ERP pricing and advice

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How much does ERP cost?

This Software Path ERP study shows that businesses spend an average of £7,065 ($9,000) per user for an ERP project. However, ERP pricing varies greatly based on the type and complexity of the system, as well as your company size.  

Small businesses, for instance, have limited processes, so don’t require a large-scale ERP system. Bigger companies, on the other hand, need to streamline potentially hundreds of processes and will definitely need broader budgets.  

Other factors influencing ERP pricing might be: 

  • Customisation needs 
  • Functional requirements 
  • Implementation costs 
  • Maintenance and support costs 

This is why it’s important to assess your current business needs to identify exactly what you need from an ERP. This will prevent you from overspending on a new system.  

ERP pricing models: what you need to know  

User-based ERP software pricing  

User-based ERP pricing changes as you add more users to your system. Pricing can be calculated by named users or concurrent users.  

Named ERP users are given unique log in credentials which are only meant to be utilised by one person. Basically, every employee who will be using the system will be given their own profile and your ERP price will be based on the total number of named users.  

Concurrent users, on the other hand, don’t need unique log-in credentials. Your company is given a single log-in that all your staff can use. However, the number of concurrent users you buy should reflect your staff level. For example, if you have 30 employees who all need to use the ERP, you’ll need to buy 30 concurrent users. If you don’t and a 31st user attempts to use the system, they will not be permitted.  

ERP Software Module Pricing

ERP solutions consist of several modules that can be grouped together by the user (and paid individually) or bought together as part of a licensed package. With module pricing, you only pay for the modules you use.  

Pricing by module is usually considered a more cost-effective solution, as companies have more control over the functions and users they pay for. Nevertheless, costs might escalate greatly as more features and users are added to the ERP software.  

Resource/usage-based pricing of ERP systems

This pricing model is based on your usage of resources. For example, the vendor will consider how much data storage you utilise, your bandwidth, and computing power. Based on this, the vendor will make real-time changes to your pricing model.  

Enterprise software licenses

Enterprise licenses are calculated on a case-by-case basis by the vendor, adapting it to variables such as module usage, company size, and user count. It’s predictable in that you only pay for what you initially agreed to with the vendor. You could end up using more ERP features without having to pay more for extensions. However, when it comes to renewing your contract, your renewal price will be based on your level of usage in the previous term. Conversely, if you end up using less of the ERP, you’ll be charged a smaller renewal fee.  

Generally, enterprise contracts are less common.  

Open source options  

Open-source ERP software is oftentimes developed by volunteers and is free to download and use.  With the code being “open source”, it can be altered to suit the business better.  

Although open-source licenses are generally free of charge, business owners should keep in mind configuration and maintenance costs. Programmers will be required to oversee the successful implementation and upkeep of the software.  

Budgeting advice on your ERP implementation costs 

  1. Define clear objectives: start by clearly outlining your ERP implementation goals and objectives. Understand what specific functionalities and features your business requires, and prioritize them accordingly. This helps in allocating budget resources more effectively towards essential components. 
  1. Plan for hidden costs: anticipate and budget for potential hidden costs such as customisation, data migration, training, and ongoing support. These expenses are often overlooked but can significantly impact your overall implementation budget. It is always sensible to allocate a contingency fund for unexpected expenses. 
  1. Prioritise essential features: determine which ERP features are essential for your business operations and focus on implementing them first. You can always add additional functionality later as needed. This approach can help keep costs down and streamline the implementation process. 
  1. Invest in training: allocate funds for comprehensive training for your employees. Well-trained staff are more likely to adopt the new ERP system effectively, leading to higher productivity and ROI in the long run. Consider both initial training for implementation and ongoing training for continuous improvement. 
  1. Monitor and adjust: continuously monitor your budget throughout the implementation process. Track expenses against your budgeted costs and adjust as necessary. Regularly review the progress of the implementation and be prepared to make adjustments to stay on track financially. 
  1. Negotiate pricing and contracts: lastly, it’s possible to negotiate pricing and contract terms with ERP vendors to secure favourable rates and avoid unnecessary expenses. Explore options such as volume discounts, flexible payment schedules, and scalable licensing models that align with your budgetary constraints. 

Affordable ERP solutions for businesses  

With so many ERP vendor options out there, choosing the right solution can be difficult.  

From pricing models to hosting systems, there is just so much to consider.  

YourShortlist makes the whole IT procurement process easier for business owners. We can listen to your ERP requirements and pair you with vendors that can meet your needs exactly.  

We strive to make IT procurement into a simple and quick process for business owners.  

Contact us today and let our team of experts help you find your ideal ERP match!