How Much Does an ERP System Cost? 2022 Pricing Guide
Pricing is an essential factor and usually the first consideration when a company wants to invest in an enterprise resource planning (ERP) system.
Using ERP software or systems for your business operation is not cheap. However, prices vary depending on the type of deployment, level of customizations, and the number of users.
Knowing what ERP software or systems cost will help you make better decisions when it comes to ERP implementation. Some ERP vendors do not publicly display their prices on their website, you have to request a quote after providing your company’s business requirements.
In this article, you will learn the meaning of ERP, the two ERP system pricing models, implementation costs, ongoing costs to consider, and 10 ERP system vendor pricing plans.
Let’s get started.
What is an ERP?
Companies use ERP (Enterprise Resource Planning) to manage and control the essential parts of their businesses. It has evolved over the years, from physical operations to web-based software operations. ERP software applications are used to integrate the different processes in a company with one system.
An ERP software system is vital to a company because it can control marketing, inventory, finance, planning, sales, supplies, and many more.
ERP software applications aid remote operations. You can control a lot from a room with a single system. However, a company needs to execute an enterprise resource planning system meticulously before it can be effective.
How Does an ERP Work?
An ERP system is a network that connects every computer system in an organization. You can imagine a system managing the finance, accounting, sales, inventories, etc., of a large company. Every department of a company has a system that is optimized to run some peculiar tasks. But with an ERP system, a computer can integrate all of those operations using one interface.
The software applications allow inter-departmental communications and relations. Information can be shared easily using the ERP system since it connects all the systems. For instance, if a division’s task is to process raw data to meaningful information, the ERP system can send it to where it will be utilized.
Enterprise resource planning systems can simultaneously help an organization monitor production, distribution, allocation, and resources. With this, it can eliminate redundancies, improve productivity, and cut costs. You can synchronize diverse operations to give a better yield.
ERPs can also help companies quickly access information needed by business partners, clients, and investors. It improves the customer service experience you offer customers. Also, an ERP system reduces the time allocated to menial jobs, i.e., staff can give their time to more specific tasks to improve efficiency.
ERP software systems do not eliminate a company’s inefficacy. A company must organize the system carefully with the right technologies to give optimum services.
ERP System Pricing Models
There are two methods that ERP vendors use for their pricing and software licensing. They are the subscription model and perpetual licensing model. Here’s how the models work.
1. Subscription Plans
The subscription plans work on a SaaS (Software as a service) pricing model. For this ERP system pricing model, the payments are paid continuously as at when due. It could be paid monthly or annually, depending on the convenience of the user.
How Does it Work?
Businesses contact the ERP vendor and make payments to gain access to the enterprise resource planning software. The vendor maintains the software on a third-party server. Companies that use the subscription plans have a contract agreement. The contract determines the functionality of the software.
The cost of the subscription also depends on some criteria. They are:
- Number of users using the software,
- Number of transactions, and
- Volume of Revenue.
An advantage of the subscription plans is the lower cost of software licensing. Some disadvantages of this model include the inability to design the software to your taste and needs, data security issues, unforeseen usage costs, etc.
2. Perpetual Licensing Model
Companies who use this model pay a perpetual licensing fee to access the cloud ERP software. Unlike the subscription model, users can host the software on their servers. For this model, you make a one-time payment that does not get renewed.
How Does it Work?
Perpetual licensing allows companies to pay a one-time payment of the upfront licensing fee. This payment gives them access to the software for an indefinite period. The perpetual licensing model does not include unanticipated costs like upgrades fees, maintenance costs, and support charges.
The one-time payment is paid in advance and depends on the number of users accessing the software. Also, it depends on the level of customization of the software.
The advantages of this model are:
- Ability to modify the software to your specific needs,
- Ability to configure the software to your business interface, and
- Lower costs of ownership in the long run.
The perpetual licensing model is more flexible than the SaaS software model. Your business data security is also protected because you are hosting it on your server, not a third-party server.
The cost of implementing an ERP system varies depending on several considerations such as training, configuration/installation, customization, hardware, and modules or features not included in the base price.
Training costs are the fees spent on the employees to educate them on how to use the ERP software system. Training fees cover a large percentage of the implementation costs. It depends on the number of users. For example, you will require more time and energy to train a larger number of people.
