Traditional WMS models often rely on per-user licensing fees, creating a dilemma for businesses who want to improve efficiency by having more users access the WMS. Adding users incurs extra costs and can become a financial barrier. At Logiwa, we believe there’s a better way—one that aligns our goals with our customers’ by focusing on what drives real value in fulfillment: the volume of orders shipped.
The hidden costs of traditional user-based WMS pricing models
Traditional warehouse management system pricing typically follows a familiar SaaS playbook and charges per user, per month. While this model might work well for general business software, it creates several challenges in warehouse operations:
1. Limited access creates operational bottlenecks
- Operations restrict WMS access to minimize licensing costs
- Key personnel often can’t access critical system functions
- Warehouse efficiency suffers due to artificial user limitations
2. Growth Penalties
- Adding new users means increasing monthly costs
- Seasonal scaling becomes expensive
- Budget constraints limit system utilization
3. Misaligned Success Metrics
- Costs increase with team size, not business success
- No direct correlation between WMS expenses and revenue
- Financial friction during expansion phases
How volume-based pricing drives better results in WMS
Charging based on order volume rather than user count shifts the focus from cost centers (like employee access) to revenue drivers (like increased shipping capacity). In microeconomic terms, volume-based pricing is better aligned with the utility operations gained from the WMS.
More shipped orders mean more revenue, while the cost of WMS access is tied to productive output rather than a fixed input. This incentive structure encourages operations to fully utilize their WMS, empowering more of their workforce without adding user fees that can act as a financial deterrent.
This fundamental shift brings several key advantages:
1. Direct Alignment with Revenue
- Costs scale with actual business growth
- Pricing directly correlates with revenue generation
- Better cash flow management during seasonal peaks
2. Optimal Workforce Access
- No per-user fees means broader system access
- More eyes on operations improve accuracy
- Enhanced collaboration across teams
One of the unexpected advantages of volume-based pricing is that it encourages companies to give more employees access to the WMS. Under per-user pricing, organizations may hesitate to add new users, limiting essential personnel’s access to critical system functions.
With volume-based pricing, this financial disincentive is removed. As a result, we’ve observed a 200% increase in created users among our clients.
This shows that, when given the option, clients find value in expanding system access. More users mean more eyes on operations and more hands available to solve problems, driving labor productivity without the cost friction associated with per-user licensing.
3. Better Support Prioritization
- Service providers focus on shipping bottlenecks
- Faster resolution of revenue-impacting issues
- Shared interest in maintaining high throughput
Volume-based pricing doesn’t just change how clients are charged; it also impacts how we support them. In a per-user pricing model, service providers may inadvertently prioritize basic access over productivity. By contrast, our volume-based model means that if something is preventing you from shipping orders, resolving it becomes our top priority.
Every disruption to order flow directly impacts our client’s bottom line—and ours.
This alignment ensures that our support team focuses on issues that matter most, reducing any potential deadweight loss associated with fulfillment interruptions. This approach also supports clients’ utility maximization by prioritizing service reliability and minimizing downtime.
The economics of volume-based WMS pricing
Understanding the economic principles behind different warehouse management system pricing models helps explain their impact on business operations:
Traditional per-user model:
- Fixed costs regardless of business performance
- Step-function increases with growth
- Creates artificial barriers to system access
- May lead to suboptimal resource allocation
Volume-based model:
- Variable costs aligned with revenue
- Smooth scaling with business growth
- Encourages optimal system utilization
- Supports natural resource allocation
A model that fosters growth, not restriction
The shift to volume-based warehouse management system pricing creates tangible operational benefits:
1. Improved Workforce Efficiency
- Warehouse staff can access the WMS without cost concerns
- Better training opportunities for new employees
- Enhanced cross-functional collaboration
- More flexible role assignments
2. Faster Problem Resolution
- Multiple team members can troubleshoot issues
- Better visibility across operations
- Reduced dependency on key personnel
3. Scalability Advantages
- Easily accommodate seasonal workers
- Support rapid business growth
- No financial penalties for system expansion
Choose growth-oriented WMS pricing
The industry is increasingly recognizing that traditional per-user pricing models don’t serve modern warehouse operations effectively. Volume-based pricing represents a more sustainable approach that:
- Aligns technology costs with business outcomes
- Supports unrestricted operational optimization
- Enables true scalability without artificial barriers
- Creates stronger partnerships between WMS providers and clients
Logiwa’s approach to pricing reflects a commitment to building partnerships with our clients. By tying our revenue to the number of orders shipped rather than the number of users in the system, we share a stake in our clients’ growth. This creates a mutually beneficial setup that encourages optimal resource allocation, enhancing overall operational scalability.
By choosing a WMS with volume-based pricing, companies can access a system that supports their growth without the obstacles of per-user fees. The result? A scalable, efficient, and growth-oriented WMS solution that maximizes operational potential and aligns directly with the key driver of value in fulfillment—orders shipped.
Ready to learn more about how volume-based warehouse management system pricing can benefit your operation? Contact our team to discuss your specific needs and see how modern WMS pricing can support your growth goals.
