A Guide to Distribution Software Pricing Models

If you’re a supply chain manager or logistics coordinator, evaluating distribution software options and selecting a pricing plan that aligns with your budget and business needs can be complex. Choosing software involves carefully evaluating several factors, such as overall budget, number of users, nonnegotiable features, and total cost of ownership.

With this in mind, we’ve created a guide to simplify distribution software pricing. We provide clarity on the costs associated with top-rated distribution solutions, including pricing structures, subscription fees, implementation costs, and additional expenses. By offering a detailed pricing comparison, we aim to help you make an informed software purchase that fits your budget and distribution needs.

What are the different types of distribution software pricing models?

Distribution software solutions have different pricing plans or ranges determined by several factors, such as software features, number of users, required infrastructure, business size and type, training availability, deployment options, custom branding options, available integrations, and storage capacity. Here are some common distribution software pricing models:

Subscription license

You pay a monthly or annual fee to use the software for a set period of time. Pricing is typically based on the number of users per month. The subscription model is commonly used for cloud-based deployments where the system is hosted by the software provider on their servers and can be accessed by your users on compatible devices, such as laptops, smartphones, and tablets, via the internet.

Some common types of subscription pricing options include: 

• Per user: Pricing is based on the number of users accessing the software. It can be either a flat fee per user or a tiered structure where the cost per user decreases as the number of users increases.

• Tiered: Different pricing tiers based on the software features included, with higher tiers offering more advanced functionalities.

• Flat rate: A single, fixed fee for a specified period, regardless of the number of users or projects.

• Pay as you go: Charges are based on the actual consumption of software resources, such as the number of transactions, the volume of data stored, or the frequency with which certain features are used.

Perpetual license

Under this pricing model, you pay a one-time upfront fee for the permanent license to own and use the distribution solution. The fee can vary based on the number of users. The perpetual pricing model is commonly used for on-premise deployments where the software is hosted and maintained in-house on your own servers.

Free and open-source license

These pricing options are commonly used by small-business owners or manufacturing and distribution managers with limited budgets and resources.

• Freemium: A basic version of the software is offered for free, with premium features, add-ons, or additional services available for a fee.

• Open source: The software source code is freely available, allowing users to modify and distribute it. While the software is often free to use, you may incur implementation and maintenance costs.

Common subscription pricing tiers for distribution software

Under the subscription model, per-user pricing is the most commonly seen. You pay a fixed fee for every user seat, and prices increase as the number of user seats increases. Per-user pricing plans are typically of three types, according to analysis by our research team.

• Entry-level plans (1-10 users): Cost up to $321 per month and offer access to standard software features. These plans are suitable for small businesses with basic distribution needs, such as inventory management, order management, and reporting.

• Mid-tier plans (10-100 users): Cost up to $761 per month and offer advanced features such as automated reordering, customer relationship management, and advanced reporting. These are suitable for businesses that have outgrown basic distribution tools but don’t require the full range of functionality offered by enterprise-level systems.

• High-end plans (100+ users): Cost up to $1,478 per month and offer a range of advanced distribution capabilities, including unlimited features from entry-level and mid-tier plans, supply chain management, integration with ERP software, and customizable dashboards. These plans suit larger enterprises with complex distribution networks, high-volume transactions, and extensive customization and support needs.

For reference, below is a snapshot of the prices of the most reviewed distribution solutions with subscription pricing plans. These products are taken from the most recent Software Advice FrontRunners report for distribution software.*

Note: To find out the subscription price of each tier (entry-level, mid-tier, and high-end), we calculated the median value based on their respective pricing mentioned in the product pricing table above. In this case, the median represents the middle value of the monthly fee for each pricing tier when all the top-rated software solutions are considered. While average pricing may be easily skewed by outliers, the median value gives users an understanding of the midpoint of ranges they're likely to encounter.

What are the upfront and recurring costs associated with distribution software?

Upfront costs are the initial expenses incurred when purchasing or subscribing to software, such as licensing, installation, setup, and training. The graphic below illustrates the primary upfront costs associated with distribution management software.

