Why would a company spend that much on TMS software when there are plenty of cheap alternatives on the market? Well, let's go through the pros and cons of cheap transportation management software to figure out.
Investing in software for your growing trucking company is a difficult task - not only do you have to figure out which features you need and don't need, you need to figure out a budget as well. Paying too much for your transportation management system (or TMS) can harm your bottom line, and saddle your operations with tons of unnecessary features, while paying too little may get you into trouble with hidden fees, poor customer service, and difficult to use software.
In fact, according to research conducted by industry experts at Deloitte, IT leaders through all industries are increasing their technology spend - sometimes up to over 7% of annual revenue - in 2020 and beyond. This means that for a company doing $5 million gross in a year, they could be spending upwards of $350,000 annually on software alone!
Why would a company spend that much on TMS software when there are plenty of cheap alternatives on the market? Well, let's go through the pros and cons of TMS software to figure out:
This one doesn't take a genius to figure out - using free, or low-cost software can reduce your initial overhead costs, make starting up a business cheaper, and help you keep more money at the end of the month. Sometimes there's just no way around it - if you can't afford to pay for a piece of software, it's usually in your best interest not to buy it (as it is with anything else).
However, make sure to consider exactly what the costs of software entail. Imagine you're paying $300 a month for your TMS. That's $10 a day - the price of a sandwich these days. How much time does the TMS save you? How much additional business does it bring you? Are you getting more than $10 (a sandwich's) value from that TMS?
What's the saying? There's no such thing as a free lunch. While cheap TMS software might be light on your wallet at the beginning, the hidden costs can spiral quickly with surcharges for extra customer support hours, onboarding, additional user seats, additional shipment tracks, additional integrations, additional features, it goes on and on!
Companies will use the upfront value of a "free TMS" to entice you, and make the money back in the long term. So, while committing to a cheap TMS might save you money right now, it could cost you big in the long term.
What's the difference between a $10,000 car and a $100,000 car? Of course performance is better, but not 10 times better! You pay a premium for great design - ease-of-use, convenience, and intuitive UI. In a car, these are usually luxury features - but in software, its a matter of basic usability. A poorly designed TMS can make booking a shipment take twice or even three times as long - and this adds up!
Imagine if you had to process 10 shipments a day. Each shipment takes ten minutes with a cheap TMS, and five minutes with a well-designed one. Over a 365 day year, you'll have saved over 304 hours - over 12 whole days! Even though it was only five minutes per task, it quickly adds up. That's time you can never get back.
And that's if they provide any to begin with. Maintaining great, always-available customer support from real people (who aren't on the other side of the world) is expensive. And that's something that the makers of cheap software can't afford to provide. Having trouble booking a shipment? Better hope you have a ton of experience working with software. Notice a problem and want it fixed? You'll probably have to find a workaround.
Of course, at FreightPath, we're biased towards ourselves (although not by much). However, even if you decide that FreightPath isn't the right TMS for you, there's a couple of things you should take into consideration when you decide whether or not to invest in a quality TMS:
What the hell is SaaS? SaaS stands for Software as a Service, which means that instead of paying a large one-time installment upfront for your software, you pay for it like you would pay a service bill - on a monthly or annual basis. Why would you want a monthly payment instead of a one-time license? It's actually pretty simple.
Your TMS is something that you'll be using on almost a daily basis - so you've got to be comfortable with the daily experience of using it. This means looking beyond what the software LOOKS like - consider what it's like the USE the software. Make a list of all the situations that you want your TMS to handle, and ask your account manager if they can go through booking and tracking shipments with you to handle each of the situations. Evaluate how difficult each on was, and consider that you'll have to go through the process each time you book a shipment for that specific situation.
Even better, ask if there's a money-back period for the software - a week or two where you can use the full capability of the system and return for a full refund if you're not satisfied with the result. Not only does this lower your risk as a buyer, you'll be able to see how good the company's customer support is!
Buying TMS software, like any other software, is hard. There's tradeoffs to everything, and you have to make sure you're making the choices that best benefit your specific logistics situation. When you're in doubt, consider talking to an expert before you buy - get to know the exact capabilities of the software platform, and figure out your fit with the product that they're providing.
Get started on your journey today - talk to one of our TMS specialists for free or see what plan's right for you