The most common question people have top of mind when beginning their research into a GPS tracking system is, "How much will it cost?" As you engage in your process to find the right solution for you, the first rule of thumb is to focus less on the overall cost of a GPS tracking system and more on the value you'll derive. Cheaper solutions will cost less upfront but may limit your ability to reap further efficiencies. The adage, "You get what you pay for," is certainly true here.
This article will help you understand the cost factors for a GPS tracking system to maximize your return on investment (ROI).
GPS Tracking System Cost Breakdown
The cost of a GPS tracking system can generally be dissected by:
- Monthly airtime or usage
- Feature sets
Yet how these costs impact your bottom-line payment varies widely. Other variables to consider are:
- Contract-type and length
- Number of data points to monitor
- Vehicle or equipment type
- Number of units installed
- Data refresh frequency
- Integration with other business systems
We'll go through each of these points in this article. While not a direct cost, It's vital to also remember to account for your staff's time managing the system.
GPS tracking system contracts generally come in two types: perpetual license or subscription-based.
A perpetual license is generally granted when you opt to buy your system. A perpetual license allows you to use the hardware with no restrictions — even if you end the contract with the provider — though you may need to pay extra for tech maintenance, upgrades, or replacements.
A subscription is more like a rental or lease. A subscription-based license entitles you to use the software and hardware as part of the monthly fee, but only for the length of the contract with the provider. The monthly payment usually covers any updates and replacements, though damaged hardware may incur an extra cost.
While your initial cost will be lower in a subscription plan, you may end up paying more in the long run. Do the math to figure out the inflection point where the subscription payments' total exceeds the costs of a perpetual license plan. If you're comfortable with a longer-term plan, you may save money by buying the units outright.
Contracts generally run in month-to-month, one-year, or multiple-year agreements. Providers may subsidize the upfront hardware costs and installation costs for longer contracts. While a longer contract could afford you a better monthly deal, it may not be in your best interest if you anticipate flux and uncertainty in your business.
Before you enter into the contract, find out if the provider offers a "cooling-off period" in which you can cancel the plan with a minimal penalty within a specific time. If you choose a more long-term contract, ask for the termination penalty if you decide to break the contract. Even if you've surpassed the contract length and have abided by all the rules, find out what fees may be in store when you exit the system entirely. Some providers even have auto-renewals built into their rental agreements, so check how this works if you choose to rent the hardware.
Also, be sure to ask your provider upfront how training and technical support are handled and priced.
There are too many cost and contract permutations to consider in this article. Therefore, a good practice before you sign on the dotted line is to ask: "Are there any fees that exist outside of the contract?" If the answer is yes, make sure you get them written into the contract.
A standard GPS tracking device can cost as little as $50 or over $200 for devices that connect to other systems, larger assets, or vocation-specific applications.
Sticker shock? Don't worry — smaller business fleets can expect to pay about $100 per unit, but many variables dictate price even then.
GPS tracking devices are usually divided into two main types: hardwired devices, which require a three-wire connection (ground, power, and ignition), and plug-n-play (PNP) devices that connect directly to the OBD-II port. Your system requirements will dictate the type of hardware and thus installation. The hardwire devices offer more of an array of add-on options like diagnostics, driver ID, and senors.
Other hardware can also include dashcams, electronic logging devices (ELDs), temperature monitors, and asset and trailer trackers.
A PNP device does not require any hardwired connections. It simply plugs into the OBD-II port typically located inside the cab underneath the dashboard. It can receive engine diagnostics by reading diagnostic trouble codes (DTCs). PNPs are a great option if you rent vehicles or rotate them into your operation as they can easily transfer between vehicles. However, PNP devices lack external ports to access other vehicle operations or add features beyond what comes preset.
On the other hand, a hardwired device could take up to an hour for a professional to install and potentially longer if you do it yourself. A hardwired device goes under the hood out of sight of the driver, so it is, therefore, more secure. Installations generally come with tamper-proof substances that will let you know if someone tries removing the devices, as well as alerts within the software to notify you.
Hardwired devices allow the system to remotely operate vehicle functions such as door lock/unlock or remotely engage the motor, and monitor seatbelts, PTO status, and temperature sensors. They can also communicate with ELDs, video cameras, and key fobs for driver identification.