Apart from the large number, the training is easier when the employees are familiar with the usage of software programs.
Also if the workers can devote their time and focus to the training, it makes it easier for the company. For a smooth drive, it would be best if the employees pay rapt attention to the training sessions. Some ERP vendors offer the training services for free, while some others require additional costs.
Some ERP vendors maintain the client’s software on a third-party server. Vendors like these will create a separate server for each client. The server will be configured to meet the company’s special needs.
To achieve this, companies spend lots of time and money. The vendor’s IT team will have to go through a step-by-step process of installing and configuring your software in a server environment.
However, the cost and time spent will depend on the business entities, the volume of sales, complexity of business operations, locations, and others.
Some companies want some special edits done to their ERP software. However, they will need to pay extra costs to gain access to the custom. The cost varies depending on the features the company requests. It would be best if companies focus on the essential features to avoid unnecessary costs.
During implementation, companies see new features and add them to their wish list. The software has some old programs and the requests for new features will attract additional costs. The additional costs are because of those old processes that will be upgraded or replaced.
Companies that prefer the perpetual licensing model have to develop their sites to host the ERP software. They need to buy servers and infrastructure to host the software program. You must develop a strong server and online space to host your software to avoid server issues and breakdowns.
5. Modules or Features not Included in Base Price
Some ERP software vendors charge extra fees for advanced options such as e-commerce, payroll, etc. These are the general features that every business might need to pay extra for. There are also some ERP modules that are particularized to a specific market.
Ongoing Costs to Consider
Apart from the up-front fees paid to ERP vendors, some systems require additional costs for a smooth run. These additional costs are not always included in the main costs for accessing the software. They include customer service support, maintenance, and IT staff.
1. Customer Service Support
Every ERP software system has some basic support rendered to users upon payment. Examples are email support, hotlines support, and more.
Nevertheless, ERP vendors do attach some advanced support systems to the software that would attract additional costs. For example, direct access to a customer service manager is not available as a feature under the basic ERP software plan. You would need to pay extra to access features like this on the system.
ERP vendors who use the perpetual licensing model often charge extra fees for maintenance and software version upgrades. After paying the up-front costs to gain access, you might still need to pay for maintenance, but not as frequently as someone using the subscription model.
For the subscription plans model, the fees would be included in the regular renewal of payments to gain access. So, as you are paying monthly or yearly, you are automatically paying for maintenance and upgrades where necessary.
3. IT Staff
ERP software programs are always complex to manage without the required experience. Companies that choose to use the perpetual licensing model, where they get to handle the software on their server, will need an IT staff to control the software system.
The work of the IT personnel is to manage the operations of the software. Some technical issues may arise later that would need the help of a professional, so there should be a standby staff for that purpose.
ERP System Vendor Pricing Plans
NetSuite is one of the best ERP software systems with rich ERP features for growing companies. It is one of the best QuickBooks alternatives for businesses that need help with scalability and handling more complex tasks.
NetSuite pricing model is not fixed, depending on each customer’s needs, pricing varies. There are four ways NetSuite sets prices for its services: NetSuite pricing per suite, NetSuite pricing per user, NetSuite pricing per advanced module, and NetSuite pricing for SuiteCommerce.
On the website, it asks you to schedule a free consultation where it asks you to fill out some information and tour the product. It uses the information given to set a price, taking into consideration factors such as ERP configuration, total user count, required add-on modules, and contract length.
NetSuite’s base license costs $999 per month with the access costs of $99 per user paid monthly. Check out this NetSuite pricing guide for more detailed information about the ERP software’s pricing.
Odoo is one of the best ERP software for sales, web presence, and other integrations. It provides a centralized platform for key business operations such as e-commerce, manufacturing, inventory, accounting, finance, sales, and human resources.
The ERP software has over a thousand modules for users to choose from and gives users the ability to develop their own apps through the API key.
Odoo is an open-source ERP software with two pricing plans: Odoo Community and Odoo Enterprise. Odoo Community is free to implement and use on-premise. It contains basic modules such as project management, human resources, customer relationship management (CRM), accounting, manufacturing, e-commerce, and inventory.
Odoo Enterprise costs $8 per user per month for existing users or $6 per user per month for new customers billed annually. If you want access to additional apps, your total cost can range from $12 to $96 per month, depending on the number of apps chosen.
