Navigating Applicant Tracking System Costs in 2024

Ugh. Yet another software platform that costs money? Usually, that sentiment would garner a room full of head nods, but when it comes to an applicant tracking system, the “ugh” simply isn’t justifiable.

Applicant tracking software (ATS) is an integral platform for candidate sourcing, recruiting, and hiring the best talent. It automates the recruitment decision-making process, delivering blistering evaluation speeds and data-driven insights. 

Okay, an ATS is crucial, but how much does it cost? How do you add the new software to the budget? And what can we do to reduce costs? 

This guide explores everything you need to know about ATS prices, budgeting, and cost-saving strategies. Plus, we break down the ROI of using an ATS, especially one flexible enough to support any industry, like Gem. 

So buckle up and get ready to modify your P&L to include an invaluable asset to your HR team.

Breaking Down ATS Costs

So, how much does it really cost to add applicant-tracking software to the tech stack? Unfortunately, there are quite a few factors that can impact the pricing, including initial setup and implementation fees, subscription charges, and add-ons. Here’s a glance at what companies can expect to spend based on their staffing numbers: 

• Small businesses (less than 100 employees): Between $200 and $3,000 annually.

• Medium-sized businesses (100-500 employees): Between $3,000 and $15,000 annually.

• Large-sized businesses (500-5,000 employees): Between $15,000 and $50,000 annually.

• Enterprise-level organizations (5,000+ employees): As much as $125,000 annually. 

While free ATS options are available, few are adequate for day-to-day recruiting activities, and most have significant functionality limitations. A better option is to find the right ATS platform that meets your hiring needs at a price that matches your budget. 

Key Factors Influencing ATS Pricing

The wide range of potential costs associated with an ATS may cause some professionals to scratch their heads. A deeper look at the key factors that influence applicant tracking system pricing reveals what creates the discrepancies, including the various ATS pricing models that providers use, such as: 

• Flat-rate pricing – A single, set price based on company size that enables hiring teams of all sizes to use the software as much as they need. Flat-rate pricing is pricey, meaning only large businesses and enterprise organizations with long-term contracts opt for these pricing models. 

• Pay-per-user (pay-per-employee or pay-per-recruiter) – ATS software charges based on the number of users in your organization. These models are great for small and medium businesses with small hiring departments. 

• Pay-per-vacancy—This model is also known as pay-per-job opening, per job posting, or per requisition. It is ideal for companies with low hiring volumes and infrequent open positions. 

• Pay-per-module—This pay-per-service structure allows companies to pay for individual components as they become necessary. Pay-per-module services benefit simple platforms, customizable systems, and specialized use cases, like onboarding. 

Outside of pricing plans, a handful of other factors play into the overall costs of implementing an ATS, such as: 

• Initial setup, implementation, integrations, or additional support. 

• Add-on features like requesting background checks.

• Industry-specific features or requirements.

• Added security protocols. 

• The level of customization and scale.

• The level of access to your provider, such as dedicated customer support or self-serve options.

A general rule of thumb is that the larger the business and the more you expect your ATS to do, the more it will cost. Fully customized solutions are great, but building a platform from a template can be more realistic regarding total cost. 

How to Budget for an ATS

We mentioned that the best applicant tracking systems can be expensive, but with proper planning, you can make room in any human resource budget for an option that meets your specific needs. The first budgeting step is to build a rock-solid business case for investing in a new ATS. 

With a solid business case, you can determine your business needs and what you hope to obtain from the new software. Once you know what you’re looking for, you can set a budget for software that meets those needs. 

Likewise, you’ll use your business case to gain internal buy-in from ownership, hiring managers, or other vested stakeholders. Establish a shortlist of available ATS vendors at your budgeted price point and start exploring demos or trials of each product. 

When composing your budget, be sure to include the long-term costs associated with forgoing an ATS, such as missed hiring opportunities, hiring unqualified candidates, a reduced talent pool, and increased hiring time. Balance these potential costs with the Total Cost of Ownership (TCO) to dial in your final budget numbers.

