Do you know how much your telecom expense management (TEM) system will cost? It is not always simple to ascertain each vendor’s price structure. There are sometimes even hidden expenses. Before proceeding, ensure that you completely comprehend the price concept of a TEM service.
A Summary of TEM Pricing Structures
You should be aware of four basic price structures: contingency, fixed hourly rates, fixed licensing software payments, and fixed-scope-defined fees. Much of what we shall say about TEM pricing models are based on Aberdeen Group research.
Some TEM providers are compensated on a contingency basis, which means they take a percentage of the savings generated by billing problems and other telecom-related issues. The normal contingency fee ranges from 20% to 50% of the savings. If no savings are realized, no money is paid to the TEM provider under this pricing scheme. This methodology can be challenging since the vendor’s priority may be cost reduction rather than addressing inefficient procedures.
- Hourly Rates That Are Fixed
In contrast to the contingency paradigm, many TEM providers charge set hourly rates for consultation services and manual activities. The fixed hourly fee model is frequently chosen by businesses because it avoids the potential conflict of interest that comes with the contingency structure (i.e. focusing only on cost savings). When manual telecom audits are performed, fixed hourly costs are sometimes levied.
- Fees for Fixed Licenses and Software
Vendors may charge a one-time licensing fee if TEM software is utilized. Maintenance and update fees are often invoiced separately.
- Fees with a Fixed Scope
It is fairly usual for a company to use a mix of TEM software and consultancy services. A telecom specialist installs and manages a software solution in this hybrid manner. The consultant handles all physical labor, freeing up the enterprise’s time and resources. Numerous variables are evaluated in this circumstance to establish the scope of work. After determining the scope of service, the TEM provider will determine a set monthly cost.
Be warned that there are occasionally hidden fees.
If you are looking for a TEM solution, inquire about the expenses connected with system integration and customization. These expenses are frequently underestimated.