Integration with third-party applications can also increase your costs. Integrations with order fulfillment services such as DHL Express Shipping, UPS Shipping, EasyPost Shipping, United States Postal Service (USPS) Shipping, and FedEx Shipping cost $12 per month for each service chosen. eBay Connector and VOIP cost $12 per month each, while Amazon costs $32 per month.
Odoo offers a 15-day free trial.
Oracle is an ERP software for handling large volumes of data. It is a comprehensive business management solution that is suitable for businesses of all sizes.
The ERP software handles different ERP modules such as procurement, project management, finances, risk management and compliance, supply chain and manufacturing, risk management & compliance, EPM, and ERP analytics.
Oracle pricing depends on the applications you choose and the number of users your company wants to access the software. There are three pricing based on product features: financial reporting plan, advanced financial controls, and advanced access controls.
The financial reporting plan costs $175 per user per month, the advanced financial controls plan costs $80 per user per month, and the advanced access controls plan costs $150 per user per month.
Microsoft Dynamics is one of the best ERP software for small-to-medium-sized businesses that do not have enough employees to handle their daily business operations.
The cloud-based Microsoft Dynamics ERP software has CRM, sales, marketing, finance, commerce, operations, service, and HR functionalities that boost business productivity and foster long-lasting relationships with customers.
Microsoft Dynamics allows companies to purchase individual modules that they need for specific business operations. Here is a full breakdown of the cost of the individual modules that companies can choose.
- Customer Insights – Pricing starts at $1,500 per tenant, per month, or $1,000 per tenant, per month if you use other Microsoft Dynamic apps.
- Customer Voice – Pricing starts from $200 per tenant, per month
- Sales – There are four types of sales module pricing: Sales Professional, Sales Enterprise, Sales Premium, and Microsoft Relationship Sales. The professional plan costs $65 per user per month, and the enterprise plan costs $95 per user per month. However, if you use other Microsoft Dynamic apps, you pay just $20 per user per month. The premium plan costs $135 per user per month, while the relationship sales cost $162 per user per month.
- Service – There are four service module pricing: customer service professional, customer service enterprise, field service, and remote assist. The customer service professional plan costs $50 per user per month, the customer service enterprise plan costs $95 per user per month, the field service plan costs $95 per user per month, and the remote assist plan costs $65 per user per month. When you use other Microsoft Dynamic apps, you just pay $20 per user per month.
- Marketing – Pricing starts from $1,500 per tenant per month if you purchase it as a stand-alone application or $750 per tenant per month if you use other Microsoft Dynamics 365 apps.
- Commerce – It costs $180 per user per month or $30 per user per month if you use other Microsoft Dynamic apps. Its fraud protection plan costs $1,000 per tenant per month.
- Supply Chain Management – It costs $180 per user per month or $30 per user per month if you use other Microsoft Dynamic apps. Guides cost $65 per user per month.
- Human Resources – It costs $120 per user per month or $30 per user per month if you use other Microsoft Dynamic apps.
- Finance – It costs $180 per user per month or $30 per user per month if you use other Microsoft Dynamic apps.
- Project Operations – It costs $120 per user month or $30 per user per month if you use other Microsoft Dynamic apps.
Aquilion Software is an integrated ERP software solution designed for small and mid-size distributors and manufacturers.
Aquilion Software offers two licensing options: cloud-based and on-premise options. It gives companies different licensing quotes based on the number of users and modules selected.
The on-premise licensing option ranges from $1,500 per user to $3,000 per user, while the cloud-based licensing option ranges from $75 per user per month to $150 per user per month.
Infor is a versatile ERP software with end-to-end functionality designed to boost the performance of entire teams in a company. Distribution and manufacturing companies that need powerful ERP features to run their business operations efficiently will profit from using Infor’s versatile ERP solution.
Some of its key features include advanced planning and scheduling, human capital management (HCM), workforce planning, and prebuilt industry analytics.
Infor does not disclose publicly its pricing information, you have to contact the vendor directly on its website to get a quote unique to your specific business needs.
SAP Business One is an ERP software designed to help small and medium-sized businesses (SMB) grow by offering extensive industry-specific functionalities, best practices, and processes.
The ERP software focuses on consumer products, professional services, industrial machinery and components, retail information, and wholesale distribution. It helps small businesses gain great insight into their businesses, lower the cost of managing their business operations, and make decisions based on real-time information.
