When deciding whether or not to implement a software solution, it’s essential to first make sure that your company can actually afford a new program. The cost of ERP software is a significant factor that leads some companies to go with a different type of solution, such as a standalone CRM or manufacturing program. Multiple factors affect an ERP cost, from users and deployment to implementation tactics.

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SelectHub has the full breakdown of ERP costs, non-monetary charges, pricing models and crafting solid budgets so you can answer the question with confidence, “how much does ERP cost?”

Table of Contents

• ERP Basics
• Factors That Affect Cost
  • Number of Users
  • Add-ons/Customization
  • Implementation Strategy
  • Deployment Method
  • Training/Customer Support
  • Software Maintenance and Upgrades
• Implementation Cost Example
• Non-monetary Costs
  • Time
  • Productivity
• Pricing Models
  • Perpetual Licensing
  • Subscription
• Pricing for Top ERP Software
  • Oracle JD Edwards
  • SAP Business ByDesign
  • Sage X3
  • SYSPRO
  • SyteLine
• Hidden Costs
• Creating Your Budget
• Predicting Your ROI
• Final Thoughts

ERP Basics

Before we get into the cost of ERP software, it’s crucial to recognize standard features that are often part of an out-of-the-box package. When reading about these essential functions, it’s important to note that availability and specific capabilities vary from vendor to vendor, so keep that in mind when calculating the cost of necessary add-ons for the system you purchase.

For example, you might need transportation/logistics functionality in your program, which might be included in the base package of Vendor A but only available as an add-on or third-party integration through Vendor B.

Here’s a list of some standard modules included in base ERP software:

• Accounting/Financial Management: Balance general ledgers, maintain accounts payables and receivables, reconcile bank accounts and transactions, and perform real-time reporting for improved centralization and task automation.
• Human Resources Management: Maintain employee payroll, benefits, certification, PTO and more in one solution.
• Inventory Management: Find stock in real time and establish minimum quantities to obtain notifications as objects reach the minimum amount.
• Customer Relationship Management (CRM): Keep tabs on client satisfaction rates, customer reviews, interactions, lead generations and more with the proper CRM tools.
• Marketing Automation (MA): Develop email campaigns, boost customer retention methods, boost ROIs and more with the ideal MA tools.

Open Source ERP

Open source ERP is ERP software that offers source code for anyone to alter with the ideal features and needs to meet their goals. This system is ideally cheaper because vendors don’t charge licensing fees. Vendors may offer monthly subscription fees. Open source software offers flexible customization options, community support and vendor independence.

Factors That Affect Cost

There are several factors to consider before making your ERP selection. The total cost of ownership (TCO) for an ERP system can rack up hundreds of thousands of dollars. This colossal variance in charge measures how different aspects contribute to a system’s final price. Some typical financial costs to review before making a decision include:

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Number of Users

You need to estimate the number of users that will initially have access to the program. Many ERP vendors charge on a per-user basis, meaning the more people who use it, the more expensive it gets.

You also need to account for the cost of adding new users to your system and how that expense could increase in the future as your company grows. You’ll need to check with the specific vendor you’re interested in to see if they charge per user, especially if you have many employees who will need access, as ERP costs can quickly add up.

Add-ons/Customization

Program add-ons, customizations or configurations aren’t cheap. You must find a system that meets most of, if not all, of your core needs through its out-of-box functionality.

Many vendors offer integrations with third-party add-ons or the option to include specific modules for increased functionality in your program. The cost of these additional capabilities differs depending on what you decide to have and which vendor you go with for your base package.

Implementation Strategy

Depending on the technical expertise of your internal employees, you may decide to leverage a consultant to smooth out your ERP implementation process. Most vendors offer support that may or may not include installation and employee training.

Some ERP programs list their preferred consultants who are most experienced in helping an organization implement the software successfully. Additionally, some vendors offer more consultative assistance, but this costs extra.

If you are looking at implementing ERP for the first time, you will likely need more dedicated technical assistance than a company with experience deploying this type of program. Whether vendor-offered help or a consulting service is best for your business is critical in your ERP search.

Deployment Method

The upfront cost of deploying an on-premise ERP solution is more expensive than a cloud-based program. However, the overall cost of these deployment methods evens out when you consider monetary factors such as fees for training, maintenance and customization.

There are pros and cons to both of these deployment methods, with upfront payment being one aspect that makes cloud deployment more appealing to some businesses. Suppose you’re more interested in an on-premise solution, though. In that case, you should remember that although upfront costs are higher, companies with cloud ERP software end up paying about an equal amount for their solution in the long run.

Training/Customer Support

Training and customer support are two essential components to consider when estimating the cost of an ERP solution and how well a program will work with your company’s needs.

