Submitted on Mon, 2016-11-07
By Upp Software

Cloud Warehouse Management System Pricing: SaaS versus Perpetual

Relatively few organizations today are using cloud-based versions of supply chain-specific applications like a Warehouse Management System (WMS) or Transportation Management System (TMS). However, in just a few short years, analysts believe that the vast majority of logistics firms will migrate to cloud applications.

This means buyers will need to quickly get up-to-speed on cloud technology advancements and differences in purchasing a new system. One of the biggest differences between legacy systems and new cloud systems is pricing. 

Today, there are two basic pricing models for Cloud Warehouse Management Systems – SaaS and Perpetual. Deciding which model is right for you is key to achieving the greatest lifetime value and immediate return on investment.

What are the differences between these pricing models?

Here are the two basic definitions of SaaS and Perpetual pricing models:

The Definition of SaaS Licensing
A Software-as-a-Service (SaaS) pricing model is a subscription model that combines all software license costs, hosting, maintenance and support fees in a low monthly user fee.

The Definition of Perpetual Licensing
A Perpetual licensing model allows the customer to pay for software licenses upfront and then pay annual maintenance and support fees. In this model, the client is responsible for hosting the application.


How are these pricing models different?

Both of these pricing models have attractive financial benefits, but the pricing model you choose will depend on a variety of factors, including:

  • Your total number of user licenses

  • The number of user licenses you plan to add over time

  • The cost to run and maintain your IT environment

  • The capital you have available to invest upfront

  • Your desire to maintain the system internally


Infographic: The Truth About Cloud WMS PricingWhat is Included in a SaaS License Fee?

In a SaaS subscription model, most of your costs are included in monthly user fees. Here are some of the many charges that are included in the cost of every user license:

  • IT Services

  • IT Server/Infrastructure

  • Backup and Disaster Recovery

  • Database

  • Operation System

  • Software Licenses

  • Maintenance and Support


What are the biggest differences between these pricing models?

Understanding the differences between each pricing model will help you determine the most cost-effective model for your organization.

  • Entry Fees: SaaS pricing requires a lower initial investment than a Perpetual pricing model, as SaaS models provide hosting for the IT server environment.

  • License Fees: A SaaS model includes monthly user license fees for each user; while, a Perpetual model includes enterprise licenses.

  • Maintenance and Support Fees: While enterprise licenses are purchased upfront in a Perpetual model, users are charged annual fees for maintenance and support of the software. In a SaaS model, maintenance and support fees are included in the monthly license costs.

  • Expenditure Type: One of the most attractive benefits of a SaaS pricing model is that it is typically approved as an annual operating expense. Perpetual models are usually classified as a capital expenditure and require additional rigor to be approved.

  • Software Upgrades: With a SaaS pricing model, updates are included in the monthly user fees; while, Perpetual models include user fees with annual maintenance and support costs.

What pricing model has a better lifetime value?

Some standard lifetime value calculations show that Perpetual licensing can provide a more attractive value in as little as five years. This cost-benefit analysis varies widely from organization to organization and is dependent on a large variety of factors, including the total number of users and IT infrastructure costs.

Lifetime value calculations are unique to every organization. For some organizations, a Perpetual model will never be cheaper than SaaS – and vice versa. Make sure that you are factoring in every pricing variable available to you.


Warehouse Management System Pricing: Which one is right for you?

This answer is unique to every organization. Each pricing model has advantages that can make cost benefits and return on investment calculations very attractive in both the short- and long-term. Your challenge will be to identify all of the contributing factors to your purchase, including the costs of your IT environment, your available capital, your existing base of users, and your expected growth.

For a customized cost-benefit analysis to determine which pricing model is right for you, schedule a call with one of our Cloud Technology Experts today!




This handbook is designed to aid executives selecting a cloud warehouse management system and includes expert insight on how to research, buy, and implement cloud technology so it positively impacts your bottom line.

Blog Type: 
Innovative Technology Solutions