends on the number of integrations and the level of customization required.
WMS integrations simplify collaboration across departments and companies within complex logistics networks using web and mobile technologies. In this way, customers, suppliers, and partners are integrated into your processes, assisting in accomplishing valuable business transactions.
Some integrations are included and are free, but others you’ll have to pay for — something to consider when you choose a WMS.
- Simple cloud WMS with few integrations and basic configuration: $3,500–$10,000
- Complex on-premises WMS with many integrations and customization: $20,000–$40,000
It’s important to get quotes from several WMS vendors to understand their pricing structure and how it aligns with your specific needs, including the level of customer support offered.
WMS add users cost
It should also be noted that each user or team member you add to your WMS platform affects the price. Therefore, many models limit the number of users in the pricing plan and require upgrades if warehouses want to add more users.
WMS support cost
Some WMS software companies offer live customer support, such as phone support, only at higher subscription tiers. To avoid frustration and wasted time resolving problems on your own, make sure your license includes ongoing live customer support. This support is critical to resolving issues quickly and efficiently, minimizing downtime, and maintaining uptime. Also, be sure to check if support hours coincide with your business hours and if support is provided in your preferred language.
HQSoftware Founder
Having founded the company in 2001, uses his broad knowledge to drive the company forward. Ready to share his wisdom on software development and technology insights
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