Some vendors offer training options on-site and via online tutorial videos and classes. However, depending on the vendor, this assistance may be included in your overall software price.

Additionally, more hands-on training options, such as having a specialist come to your place of business to help employees learn more about the program, typically cost more than receiving training through virtual self-paced courses.

Software Maintenance and Upgrades

You need to ensure your program continually updates as you develop your budget and ERP cost estimate. Additionally, the program needs upgrades that vendors may not include in your base software costs. Ask your vendor how often you need updates and if they added them to the base price.

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Implementation Cost Example

Software implementation costs vary. Some vendors charge per hour and for deployment options. We have a realistic example of how vendors leverage implementation charges.

Sage X3

Sage X3 says their on-premise and cloud costs are more than the overall subscription cost. The license fee is roughly $2,600 per user. Sage’s tCognition hybrid deployment model of onshore project managers governs offshore development teams. The prices are as follows:

Non-Monetary Costs

The financial cost of ERP is likely what made you click on this article. However, there are significant non-monetary costs associated with an implementation that you also need to consider as you prepare to select a program and undergo deployment. Here are some of the other “costs” you’ll need to factor in as you get ready to install an ERP system.

Time

NetSuite says ERP implementations take about six to 12 months. It may be more or less, depending on the type of software, deployment options, data migration and training.

SMBs use, on average, seven internal resources, and enterprises use about 24 when deploying ERP. Therefore, you need to account for lost employee time and consider how you will make up any slack during this period.

For example, will different employees step up to the role of those committed to the project during this time? Will you hire contractors? These are essential factors to consider when conceptualizing your ERP implementation.

Productivity

With a group of your IT staff devoted to ERP implementation, productivity is likely to decrease in the interim. This lapse in productivity is temporary, and it should increase once you deploy the ERP solution successfully.

You should expect projects to take longer to complete and queries to take longer to answer if you don’t have a backup plan for your staff members devoted to the ERP deployment. Additionally, as you train users after deployment, productivity decreases due to courses, training and getting used to the system’s intricacies.

Pricing Models

There are two main pricing strategies that vendors typically use when developing the cost of an ERP system. Let’s take a look at these different pricing methods and examine some of the intricacies of each.

Perpetual Licensing

Perpetual licensing is closely associated with on-premise deployment. This model allows users to pay a one-time upfront fee for access. This plan varies according to customizations and users. This model often doesn’t include recurring payments for support, maintenance or upgrades.

Pros

• Costs less over time.
• Doesn’t rely on cloud providers.
• The software keeps working if you forget to renew your contract.

Cons

• Requires many updates to maintain security and operation.
• Higher costs.
• May not have mobility options like the cloud.

Subscription

A subscription-based pricing method gives customers access to the program monthly, yearly or multi-yearly. Subscription pricing is most applicable to companies that go for a vendor that offers cloud deployment. Most subscriptions come with stipulations, such as a minimum duration contract and various pricing tiers depending on your company’s chosen functionality.

Pros

• Less expensive.
• More mobility and real-time access on any device.
• Your vendor keeps the system updated and performs maintenance.

Cons

• Can cost more over time.
• You rely on cloud vendors more.
• Need constant internet access, or the software won’t operate at full capacity.

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Pricing for Top ERP Software

ERP software varies by vendor. Some charge more than others. Some solutions run exclusively on the cloud, while others offer on-premise and hybrid options. Here’s a rundown of some top ERP solutions according to SelectHub’s data.

Oracle JD Edwards

This ERP application offers on-premise and cloud deployments with a licensing cost ranging from $15,000 to $400,000. You can allot 15 to 1,000 users. It’s required to have a minimum one-year commitment, and you can access custom quotes and free trials.

SAP Business ByDesign

SAP Business ByDesign offers cloud deployment and runs on a subscription-license-based pricing model.

For self-service users, the standard price is $11/user/month. The SCM pricing model is $24/user/month. Project management offers $24/user/month.

SAP offers CRM sales team users $89/user/month with a minimum of 10 users.

Enterprise users require a 10-user minimum. Standard is $149/user/month. SCM users are $199/user/month.

Sage X3

This ERP platform offers license-based and subscription-based pricing models. The minimum commitment is one year. Custom quotes are available, but Sage does not offer free trials.

Licensing starts at around $2,600 per user. For 10 users, a perpetual license is $45,000 per year, and subscription pricing is approximately $26,640 per year.

Sage ERP X3 Version Seven has a cloud and SaaS model perpetual license of $2,600 per user. The user range is typically 20 to 1,000 or more.

SYSPRO

SYSPRO requires a one-year minimum commitment and offers subscription-based pricing models. Custom quotes and free trials are not available. It also offers on-premise, cloud and mobile deployment.