Cost-Saving Strategies When Choosing an ATS

As an ATS is such an integral part of your hiring success, you don’t want to skip out on quality in favor of a few cost-saving measures. Instead, consider the following cost-effective strategies you can utilize that won’t handcuff your performance:

• Cloud-based options over on-premises – On-premise software requires software licenses, on-site infrastructure, ongoing maintenance and management, and expensive hardware upgrades. Cloud-based software solutions put the back-end requirements on the provider, reducing the ATS overhead costs. 

• Must-haves versus nice-to-haves – Prioritize must-have features at the expense of bells and whistles. You can always use any leftover budget to invest in nice-to-have features that extend beyond the necessities. 

• Demo, Demo, Demo – Request demos from several providers, ask all the questions, and negotiate favorable terms when securing deals. Don’t be afraid to put a software provider through their paces. 

• Bundle recruiting software tools – An ATS is likely only one component of your recruiting tech stack, and finding ways to bundle can save you money. For instance, you can invest in Gem’s ATS and recruiting CRM to create a unified platform that will save you money in the long term by packaging two critical platforms together.  

Gem also offers tools that help you optimize and calculate your recruiting ROI. Of course, you can also request a demo from Gem to experience the software first-hand and learn why major corporations turn to Gem to source and hire the best candidates. 

The ROI of Investing in a Quality ATS

The best ATS platforms offer hiring teams new capabilities that attract top talent and save hours on time-consuming admin tasks. Indeed, those two benefits alone are enough to justify the cost of an ATS, but let’s take a look at some other perks of the platform: 

• It automates workflows and significant portions of the recruiting and hiring process, including evaluating candidate profiles, parsing resumes, assigning assessments, sorting applicants, scheduling interviews, running video interviews, handling rejection notifications, posting jobs, and sending offer letters. 

• It improves the candidate experience by personalizing interactions, reducing friction, and increasing hiring speed, leading to lower 30-, 60-, and 90-day turnover rates.

• Reduces time and monetary spending on job boards and recruitment marketing. Helps identify the highest-performing recruitment channels. 

• It sources more qualified candidates who are the right fit for job openings, improving long-term retention and reducing costs from lost productivity. 

• Streamlines employee referrals, social media recruiting, job board posting, trend analysis, job description updates, and job matching to improve the effectiveness of recruiting channels. 

As replacing employees costs U.S. companies nearly $1 trillion, the return on investment for hiring better candidates with the help of an ATS is almost unmeasurable. Luckily, we can measure it, and the reporting dashboard available in your ATS can give you an exact number along with other vital metrics that display your recruiting team’s performance. 

Comparing ATS Costs Across Different Industries

It can be easy to assume that an ATS only benefits office-type jobs or jobs with high recruitment volumes. Still, the reality is that applicant-tracking systems benefit businesses in all industries. For example, pharmaceutical sales companies use an ATS to attract highly specialized candidates from tech or fintech firms. 

Likewise, manufacturers use ATS platforms to highlight employer brands, fill technical roles, and source candidates with diverse backgrounds. A financial services firm finds utility in filtering candidates based on required certifications and producing candidate scorecards. 

Regardless of industry, the cost of an ATS is still dependent upon the business size, the type of pricing model, and any add-on features. Few providers support such a broad range of industries, which makes Gem all the more unique and ideal for any organization. 

Maximizing Value with Gem’s ATS Solution

The benefits of an ATS make it almost a necessity in businesses of any size, from start-up to enterprise-level. The automation features, sourcing capabilities, integration options, scalability, and pricing options make it an appealing solution for hiring the best candidates. 

While it is still a business investment, an ATS offers competitive advantages, better candidates, and a noticeable return on investment. Plus, with a few strategies, like opting for cloud-based solutions and foregoing some features, you can make the platform an even more affordable part of your talent acquisition strategy. 

Don’t settle for an underperforming ATS just because it’s free. Check out Gem’s ATS, a recruiter’s new best friend. Gem provides comprehensive recruiting software in a user-friendly package without breaking the bank. Contact us today to implement Gem into your talent management strategy.