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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In today's complex financial landscape, Financial Planning & Analysis (FP&A) and Enterprise Performance Management (EPM) solutions have become essential for enterprises seeking to optimize their budgeting, forecasting, and strategic decision-making processes. However, navigating the procurement of these tools can be challenging due to their varied pricing structures and enterprise-specific considerations.
This guide will walk you through everything procurement and finance leaders need to know about how FP&A and EPM solutions are typically priced, helping you make informed investment decisions for your organization.
Understanding the FP&A and EPM Software Market
Before diving into pricing models, it's important to understand the current market landscape. The global EPM market was valued at approximately $11.7 billion in 2022 and is projected to reach $17.3 billion by 2027, growing at a CAGR of 8.1%, according to Markets and Markets research.
Key vendors in this space include Oracle, SAP, IBM, Anaplan (now part of Coupa), Workday, OneStream, Planful, and Board, among others. Each offers different capabilities with varying price points designed to serve enterprises across different industries and sizes.
Common Pricing Models for FP&A and EPM Tools
User-Based Licensing
This is the most common pricing model for enterprise FP&A and EPM tools.
- Named User Licensing: A fixed price per individual user with access to the system
- Concurrent User Licensing: Pricing based on the maximum number of users accessing the system simultaneously
- Tiered User Pricing: Cost per user decreases as the number of users increases
Example: A mid-sized enterprise might pay $1,000-2,500 per named user annually for a comprehensive EPM solution, with the cost varying based on user role types (admin users typically cost more than view-only users).
Data Volume-Based Pricing
Some vendors incorporate data volume into their pricing structure:
- Charges based on the amount of data processed or stored
- Pricing tiers associated with data thresholds
- Additional costs for exceeding predetermined limits
For instance, a vendor might charge a base fee plus incremental costs when your data storage exceeds 1TB, particularly relevant for organizations with extensive historical financial data requirements.
Module-Based Pricing
Enterprise EPM suites often divide functionality into modules such as:
- Financial planning and budgeting
- Financial consolidation and close
- Profitability and cost management
- Strategic planning
- Operational planning
- Reporting and analytics
Each module might be priced separately, allowing companies to select and pay for only the components they need. For example, adding a specialized financial consolidation module might cost an additional $50,000-100,000 annually for a mid-sized enterprise.
Subscription vs. Perpetual Licensing
Subscription (SaaS) Model:
- Monthly or annual recurring fees
- Lower initial investment
- Includes maintenance, updates, and support
- Cloud-based deployment with vendor-managed infrastructure
- Typically ranges from $100,000 to several million annually for enterprise-scale implementations
Perpetual Licensing:
- One-time upfront license fee
- Ongoing maintenance fees (typically 18-22% of license cost annually)
- Higher initial investment
- Customer responsible for infrastructure (for on-premises deployments)
- Less common today but still offered by some vendors
Hidden Costs to Consider
When budgeting for EPM solutions, procurement leaders should account for several costs beyond the core licensing:
Implementation Costs
Implementation costs often range from 1-2 times the annual subscription cost and include:
- System configuration and customization
- Data migration and integration
- Testing and validation
- Project management
- Change management and training
According to Gartner, organizations typically spend 1.5 times their annual software cost on implementation services for complex EPM deployments.
Integration Expenses
Most enterprises need to integrate their EPM solution with:
- ERP systems
- CRM platforms
- HR management systems
- Business intelligence tools
- Legacy financial systems
Integration costs can add 15-30% to the total implementation budget depending on complexity.
Training and Change Management
User adoption is critical for realizing ROI from EPM investments:
- Initial training programs
- Ongoing education for new features
- Change management initiatives
- Internal support resources
Organizations typically allocate 5-10% of their EPM budget to training and change management.
Infrastructure Costs (for On-Premises Solutions)
For non-SaaS deployments:
- Server hardware
- Database licenses
- Network infrastructure
- Security systems
- IT personnel costs
Negotiation Strategies for Procurement Leaders
When procuring EPM solutions, consider these tactics to optimize value:
Multi-Year Commitments
Vendors typically offer discounts of 10-20% for multi-year commitments. While this reduces flexibility, it can significantly lower your total cost of ownership if you're confident in your vendor selection.
Enterprise-Wide Agreements
If your organization uses other products from the same vendor, leverage an enterprise agreement to negotiate favorable pricing across the portfolio. Companies frequently secure discounts of 15-30% through consolidated vendor relationships.
Pilot Programs
For large implementations, negotiate a pilot or phased approach that allows you to:
- Test the solution with limited users
- Validate ROI before full-scale commitment
- Gain negotiating leverage based on demonstrated value
Right-Sizing User Licenses
Carefully analyze your actual user needs:
- Different license types for different user roles
- Room for growth without overcommitting
- Clear understanding of upgrade/downgrade policies
Benchmark Pricing
According to Forrester Research, enterprise clients who leverage competitive benchmarking in their negotiations achieve 20-35% better pricing outcomes than those who don't.
Total Cost of Ownership Example
For a typical mid-sized enterprise with 250 EPM users implementing a comprehensive cloud-based solution, the five-year TCO might break down as:
- Annual subscription: $500,000 ($2,000 per user) = $2.5 million over 5 years
- Implementation services: $750,000 (one-time)
- Integration costs: $200,000 (one-time plus maintenance)
- Training and change management: $175,000 (over 5 years)
- Ongoing administration (internal): $400,000 (over 5 years)
Total 5-year cost: Approximately $4 million, or about $800,000 annually.
ROI Considerations
While this guide focuses on pricing, it's crucial to consider the ROI potential of EPM investments:
- Reduced cycle time for budgeting and forecasting processes (often by 50-70%)
- Improved forecast accuracy (typically 10-30% improvement)
- Better resource allocation and scenario planning capabilities
- Enhanced financial visibility and decision-making
- Reduced manual effort and error rates
According to a Nucleus Research study, EPM implementations deliver an average ROI of 4.3x over a three-year period.
Final Procurement Recommendations
- Define clear requirements before engaging with vendors to avoid paying for unnecessary capabilities
- Request detailed demos focused on your specific use cases
- Involve end-users in the evaluation process to ensure adoption
- Secure executive sponsorship to support implementation success
- Consider future scalability needs when negotiating terms
- Include flexibility clauses for adding or reducing users as business needs change
- Request customer references from similar enterprises
- Understand the product roadmap to ensure alignment with your strategic needs
By understanding these pricing structures and negotiation strategies, procurement leaders can secure FP&A and EPM solutions that deliver both financial and operational value to their enterprises while avoiding unexpected costs and ensuring successful implementation.