On-premise deployment types range from $25,000 to $500,000. Pricing varies depending on the number of users:

SyteLine

Lastly, SyteLine offers on-premise and cloud-based deployment options. It provides license and subscription-based pricing models. You need a one-year commitment for purchase. Custom quotes are available, but free trials are not.

On-premise costs start at $42,000 for 10 years. You also have to pay for annual maintenance and support agreements.

Compare ERP Pricing & Costs with our Pricing Guide

Hidden Costs

Similar to a car or an appliance, ERP costs also have hidden or additional fees to consider from maintenance and customization to training and security. Here’s a breakdown of some hidden fees:

• Maintenance and Support: Your software may encounter errors or need upgrades. Some vendors offer customer support packages (e.g., bronze, silver, gold) with 24-hour phone support, interactive portals, webinars and more.
• Security: Cyberattacks are common. The right security measures, such as data encryption, multi-factor authentication, user permissions and more safeguard your information from hackers. Although cybersecurity can be expensive, it should be a high priority.
• Training: Whether you’re training your IT staff or employees to use your new ERP, the right training materials are ideal. Ebooks, seminars, guides, certification classes and more help you and your team better understand how to navigate and utilize the system. Most vendors offer these and other resources.
• Additional Hardware or Software: Additional hardware or software can help you make the most of your solution. For example, if you purchase a point of sale (POS) solution, you’ll likely need accessories like tablets, receipt printers, cash drawers and credit card readers to maintain purchases, tips or employee management.
• Add-on Modules: You may need add-on modules for your prospective system. For example, your program may offer accounting, CRM and manufacturing, but you may not have inventory management tools.
  Your current system lacks inventory management, so you need add-on modules that merge with the new application. Think of this cost as buying different-colored controllers for your new game console because you’re not happy with the one that came with it.

Creating Your Budget

How much should your company spend on an ERP system? It’s necessary to know the answer before choosing a vendor. You’ll want to account for the different costs associated with an ERP system when estimating how much you will spend. However, determining how much your company can spend while still being clear might be the most critical aspect of ERP software selection.

ERP software can be a significant expense. When developing your ERP budget, you will need access to your company’s operating financial data and budgeting information. After all, you don’t want to lose your financial footing while trying to implement your solution.

With this in mind, you need to account for recurring fees associated with ERP and ensure that your company’s finances can support these ongoing costs. You wouldn’t want to invest a lot of money into a program only for it to become obsolete or difficult to operate in a handful of years.

To begin creating a software deployment budget, you’ll want to take note of the ERP costs listed above. If you don’t feel like scrolling or can’t remember them off the top of your head, these factors are:

• Training
• Maintenance
• Support
• Deployment Method
• Customizations/Add-ons
• Upgrades
• Number of Users

Based on your company’s needs and the quoted prices from relevant vendors, you’ll want to develop an estimate of what the entirety of an ERP program would entail. You’ll want to ask yourself: “Can my company support this financially?” and “Will the ROI of an ERP solution be worth the initial cost?”

If the answer to both of these questions is yes, then you’re in luck! You’re probably in a good enough spot to continue looking for a program seriously.

When creating your budget, secure more funds than you’re estimated to need for your ERP project. Why? ERP implementations frequently exceed expectations.
The last thing you want to do is have the finish line in sight but be unable to reach it because you don’t have enough capital left to complete the project.

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Predicting Your ROI

When you purchase a new ERP solution, you garner a huge ROI across different business sectors and metrics, from increased productivity to lowered costs and more. Here’s a breakdown of where you should expect significant ROI.

• Boosted Productivity: When you automate routine tasks (i.e., allocating invoices, monitoring orders, paying employees), you save time and pinpoint your focus on more high-priority tasks. Your newfound focus increases your productivity numbers.
• Increased Supply Chain Visibility: You can supervise your supply chain with real-time updates for on-time deliveries, bottlenecks, vendor reliability and more.
• Enhanced Customer Satisfaction Rates: Automating tasks and boosting productivity increase your on-time delivery and satisfaction rates. The right CRM tools help you maintain leads and client satisfaction, so you can easily maintain new and regular customers.

Compare ERP Pricing & Costs with our Pricing Guide

Final Thoughts

The price you pay for an ERP depends on your company’s needs and how good a job you do at planning for implementation. The cost of ERP doesn’t just hinge on your subscription to or licensing of a program — it includes aspects such as the number of users, deployment method and training.

Therefore, when estimating how much it will cost your business, you must consider these diverse factors. ERP cost can run you an arm and leg. You need to make sure that it hits all of your company’s main bullet points and that its cost isn’t too significant for your company to handle. For more ERP solutions and modules, check out our comparison guide and requirements template.

What are some ERP costs that surprised you during your selection process? Enlighten us in the comments below!