The Problem With Fixed-Rate Expenses in Mobile Workforce Management Solutions

Managing expenses is critical for any business committed to long-term success—hopefully, yours falls into that category! For organizations with large mobile teams, such as home healthcare providers, field sales representatives, or community service organizations, expense management presents unique challenges. To meet these challenges, many companies are turning to advanced mobile workforce management solutions.

One significant issue facing organizations with mobile workforces is seasonality. Industries with mobile employees often experience fluctuating demand. For instance, businesses may hire additional mobile workers during the summer or holiday seasons or see spikes in employee travel expenses at specific times of the year. These variations make some months inherently more expensive than others.

When managed correctly, organizations can offset high-season expenses with savings during slower periods. But are the mobile workforce management solutions you use flexible enough to adapt to these fluctuations? For instance, what pricing model do they use? Do they charge a flat rate per year or month, or are your expenses, like your business model, variable?

In this article, we’ll examine the difference between fixed-rate and variable pricing in mobile workforce management solutions, and the best options for organizations with high numbers of employees in seasonally variable fields. 

What is the Fixed-Rate Pricing Model?

Mobile workforce management solutions that use fixed-rate models for pricing sell enterprise software to businesses at a predetermined, fixed monthly cost, which does not change at any time during the duration of the contract regardless of actual usage. In today’s increasingly high-tech (and increasingly specific) business market, there is no shortage of software solutions designed to help businesses manage their mobile workforces, but most enterprise software companies use annual contracts. 

This means that you’ll be paying a fixed-rate price every month for however long that contract lasts, even if expenses for your business vary widely from month to month or from season to season. Many vendors prefer using fixed-rate pricing models, as it offers a preset price that can be determined ahead of time, with clearly defined scope and expectations. Fixed-rate pricing can also help define a budget for the use of these mobile workforce management solutions. However, the fixed-rate pricing model often proves problematic for businesses whose needs vary throughout the year. 

How Fixed-Rate Expenses Cost Your Company Money

Uneven Utilization 

The first and most obvious issue with fixed-rate pricing for mobile workforce management solutions in highly seasonable fields is inconsistency with which these businesses benefit from the solutions in question. If your company has more employees or markedly higher business expenses in certain months or seasons, then usage of the software you use to manage those expenses will change throughout the year. The price you’re paying for that software, however, will not. It is likely that you’ll end up overpaying for expense management software in months where you have markedly less mobile employees or less business activity, which could cause financial damage in the long run.

Vulnerability to Unforeseen Events

Unexpected national or global events cause market disruptions all the time. Global pandemics, for example, can cause (and have caused!) supply chain issues, shortages, and disruptions that severely impact businesses—and by extension, their expenses. Economic slowdowns or recessions, wars, and large-scale national disasters can also severely impact commerce. Fixed-rate pricing models cannot adapt to unexpected changes in business activity. If your organization is hit hard by something like this, using software with fixed pricing will cause your wallet to get hit hard as well during an already vulnerable time.

Cash Flow Inefficiencies

Fixed-rate model pricings also often have negative or limiting impacts on cash flow management within an organization. Flexibility is a huge asset for companies with expenses that vary depending on the time of year and fixed rates are, by their very nature, inflexible. Having to pay a prefixed price for expense management software could prevent a business from reallocating funds to other, higher-priority sectors during slower months.

Why Variable Cost Models Are Better for Mobile Workforce Management Solutions

On the other end of the pricing spectrum, we have the variable cost model. Unlike fixed-rate pricing, which offers a product at a static, predetermined cost, variable cost pricing alters the price of a product or service based on existing supply and demand. When it comes to enterprise software, this pricing model, exactly as it says on the tin, dictates that the monthly price your business pays for mobile workforce management solutions will vary depending on levels of usage.

Businesses that use expense management software that utilize this pricing model see several advantages. Possibly the biggest and most obvious of the boons offered by variable pricing is that it tailors the monthly cost of using the software in question to actual recorded activity. Instead of making businesses pay a fixed cost for mobile workforce management solutions, even in months or seasons where that solution might not be getting a lot of use, variable pricing lets usage help determine pricing. 

This model allows businesses exponentially higher seasonal alignment with their expense management software. In turn, the seasonal alignment between businesses and enterprise software that utilize variable pricing allows that business a high level of flexibility, enabling the product to adapt to the needs of the organization as they grow or change. Financial flexibility also means far greater financial efficiency, so your company doesn’t have to worry about ironically breaking the bank in its efforts to effectively manage and supervise its expenditures. 

Benefits of Adopting Variable Cost Models With CompanyMileage 

If you make the wise business decision to choose options that offer variable pricing from the wide market of available mobile management workforce solutions, the next logical question follows: Which to choose? Luckily, you won’t have to look far! CompanyMileage, a fully automated, streamlined solution for mileage reimbursement, offers a suite of software solutions designed to make expense management as painless as possible. And don’t worry, that extends to pricing as well. 

At CompanyMileage, we embrace the variable cost pricing model for the businesses we serve, because we know and understand that many businesses that manage large numbers of mobile employees operate in fields with high levels of flexibility in seasonality. We offer straightforward, affordable month-to-month payment structures without long-term commitments, so that your organization is never locked into a contract it doesn’t need or falls outside of the limitations of your budget. 

This also helps our clients reduce unnecessary expenditures during lower-activity periods or seasons within their field. CompanyMileage and its software are also highly scalable. We’re devoted to serving as the best asset possible for your business, and that means built-in adapability, so that our products will always meet your organization’s needs, whatever they may be at that point in time.

CompanyMilage Offers Smarter, Cost-Efficient Solutions for Mobile Workforce Management Solutions

When you’re managing a mobile workforce prone to variations in activity, you’re going to want mobile workforce management solutions that can go with the flow. Don’t worry, we’ve got you covered! Instead of an annual contract, customers of CompanyMileage’s travel expense management software, SureMileage, pay monthly based on how much use they actually get out of the platform. You only have to pay when users submit mileage and other expenses for reimbursement, so if employees are driving less one month, your company will pay less. 

When your mobile workers are driving more, CompanyMileage will help you save money there, too. Our novel approach to mileage tracking uses point-to-point calculations to calculate the best route between business-related travel points and from there the amount for reimbursement, eliminating the opportunity for inflated mileage tracking, duplicate reporting, or trying to claim reimbursement for ineligible travel. 

Our automated system for submitting and approving expense reports also saves everyone time. With SureMobile, our mobile app, employees can easily create, edit and submit reports in a matter of minutes. Our QuickCapture feature makes mileage tracking even easier, letting workers submit trips with the literal tap of a button. Once submitted, expense reports move through an automated workflow, easily customizable to meet the needs and structure of your business. And since SureMileage integrates with all major accounting software, you can issue reimbursements faster than ever. 

It’s time you invest in mobile workforce management solutions that meet the needs of your mobile workforce. Request a demo with CompanyMileage today to see that solution in action!