How Much Does Performance Management Software Cost?

Performance management software costs between $5 and $10 per employee per month based on the number of employees. If you have under a few hundred employees expect to be on the higher end. Minimum annual contract sizes range from $5,000 to $15,000. 

It is important to consider the full cost of implementing a performance management system. Some vendors will add additional charges for set-up, training, customer support and add-on modules.

There is no free standalone performance appraisal software currently available.

PerformYard offers straightforward and transparent pricing of $5-10 per month. Every feature is included, and every customer gets a dedicated customer success manager for implementation, training and support.

Performance Management System Pricing Model

Almost all performance management software is sold as a license to use the software for a given time. This way, your organization can start using performance management software at a relatively low price and still get the benefits of continuous updates and support from the vendor. The price is based on the number of employees using the software. This price is often referred to as the “per-employee-per-month” price or PEMP. In order to calculate the annual price you will pay for the software multiply Employees x PEPM Cost x 12.

The PEPM price will vary depending on the number of employees your organization will be purchasing seats for. Usually larger organizations will pay less per employee as the overall size of the contract is larger. Every vendor will be different in terms of what they charge and how the price varies based on seat count. 

Another thing to consider is whether the vendor has a minimum contract size. Minimum prices can vary greatly. Some software vendors will only work with organizations that have hundreds of employees and pay tens of thousands of dollars per year.

At PerformYard, we charge between $5 and $10 per employee per month. Organizations with more than a few hundred employees will be in the lower half of the range, and organizations with fewer will be in the upper half.

PerformYard does not have any additional charges. We believe in giving customers everything they need to succeed, including every feature and unlimited support from our team. However, some vendors do have additional charges that you should be aware of.

Implementation and Training Costs

PerformYard’s price always includes implementation, support, and trainings.

Some vendors will charge an up-front fee to help your organization start using their software. This fee, sometimes referred to as a “setup fee” or “implementation fee,” can range from $2,000 to $10,000 depending on the vendor. 

What is included in the implementation fee is often a set of services that are defined in your agreement. If you go beyond the agreed upon services, you may be subject to even more fees.

For example, you could get two employee trainings as part of the fee but be on the hook for even more charges if you need to do additional trainings.

For small and midsize organizations, implementation fees can be a red flag that signal the software is very difficult to set up and use.

Customer Support Fees

PerformYard’s support is always included and unlimited. As long as you’re a customer, you’ll work with a dedicated team member who knows your account.

Some vendors put limits on the type and amount of support they offer as part of the license agreement. For example, maybe you will be able to read support documents and submit “tickets” to unknown support staff, but you won’t be allowed to speak with anyone on the phone or collaborate in real time with someone who knows your account.

Usually these vendors will offer higher-quality support, but it will come with an additional fee. Other vendors will only offer quality support to their largest customer, and leave small customers to figure things out on their own.

High-quality support with someone who understands your organization is very important for performance management software. Performance management initiatives impact every person in the organization, including executives and leadership. When you're about to launch a cycle across the organization, it’s important to have the confidence that everything is going to work perfectly and as expected.

Evaluating Return on Investment

The return on investing in performance management software is usually quite high. The cost of the software is less than 0.1% of an organization’s total human capital costs, and the benefits can be large and meaningful.

Reducing the Administrative Burden on Employees 

HR teams can spend a lot of time administering review cycles by distributing and collecting review forms, chasing incomplete forms, signing off on reviews, recording appraisal data and compiling data for analysis, despite the fact that all these tasks should be easily automated.

Employees and managers also spend a lot of time on reviews, chasing down the appropriate forms, going back and forth with HR on exactly what is expected or searching for lost data. 

For a typical organization, saving just 1-2 hours per employee per year will pay for the price of the software. And this is just one of many benefits.

Reducing Employee Turnover

The average hard costs of employee turnover are 21% of the position’s salary. This number can balloon to 213% for highly specialized and senior positions.

With an effective performance management strategy, your organization can get in front of turnover by better recognizing your highest performing employees or even just having more frequent conversations with employees about their professional goals and aspirations.

For a typical organization, stopping just one or two employees from leaving per year will pay for the price of the software. That is only counting hard costs. The opportunity cost of losing a great employee is far far greater than the hard costs.

Improving Organizational Alignment

Organizations often struggle to align employees around organizational goals. Without frequent feedback and goal discussions, it can be easy for employees to head off in the wrong direction. 

If your performance management approach can correct just 0.1% of misaligned employee time, that will also pay for the price of the software. 

Improving Workforce Optimization

Human capital costs are often the largest single line item for an organization, and yet most organizations under-invest in their people. Making small investments in developing employees, driving engagement or aligning work can have huge returns.

Stanford professors O'Reilly and Pfeffer found that a change of one standard deviation in an index of human resource management practices produced increases of $20,000 to $40,000 in stock market value per employee.

PerformYard’s Simple Approach to Pricing

At PerformYard we like to keep things simple. Every feature is included in one low price, and every customer gets a dedicated customer success manager for implementation, training and support at no additional cost.

Visit our pricing page for all the details, and then connect with our team for an exact quote.