Factsheet
Shift away from percent-of-spend pricing
Many contingent workforce programs pay for vendor management systems (VMS) under a percent-of-spend fee model that originated nearly 25 years ago. As programs scale, percent-of-spend pricing increasingly breaks down. Costs climb with spend rather than with the value delivered, and the model struggles to keep pace when programs extend into statement of work (SOW), independent contractor compliance, and global labor categories.
As a result, according to industry analysts, more organizations are moving to subscription-based pricing instead, the same model that's become standard across enterprise software.
The primary reasons cited for this change are:
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Predictable costs
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Closer alignment with business
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Strategy for growth
“Predictable costs, leading to budgeting consistency, is the No. 1 capability enterprises want from their software providers.”
— KPMG International
Predictable costs for better budgeting
Contingent workforce needs go up and down, more workers one quarter, fewer the next. Under a percent-of-spend model, that means your VMS cost moves too, so you never quite know what you're going to pay. A subscription or licensing model breaks that connection: your cost stays steady even when your contingent workforce fluctuates.
That predictability matters more every year, as more companies lean on contingent workers for a bigger share of their workforce.
Aligning services with business needs
As contingent workforce programs grow more complex, spanning traditional staffing, SOW-based engagements, independent contractor compliance, and multiple geographies, a flat percent-of-spend fee increasingly fails to reflect what’s actually driving cost and complexity in a program.
Subscription pricing lets buyers negotiate terms calibrated to their program’s real shape: the labor categories they manage, the markets they operate in, and the services they actually need, rather than a fee that automatically scales with total spend regardless of program maturity or efficiencies gained along the way.
A strategy for growth
VMS solutions originally designed to manage temporary agency spend have expanded to encompass the sourcing and management of all non-employee labor categories.
Industry analysts at PwC frame this type of shift in strategic terms. In IDC-authored research published by PwC, subscription-based pricing is described as “the new industry-agnostic blueprint to drive long-term business growth, competitive differentiation, and long-term customer value.” The research notes that this recurring, contract-driven model “lowers the procurement barriers by shifting the expense from a capital to an operational budget” — the same dynamic pushing VMS buyers away from percent-of-spend contracts and toward a corporate, platform-type system that scales more predictably across labor categories and geographies.
Beeline subscription includes unparalleled service
While the terms license and subscription are often used interchangeably, they are not the same. In some cases, a software license only allows the licensee to use the software, whereas a software subscription generally entitles the subscriber not only to use the software but also to receive support services and product upgrades that extend its value.
In Beeline’s case, our VMS subscription includes unparalleled client service and support, along with product innovations, to ensure you receive the greatest possible value from our comprehensive contingent workforce management solutions.
For more information about a subscription model that provides the technology and life-cycle support you need to meet your program’s operational and strategic goals, now and in the future, contact us today.