How to work out your WMS total cost of ownership | Socius24

Before you compare entry prices, it’s worth knowing what actually goes into your WMS total cost of ownership. Starting, as these things often do, with a cheap flight to Alicante.

The flight that you’re planning on taking to Alicante costs £24.99. It says so in enormous, friendly letters, and it’s even, (mostly) true.

However, what if you’d quite like to bring a bag with some extra clothes in rather than just wearing the same thing for three days? And then, what if you’d like to sit next to the person you’re travelling with? Perhaps you’d like to board the plane while there’s still some space to stow your carry-on, and maybe you’d also like to check in without incurring the airline’s £55 penalty for the shocking crime of not owning a printer.

All of this means that somewhere over France, while you’re eating a tepid ten-quid cheese toastie, you might find yourself wondering exactly when your £24.99 flight became a £249.99 flight.

Now, the totally fair answer is that it didn’t. That £24.99 was always a real price. It just wasn’t the final price. What it was, was an entry fee to the place where the final price could eventually come to light.

Which brings us, as I bet you suspected it would, to the modern crop of SaaS WMS challengers: lovely websites, visible pricing pages (which are a genuine and refreshing novelty in this industry, we want to give credit where credit’s due). Promised go-lives are measured in weeks. And they offer an entry-level number that makes established platforms look rather like they’re asking you to buy the aircraft, instead of paying for the flight.

Those entry numbers are real too. We’re just pointing out that it’s worth knowing, before you sign anything, what the final number, your actual WMS total cost of ownership, might end up being.

What that £24.99 actually gets you

To be fair to the budget airline, the £24.99 seat does exist, and if you’re just one person with no luggage, on a short hop, it’s a perfectly good way to fly.

The WMS equivalent of this also exists. If your operation is truly simple, perhaps with one site, a modest SKU range, some nice, plain receive-store-pick-ship workflows and absolutely nothing exotic at the despatch door, a lightweight SaaS WMS might be exactly what you need.

The trouble is that warehouses have a rather poor record of KISS (Keep It Simple, Sausage). And there are lots of reasons for that – customers tend to arrive with their own special requirements. Then, perhaps a second site appears. Eventually, maybe, somebody signs a contract with a retailer whose compliance manual is longer than this newsletter’s entire 200+ edition archive.

And the problem is that the very second your operation stops being simple, you’re back eating that tepid cheese toastie at 32,000ft and wondering what the heck just hit you. Financially speaking, at least.

Things that might hit you

These are the line items that tend to push your WMS total cost of ownership upwards, usually around the time your operation gets interesting.

Success tax

A lot of SaaS WMS pricing is built on transactions, orders or volume tiers. Which sounds perfectly reasonable, until you realise that what that actually means is that your software bill is indexed to your growth. If you have a good year, you get a bigger invoice. The lovely clean pricing page shows you the price of the warehouse you have now, but it doesn’t usually say a huge amount about the one you’re hoping to become.

Per-user creep

Seats get added one totally reasonable decision at a time. You’ll obviously need agency staff for peak. And then you’ll add the customer service team, who probably need to see the orders they’re helping people with. Then there’s the finance person who really needs access to those reports. You didn’t start off with forty users; you just looked up one day and there they all were.

The connector extrapolator

These are things like your ERP, your carriers, your customers’ systems, your automation kit… the spreadsheet that you’ve been using to manage the workflows that were never included in the new system, but now you really need to hook up to it. On the pricing page these would have been mentioned under “integrations available”. The word ‘available’, as you’ll come to discover, is doing an impressive amount of work there. And each one of those is another item, either as a fee or as somebody’s billable time.

The customisation conundrum

Somewhere around the end of year two, you’ll hit a workflow that the system simply can’t deal with. If you’d had a configurable platform, you’d be able to configure it. But with a lightweight one, you get a choice: you can change how your warehouse works to suit the software, or you can build the missing piece out of even more spreadsheets, workarounds and perhaps a cheeky hint of extra-strength duct tape. And none of the above will appear on the SaaS invoice, but all of it will cost you real cash money – every single day.

The support you need

The response time in your SaaS plan is perfectly fine, right up until 7pm on the Thursday before a bank holiday when (ain’t it always the way) nothing is making it out of the ship doors. Almost inevitably, the response time you need at that moment will be on the plan just above yours.

None of this is outrageous, by the way. It’s simply a pricing model. And it works the same way that the budget airline’s does. The only mistake you can really make is to expect that the price you’re being offered will get you the outcome that you actually wanted.

Comparing the whole journey: your WMS total cost of ownership

As with most of what we talk about here, the fix is tediously, boringly simple. You just have to do what you needed to do for that flight: price out the whole return trip, with the bags, and possibly lunch, for everyone travelling, before you commit to booking anything.

We’d suggest that you look at the WMS total cost of ownership for both options over the next three years. Entry costs, yes, obviously, but also the volume tiers at your projected growth, the users you’ll realistically end up having, every connector on your integration list (including those spreadsheets), the support level that your operation REALLY needs, and, if you ever wanted to leave, what it would cost to get your data back out of their software.

Then put the numbers side by side and see which one of them is actually the better option.

Sometimes it’ll still be the basic SaaS. And if your operation stays simple, fair enough, good luck to you. Quite often, however, in our extremely long experience, the platform that looked expensive in comparison turns out to be the one that was quoting you for the whole journey (in a much more comfortable seat), rather than just for the one-way ticket, strapped to the wing.

Before we end today’s sermon, there’s one more line item that we’d like to mention for the WMS total cost of ownership comparison. It’s one that no pricing page is going to show you. And that’s how the platform ages. A new WMS is a ten-year relationship in an industry that changes constantly, and the ways a platform can grow old gracefully (or not) are something we’ve written about before in three ways your platform can age.

Dispatcher WMS (in its various versions) has been running warehouses around the world, over every vertical and at serious volume for decades, and there’s a reason that its reliability keeps coming up when people talk about it. That £24.99 seat is a perfectly fine way to travel. It’s just not usually the whole picture, most of the time.

As ever, if you want to talk about it, we’re always happy to chat