SaaS HR software is cloud-hosted and paid for through a recurring subscription, rather than a one-time purchased license running on a company’s own servers.

How pricing typically works

SaaS is now the dominant commercial model for HR software, typically structured as a recurring fee on a PEPM, per-employee-per-month, basis. The older perpetual-license, on-premise model involved a large upfront one-time fee, with the buyer then running the software on their own infrastructure, and that model has largely become a legacy pattern, mainly persisting at large enterprises with existing infrastructure already paid for. The real advantages of SaaS are lower upfront cost, the ability to scale spend up or down with headcount, and automatic updates, new features and security patches included in the subscription rather than sold as a separate purchase.

Frequently asked questions

Is SaaS the same as cloud HR software?

Nearly, in practice they’ve merged for most buying purposes, though SaaS specifically refers to the subscription licensing model, while cloud refers to where it’s hosted.

Does SaaS pricing always use PEPM?

It’s the most common structure, though some vendors use flat tiered pricing instead, worth checking which model a specific quote actually uses.

Is on-premise HR software still sold today?

Rarely as a new purchase, it’s now mostly a legacy pattern among large companies that already invested in the infrastructure.

See PEPM pricing for how to actually compare SaaS vendor quotes.