Today, we’re going to talk about what a WMS really costs. Because while the answer is mostly ‘how long is a piece of string?’, there are ways that you can guesstimate how much things are likely to cost, even without getting people like us involved.

If you’ve done this before, or you’re not currently thinking about a new project, you can probably skip this article. But if not, buckle up, Buttercup, this is going to be a long one.

So long, in fact, that we’ve split it into two parts. This one covers what a WMS quote is actually made of. Part two covers how to get a real number out of anyone, including us.

If you’re reading this at all, you’ve probably done the following at least once already this week.

You’re on a WMS vendor’s website (not ours, obvs, because we don’t try to honeytrap customers), and up there in the top menu, sitting between “Solutions” and “Resources”, is the word Pricing. Which is super. A whole page given over to the exact question you came here to ask.

MARVELLOUS.

So, you click on the menu. And the page loads. And there, before you, is a photograph of a warehouse that looks absolutely nothing whatsoever like yours. Concrete that’s polished to a shine SO bright that you’d slip if you tried to walk on it. Perfect lighting. A few people, wearing immaculate hi-vis, artfully placed in a semicircle, pointing joyfully at a tablet. And underneath it, there’s a heading. “Flexible pricing, designed around your business.” And underneath THAT, there’s a form where you’re asked for your name, company, email, number of sites. And a place to ‘tell us about your requirements’.

So, you try another one. Ooh, look! A contact form.

And then another: ‘Request a quote’. One of them has even gone to the trouble of putting three tiers on the page, Essential, Professional and Enterprise, with an awful lot of ticks in an awful lot of boxes, and where the price should be, in all three columns, you see the words “Let’s talk.”

Somewhere, usually around the fourth website, you start to feel as if you’re being managed. Which isn’t a very nice feeling. And especially when all you were trying to do was to work out roughly what you’re dealing with, before you go anywhere near the finance director.

To be completely straight with you, and before you read the rest of this, we’re not going to give you a number, either. And that’s because we honestly CAN’T give you a number that is in any way meaningful.

But what we can do, is give you something that’s considerably better than a form.

• We can break down potential WMS cost into all the line items that it’s usually made up of.
• We can explain to you what makes the number go up and down.
• And we can tell you what to take along, when you ask anyone for a quote, so that you can get an accurate number to give to Finance.

There’s a good reason why nobody (trustworthy) ever publishes a (real) WMS price, and once you find out what it is, it’ll be much more difficult to sell you the wrong thing.

Because selling you the wrong thing doesn’t help anyone, really, does it?

The pricing page that doesn’t (because it can’t)

A WMS is not just a thing that you buy. It is a thing you buy, AND a thing you do. Yep, that’s all a bit existential, I know, but stick with me here.

What a lot of people going through this process don’t know, because it might well be the first time they’ve been through this process, is that the second half of that last sentence is usually the more expensive one.

Software cost is probably going to be similar for everyone. You’ll pick a release to deploy and everyone who deploys that release will get the same thing. Please note, you might pick a few things to deploy at the same time, because it makes more sense financially or operationally. And you might have more or fewer people using it at the same time (concurrent users), which will influence the costs of licensing.

What won’t be the same, though, is your building, your processes, your data, your existing integrations, your people, your transaction throughflow, your peak. And your customers, with their increasingly imaginative requirements are all yours, you lucky thing.

Two operations of the same size, in the same sector, with roughly the same number of SKUs, can end up with project costs that differ significantly. Not because one of them got a better deal, but rather, because one of them had four systems to integrate, and eleven years of undocumented workarounds that had been institutionally baked into how their pick faces get replenished.

So, any published prices can only ever be package prices. And by that, I mean, fixed scope, fixed assumptions, fixed shape of operation, etc. If you happen to fit into that very specific shape, congrats. If you do not, and most people don’t, then any numbers on any website, anywhere can only ever be the start of a conversation that will inevitably end up somewhere else entirely.

