Picking a VMS is only half the decision, figuring out who actually pays for it is the other half. Here's how vendor-funded, client-funded, and hybrid models really compare, so you can choose the one that fits your program.
Budgets are tight, ROI is essential, and hidden costs can derail adoption. Fortunately, there are multiple ways to fund a VMS - and you don’t always have to pay entirely out of pocket. Understanding the benefits, trade-offs, and financial impact of each model is key to making the right choice for your organization.
The three main funding approaches are:
Modern VMS platforms, like Conexis VMS, support all three funding models - giving you the flexibility to choose or change your approach as your program evolves.
Vendor-funded VMS (also referred to as Supplier-Funded) means the staffing suppliers pay the software fee, typically as a percentage of labor spend billed to the client. Costs are often embedded in supplier bill rates, so the organization may not see a direct software invoice.
Tip: Vendor-funded doesn’t mean free - it just shifts who pays, not whether someone pays.
Client-funded VMS is a subscription-based model where your organization pays the software fee directly.
Hybrid-funded VMS combines elements of both vendor-funded and client-funded approaches. Part of the fee is paid by suppliers, and part is paid directly by the client.
|
Feature |
Vendor-Funded |
Client-Funded |
Hybrid-Funded |
|
Who pays |
Staffing suppliers |
Your organization |
Both client & suppliers |
|
Typical fee |
.5%–1% of labor spend *The pricing approach is the same, its just who pays that differs. |
.5% - 1% of labor spend *The pricing approach is the same, its just who pays that differs. |
Combination of both |
|
Upfront cost |
In some cases, the VMS requires you to pay a marketplace participation fee |
Yes |
Low to moderate |
|
Transparency |
Limited |
High |
Medium to high |
|
Flexibility to switch suppliers/MSPs |
Limited |
High |
Medium |
|
Internal approval complexity |
Low |
Moderate to high |
Moderate |
|
Common use case |
MSP-managed programs; Buyers implementing VMS programs
|
Procurement-led programs, Buyers implementing VMS Programs, mid-market & enterprise
|
Programs balancing cost and control |
While Vendor-funded programs are the most prevalent, there has been an increase in the number of Client-funded programs. Client funded VMS adoption is growing as organizations prioritized cost control, transparency and ROI.
|
Model |
Estimated % of Programs North America |
Estimated % of Programs Globally |
|
Vendor-Funded |
90% (2023) 76% (2024) |
76% (2023) 74% (2024) |
|
Client-Funded |
8% (2023) 23% (2024) |
13% (2023) 14% (2024) |
|
Hybrid-Funded |
2% (2023) 1% (2024) |
11% (2023) 12% (2024) |
Sources: SIA Global Landscape Report 2024, 2025.
The best funding model depends on your program priorities:
Giving your program freedom and flexibility to choose the best approach - or shift models as your needs evolve.
|
Model |
Pros |
Cons |
|
Vendor-Funded |
Low upfront cost, fast adoption, minimal internal approval |
Less transparent, limited flexibility, supplier margin pressure |
|
Client-Funded |
Full cost visibility, greater program control, easier vendor changes |
Requires budget approval, higher upfront investment |
|
Hybrid-Funded |
Balanced cost, improved transparency, reduced supplier pushback |
More complex contracts, requires coordination |
Choosing a VMS isn’t just about cost - it’s about avoiding rigid funding constraints. A platform that supports vendor-funded, client-funded, and hybrid models provides:
If you would like to explore your VMS funding options, contact us. We can:
Contact us to explore your VMS funding options today
Vendor-funded models have staffing suppliers absorb the software cost, typically built into bill rates. Client-funded models have your organization pay the software fee directly as a subscription.
Vendor-funded programs remain the most common overall, though client-funded adoption has grown significantly in recent years as organizations prioritize cost transparency and control.
Yes. Modern VMS platforms that support all three models let you change your funding approach as your program evolves, without needing to switch providers.
Everything You Need to Know about VMS Cost Savings | Guide
Case Study: How a Manufacturer Cut Costs by 27% and No Shows by 80% with Conexis VMS
Conexis VMS is an award-winning vendor management system built for organizations that want the power of enterprise software without the complexity or cost.
Leveraging the latest technology, Conexis VMS delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored, personal service you require. Learn more about our Company and what makes Conexis VMS different.
Conexis VMS is trusted by staffing agencies, MSPs and leading organizations to modernize and manage their contingent workforce programs. Here's why organizations choose Conexis VMS:
Modern VMS Technology - Built on the latest AWS microservices architecture and Open API
Fast Implementation - Get up and running in under a month, free setup and training included
Fully Branded White-Label VMS - Your Logo. Your Domain. Your Branded Communication
Flexible Pricing - No setup fees, with free implementation, training and account management
We work with teams at every stage, from first-time buyers to companies replacing outdated platforms that can't keep up. Either way, we'll show you what a modern VMS looks like, up and running in under 30 days.