Recurring costs are the ongoing expenses associated with using software, such as subscription fees and maintenance costs. These costs may be charged monthly or annually and can also include expenses for upgrades or additional user licenses. The graphic below shows the primary recurring costs associated with wholesale distribution software.

What are the additional costs associated with distribution software?

These additional costs are common across different vendors and pricing models, so it’s important to include them in your budget.

• Data migration: These costs are often incurred when transferring existing data, such as inventory records, customer information, and transaction histories, into the new software. Data migration can be complex and requires specialized tools or services to ensure data accuracy and integrity. For example, if your company is moving from a legacy system to a cloud-based platform, you might need to pay for data cleansing and transformation services to align your old data with the new software’s format.

• Training: Implementing new software often necessitates training sessions for employees to familiarize them with the system's features and functionalities. Training fees can include costs for online tutorials, in-person workshops, or even hiring external trainers. For instance, large distribution companies might invest in several days of on-site training for their staff to ensure smooth adoption and minimize disruption to operations.

• Hardware and IT: These expenses may arise if the new software has specific infrastructure requirements. They could involve upgrading servers, purchasing additional storage, or enhancing network capabilities to support the new system. For example, your company might need to invest in high-performance servers to handle the increased data load and processing demands of a new, more robust wholesale distribution software solution.

• Maintenance and upgrades: These are ongoing costs that must be factored into the total cost of ownership. Maintenance fees cover regular software updates, bug fixes, and technical support, ensuring the system remains up to date and functions optimally. For example, a software provider might offer a maintenance contract that includes quarterly updates and 24/7 customer support, which would be essential if your wholesale distribution company operates on a global scale.

How to find the right pricing plan for distribution software

• Evaluate your budget. Review both the initial costs and ongoing expenses associated with the software. A clear budget helps avoid overspending and ensures you can afford any additional costs, such as training, support, and upgrades. By aligning your budget with the software features and scalability, you make a sound investment decision that supports your distribution operations without straining your financial resources.

• Assess your organization’s size and distribution complexity. A basic software plan might suffice if you run a small business with straightforward distribution needs. Basic plans typically offer essential features at a low cost. Conversely, if your business is larger or deals with complex distribution logistics, such as multiple warehouses, diverse product lines, or intricate supply chain processes, you’ll likely need a more sophisticated solution. Larger organizations or those with complex needs often require advanced features such as customized reporting, multilocation management, and enhanced integration capabilities, which come with a higher price tag.

• Determine the essential features for your distribution processes. Creating a list of must-have features will help you compare software options and pricing plans more effectively. For instance, if you have a wholesale distribution business, features such as real-time inventory level tracking, warehouse management, order fulfillment, demand forecasting, and automated reordering are must-haves. Ensure your chosen plan aligns with your distribution needs without paying for unnecessary extra features. However, consider any additional features that might be beneficial as your business grows, even if they are optional.

Common questions to ask when choosing distribution software

Below are a few questions you should ask software providers when evaluating the pricing plans of the distribution solutions you’ve shortlisted.

• Is there a free trial or demo version of the software?

A free trial or demo lets you explore the software features and functionality firsthand without committing to a purchase. This hands-on experience helps assess whether the software aligns with your distribution needs, fits your current workflows, and integrates with your existing systems. Taking advantage of a trial or demo can reduce the risk of making a wrong investment and ensure you choose a solution that supports your primary objectives.

• Are there any additional costs for workflow customization? 

Customization capabilities allow the software to be tailored to fit your specific distribution needs, whether integrating with other systems, setting up unique approval processes, or adjusting inventory management rules. However, these features may come with additional costs. Ask about the range of customization options available, such as adaptable user interfaces and modifiable reports and dashboards. Also, check whether these customizations are included in the base price or require extra fees and whether specialized technical knowledge is needed, which might add to your overall costs. 

• Is the software scalable, and what are the associated costs? 

Ask how the software handles increased transaction loads, larger inventory datasets, and additional users and whether expanding your usage will require upgrades or additional licensing fees. Also, check the costs associated with scaling, such as potential upgrades or additional licensing fees. Understanding these potential costs upfront will help you budget effectively and ensure the software remains a cost-effective solution as your business grows.