Which is why, if you even actually find a published number, you should immediately become more suspicious, not less.

If you find one, the first useful question to ask is absolutely not “is that good value?”. It absolutely is “what isn’t included?”. The answer, more often than not, is integration, data migration, training and hardware. And that bit, my friend, is what makes up most of your project cost.

Vendors aren’t usually being evasive simply for the fun of it. Any honest answer you get really does mean them knowing enough about your operation to give you one. But you’re entitled to know what costs that number will probably be made up of, so let’s get on with it, shall we?

The anatomy of a WMS quote

One-off project costs

Some of these things will not apply to you. But it’s an unusual operation that’ll avoid more than two or three of them:

Licence or subscription

This is the bit that everyone usually thinks of as “the cost”. Usually priced per concurrent user, per site, per transaction volume or some blend of the three, and either capitalised up front or spread as an annual subscription. Job one is understanding which model you’re being offered, because that choice is likely to change the shape of your whole business case.

Implementation services

This includes such things as additional design, configuration, project management, and consultancy days. On a lot of WMS projects, unless you pick something as functionally rich as Dispatcher WMS, customisation changes can cost you more than the licence, and sometimes considerably so. Not to mention how much any future upgrades of those customisations are likely to cost you. But back to services for now: if your quote shows implementation costs as a small fraction of the software, immediately ask what has been left out of scope.

Integration

This is sometimes priced per connected system, and it can often be where any quotes might diverge dramatically. Your ERP is (probably) a given. But after that comes the TMS, the carrier integrations, any customer portals, the automation controls, the labelling, the finance system, and the spreadsheet that your most long-standing client sends you every Monday morning. All of these are systems.

Infrastructure or hosting

How are you planning on hosting your new WMS? Will you go for a cloud subscription, or choose in-house servers… and the people to look after them? This’ll include the environments that you’ll need beyond the basic production one: test, training and maybe a place to try things out that won’t take the live site down. Safety first, etc.

Hardware

RDTs, printers, label and ribbon stock, chargers, mounting, tablets, and a wireless survey that’ll finally explain why the signal always dies when it gets to aisle 14. Buildings that have never run a WMS before sometimes need more of this than they expect. And it’s always best to know what you’ll probably eventually need, even if you’re going to space it over a long-term rollout.

Data preparation and migration

This is probably the most important factor for implementation success and rapid ROI, and it’s often not properly considered. Extracting, cleaning, mapping and loading your master data: product, location, customer, supplier, stock. The size of this job is entirely determined by the state of what you already have.

Training

The way this usually goes is you train your Superusers first. Then the floor, then, eventually, the people who joined up after go-live. Top tip: you need to include any floor time itself in this number, because training new people means paying existing people to be doing something other than picking.

Backfill for your ops team during implementation

Your best operations person is going to be on this project. That’s not optional, and we’d be doing you a real disservice if we pretended it was. So, for the purpose of this article (and for the sanity of your finance director), just know that whoever covers your ops person’s day job will be a real cost, and it’s a cost that almost never appears on the business case.

Testing

This involves things like unit testing, integration testing, user acceptance testing, and the kind of volume testing that’ll give you real confidence that everything will hold up on your hardest day, rather than an average one.

Go-live support and hypercare

You will most probably need (and want) some extra hands on-site. You’ll likely need (and want) extended support hours, and there will be a period after Go-live where things should get fine-tuned. Cutting this out or down, being brutally honest here, is the single most widespread false economy in the industry.

And then, every year after that: ongoing WMS costs

Support and maintenance

This is usually a percentage of your software licence, and before you sign up for anything, it’s worth understanding precisely what it will get you. Be clear on response times, hours of cover, whether a person who understands your configuration (or even warehouses in general if you’re planning on implementing an ERP module) is on the other end of the phone. What do you get, in detail?

