Do you know how much you will be charged for your telecom expense management (TEM) solution? It’s not always easy to determine each vendor’s pricing structure. Sometimes there are even hidden costs. Make sure you fully understand the pricing model of a TEM solution before deciding to move forward.
Brief Overview of TEM Pricing Structures
There are four main pricing structures you should be aware of, including contingency, fixed hourly fees, fixed licenses software fees and fixed-scope defined fees. Much of what we will describe about TEM pricing models is adapted from research published by Aberdeen Group.
- Contingency: Some TEM providers are paid through contingency fees, which means they take a percentage of the savings recouped from billing errors and other telecom-related areas. The typical contingency fee is between 20 to 50 percent of the savings. In this pricing model, if no savings are recouped, no money is paid to the TEM provider. This model can be tricky, as the focus of the vendor might be more on cost savings than actually fixing inefficient processes.
- Fixed Hourly Fees: Opposite to the contingency framework, many TEM providers charge fixed hourly fees, which encompass consulting services and manual tasks. Enterprises often choose the fixed hourly fee model, because it eliminates the possible conflict of interest that exists with the contingency setup (i.e. focusing only on cost savings). Fixed hourly fees are often charged when manual telecom audits are conducted.
- Fixed Licenses Software Fees: If TEM software is being used, vendors may charge a one-time license fee. Maintenance or update costs are usually charged separately.
- Fixed-Scope Defined Fees: It is very common for an enterprise to incorporate a combination of TEM software and consulting work. In this hybrid approach, a software solution is set up and fully managed by a telecom consultant. The consultant does all of the manual work, which frees up the enterprise’s time and resources. In this scenario, there are numerous variables considered to determine the scope of work. Once the scope of work is identified, the TEM provider will calculate a fixed monthly fee.
- Be aware that there are sometimes hidden costs. If you are in the market for a TEM solution, ask the provider about the costs associated with system integration and customization. These costs are typically underestimated. For more information, read our article, Selecting a Telecom Expense Management (TEM) Solution: 10-Point Checklist.
Softeligent Saves You Money & Paper
Softeligent is a customizable-hosted software-as-a-service (SaaS) solution that is designed to meet any enterprise’s needs. The system interface makes it easy to navigate and operate, and we can quickly and easily modify the software so that it matches your requirements. To learn more or to get a complimentary demo, contact us today.