SAP Business One ERP does not disclose its pricing on its website, you have to request a quote. However, third-party implementation consultants give us an idea of what SAP’s Business One perpetual license costs. According to these third-party consultants, the perpetual license costs $3,213 for professional users and $1,666 for limited users.
Upgrades, bug fixes, and patch releases are not covered in the perpetual license fee, companies pay for it through a separate annual maintenance fee.
Subscription-based licenses cost $94 per professional user per month or $54 per limited user per month. This type of license covers annual maintenance. You have to commit for a year to use this plan.
SAP Business One ERP system has a starter package designed for startups and small businesses that costs $39 per user per month with a one-time fee of $1,357. This special plan for startups and small businesses covers accounting, item management and purchasing, and sales orders. However, it does not include service or manufacturing.
Deltek is a project ERP and professional services automation tool that helps companies to track purchase orders and fixed assets, and capitalize on new business opportunities, and streamline all their business operations.
The cloud-based ERP solution is designed to accelerate and simplify the life cycles of complex projects. It is an excellent ERP choice for professional services, manufacturers, government contractors, construction companies, and non-profit organizations.
Deltek does not publicly reveal its pricing plans on its website. However, like other ERP vendors, the cost of using Deltek ERP software is based on pricing, the number of users, and the selected modules.
Macola is an enterprise resource planning (ERP) solution for manufacturers and distributors who handle lots of orders, inventory, and supply. It is full of versatile project management tools such as inventory management, document management, and process workflows.
The ERP software enhances order entry, inventory, and supply chain management.
Macola does not publicly display its pricing information on its website. You have to contact the ERP vendor directly for a tailored price quote.
Acumatica is an enterprise resource planning (ERP) solution that offers modern ERP modules or business applications tailored to different industries such as commerce, manufacturing, distribution, and retail. The ERP software is one of the best choices for general ledger accounting and inventory management.
Acumatica does not charge based on the number of users that use the system from your company but based on the features and resources chosen. It does not make its pricing information public, you have to get in touch with Acumatica directly for a quote.
ERP Pricing FAQ
There are several reasons why ERP systems are so expensive. The first reason is that the ERP system was initially designed for big businesses in particular.
Tailoring the ERP system to meet the specific needs of small to medium-sized manufacturers is very costly and inefficient. Despite the emergence of lower-tier ERP systems that are more focused on smaller businesses, implementation cost still reaches the six figures range.
Implementation cost is just the beginning. Hardware costs, employee training costs, annual maintenance costs as well as the opportunity cost during installation where company operations are halted play a role in why ERP is so expensive.
For large organizations, the answer is an easy yes. It is not feasible to manage a large-scale multi-faceted business without an ERP.
Smaller businesses on the other hand should only consider an ERP when sustainable long-term growth is clearly achievable. In the short term, system add-ons to plug gaps are recommended.
There are six key components of an ERP system; human resources, customer relationship management (CRM), business intelligence, supply chain management, inventory management, and financial management.
The human resource component deals with your employees. Creating a conducive environment for workers is necessary for their production capabilities. A good ERP system must be able to handle all the aspects of employee management from organizing payroll to inventory management to timekeeping and other activities that can be automated like payroll tax.
A well-functioning customer relationship management (CRM) on the other hand allows you to keep track of all of your customer data within your ERP system and manages orders. It keeps records of customer purchase and interaction history on the system. With the information available, you are then able to optimize your sales and marketing strategies to suit your customer preferences.
Business Intelligence is relatively new as a key ERP component. The role of this ERP component is to collect data and perform analysis and provide actionable insights about your business processes. It delivers those insights in visual reports to make it easy for you to spot trends at a glance.
Supply chain management helps you optimize your supply chain by collecting real-time data and enhancing your distribution and manufacturing processes. It is a key ERP component that is crucial to staying competitive in your field.
Inventory management is the most collaborative component of all the key ERP components. It works in tandem with the supply chain management component and also with sales and warehouse components. It helps businesses manage their order fulfillment and reduce manual inventory control.
Financial management works with all other ERP components since every business process involves money in one form or the other. This ERP component stores and analyzes all of your financial data such as costs, accounts payable, accounts receivable, budgets, and forecasts.