Real-time devices transmit data send information every second, instead of a predetermined interval such as every two or 15 minutes. This aspect means that they utilize a significant amount more data and are therefore more expensive. You'll need to do a cost-benefit analysis to see if real-time tracking is necessary for your fleet circumstances.
As more manufacturers incorporate modems into their vehicles at the factory, aftermarket devices — and thus hardware costs — will drop and eventually disappear. Yet, the data coming from various manufacturers' modems still needs to be normalized for use. As provider-sourced modems do this for multiple makes and models already, they'll remain the norm for the near future.
The only cost to install a PNP device is the time it takes an employee to plug it into the OBD-II port of each vehicle. Installing a hardwired device is more complicated and costs anywhere from $50 for a simple device-only install to $200 per vehicle for more involved integrations.
The installation price can vary by extra hardware to install, the number of locations the tech must visit, and the number of vehicles. As mentioned, providers may subsidize installation costs for longer-term contracts with higher monthly subscription fees.
Providers will suggest third-party contractors in your area for the install, or you can source your own contractors. You might consider handling installation through your internal team. Don't underestimate this decision!
An incorrect or poor installation job will cause reporting headaches and device failures. When you need to reinstall another device, you may incur added hardware and installation costs and suffer the downtime that will negate your initial savings.
The first time you land on the webpages of many GPS tracking system providers, you'll encounter a series of questions to deliver information targeted to your general parameters. You'll select the industry closest to you:
- Pest control
- and your basic fleet composition:
- asset type (cars, vans/trucks, buses, heavy-duty trucks, trailers, equipment/machinery)
- number of assets to track (1-10, 11-49, 50-100, 101+)
- main features needed (tracking, maintenance, dispatch/routing, ELD, dashcam)
And then you'll leave your email to receive a quote. When that email comes, expect plans that address smaller business fleets with pre-bundled feature sets. The choices don't stop there, however. You'll work closely with a provider to marry the right system functions to your business challenges and budget. You can also access other sections of our GPS tracking system guide for input.
For business fleets, basic plans include essential GPS tracking functions such as vehicle location, geofencing, speed, alerts and notifications, idle time, trip logs, and basic reporting. However, what one provider sells as an add-on, another might include as part of its basic package.
Higher-priced tiers can be bundled or menu-based. They typically add features like vehicle diagnostics, in-cab coaching, driver scorecard programs, customized reporting, panic alerts, and roadside assistance.
Airtime and Usage Costs
After paying the upfront costs for hardware and installation, your monthly costs include cellular network data use. Cellular data costs depend on the amount of information transfer, including the number of times the GPS tracking device communicates with the server, from real-time to set intervals such as a few minutes to an hour.
Your provider’s packages will come with a standard data refresh interval. If you desire a faster or more frequent update interval based on your fleet needs, ask your provider — just be aware that your per-month cost for cellular data usage will increase exponentially.
The type of data transferred includes vehicle location, breadcrumb trails, fuel consumption, and idle time. Other driver behavior information comes from an accelerometer and provides speeding, excessive acceleration, hard braking, and hard cornering.
Some GPS tracking systems are "passive," meaning the data while on the road. Instead, the data transfers manually. Those systems are beneficial for analyzing driver behaviors. They incur cellular data charges, but they negate the powerful benefits of real-time tracking.
As a business fleet, you might be comfortable starting with a basic feature set. Yet as your business grows and requires more from a GPS tracking system, you'll want to investigate new features that will drive further efficiencies.
You may want to integrate with other systems in your organization, such as dispatch, sales, CRM, human resources, and field service management. Talk to your provider about application program interface (API) integrations, which may necessitate a hardwired device — not PNP — from the get-go. Understand the provider's API integration costs now, if there are any, even though you may be going with more basic functions at the outset.
How to Obtain Maximum ROI from a GPS Tracking System
Deriving maximum ROI out of your GPS tracking system requires taking an active part in managing it after installation. Work with your provider to understand what the system is telling you about your fleet.
- Use that data to formulate, communicate, and benchmark KPIs.
- Get your managers/office administrators involved.
- Configure alerts to prevent dangerous driving behaviors immediately.
- Don't schedule too many alerts or reports to avoid data overload.
- Schedule driver meetings to discuss performance. Analyze reports to see where you can improve.
You'll begin to realize the benefits of a GPS tracking system almost immediately after installation. But don't stop there — the more you learn from your system and apply new functions to your fleet, the greater the efficiencies you'll realize above the cost you pay.