Upgrades

There will be version updates. You will likely want to deploy them, eventually. And each one will need testing and regression work. Touching back on the customisations we mentioned earlier, this is an opportunity for enormous cost, depending entirely on how far your configuration has drifted from standard. Please note, if you work with the right provider, there are ways to mitigate this.

Change requests

Your operation will change. That’s kind of the point of implementing a new WMS. You’ll get new customers, you’ll open up new sales channels, you might need a new site to accommodate more business, and there’ll probably be some new compliance requirements coming down the line at some point. Budget for your WMS to be able to roll with this, because the alternative is that you do not, which will mean that in five years’ time, you’ll be trying to run on a configuration that was built for a business that you no longer have. What you’re looking for here is deep functionality that’s controlled via function access. Which means that your software should already do what you’re likely to want it to do, you’ll just have to turn the bits you need on, and the bits you no longer need off.

Growth

While you’re at it, make sure your WMS is easily scalable, too. So, consider any additional sites you might want to have, think about more potential concurrent users, increased volume tiers. Check how any licence model might behave if you need to double, because some of them behave quite unpleasantly.

System ownership

Somebody internally has to own your WMS. It needs to be part of a role, or (more often) a whole one. Either way, there’s a cost involved, and the operations that skip having someone who fills this role are usually the ones that stop getting any real value out of their new software after about eighteen months.

That’s part one

Next time, we’ll cover such topics as: ‘What makes your number bigger than their number?’, ‘How to deal with unexpected invoices’, and the big one, ‘How to get a real number out of anyone (including us)’.

If you’d like to get a head start on all of the above, we’d be delighted to discuss things with you, just get in touch for a chat. If not, part two is waiting for you whenever you’re ready… TTFN.

WMS cost: common questions

How much does a warehouse management system cost?

There is no meaningful single figure, and any published price is a package price with a fixed scope and a fixed set of assumptions bolted to it. Two warehouses of the same size, in the same sector, with roughly the same SKU count can land on very different project costs. What drives the number is how many systems need integrating, what state your master data is in, how much your processes have to change, and how awkward your building is. None of that is visible until a vendor has looked at your operation.

What is included in a WMS quote?

Two sets of things: one-off project costs and what you pay every year afterwards. The project side covers licence or subscription, implementation services, integration, infrastructure or hosting, hardware, data preparation and migration, training, backfill for the ops people you put on the project, testing, and go-live support. The annual side covers support and maintenance, upgrades, change requests, room for growth, and somebody internally owning the system. A quote showing only licence and implementation is not a complete quote.

Why do WMS vendors not publish prices?

Because a WMS is a thing you buy and a thing you do, and the doing is usually the bigger number. The software is broadly the same for everyone deploying the same release. Your building, your processes, your data, your integrations, your throughput and your peak are not. So any published figure is only accurate for operations that happen to match a narrow set of assumptions. When you do find a published price, the question worth asking is not whether it is good value but what has been left out, and the answer is usually integration, data migration, training and hardware.

What is the biggest hidden cost in a WMS project?

Backfill. Your best operations person will be on the project, which is necessary and not optional, and somebody has to cover their day job while they are. That is a real cost and it almost never reaches the business case. Data preparation runs it a close second, because the size of that job depends entirely on the condition of the data you already have, which nobody can see at quotation stage.

Should a WMS be bought on licence or subscription?

Both exist, priced per concurrent user, per site, per transaction volume, or some blend, and taken either up front or as an annual subscription. The thing to establish first is which model you are being offered, because that changes the shape of the business case rather than just the total. It is also worth checking how the licence model behaves if you need to double, because some of them behave quite unpleasantly.

Do customisations increase the cost of a WMS?

Considerably, and the cost keeps coming back. On a lot of projects customisation costs more than the licence, and then every upgrade afterwards has to carry that customisation forward with its own testing and regression work. The way round it is picking something with enough standard functionality that you meet your requirements by switching capability on rather than by building new code.