What is the cost of an ERP system?

The cost of an ERP is one of the most important factors when choosing an ERP. The needs of the company will be key to knowing the price of an ERP system. How much does each user and license cost? What is the price difference between on-premise and cloud ERP systems? In short: How much budget should be devoted to an ERP system?

How much does an ERP system cost?

The cost of an ERP system will depend on the characteristics of the company. Generally, the investment for the first year in an ERP software with simple processes can range from $11448.66 to $23851.38. A company without too many complex processes will see the price drop. On the other hand, if the processes are complex, the investment cost for the first year will increase. Therefore, companies with fairly complicated processes can face a cost of $23851.38 to $47702.75 . There are other factors that determine the price, such as the number of users or the type of features that are needed.

In 70% of cases, the price of an ERP is between $11448 and $47702.75 . However, it can also happen that the price is higher. For example, a multinational company with a large number of processes and functions will need a larger and more expensive ERP. Therefore, the investment for the first year in software for a large company can range from $47702.75 to more than $190811.00. In the ERP Guide you can find a selection of real budgets of ERP systems for SMEs and large companies, including the Budget Planner.

How are the costs of an ERP distributed?

The costs of an ERP are distributed mainly around three variables: software , hardware and services.

ERP-Hardware

Hardware expenses will increase depending on the equipment needed for the system to work, such as computers, servers or the infrastructure that needs to be created. ERP systems in the cloud hardly require investment in hardware, since the service provider is in charge of it directly.

ERP Software

The cost of ERP software is the most important, although not necessarily the most expensive. Sometimes, software costs are not entirely clear, since there are many brands, packages and features that make the final price vary. You can check all the details, from functionalities to price, in the ERP Guide .

ERP services

Among the services that make up the cost of an ERP are implementation , maintenance, consulting and training. The cost of these services will not depend on the chosen ERP, but on the degree of customization of the system to the company that requires it. The more processes and custom functions a company needs, the more services are required for the optimal operation of the ERP system.

What is included in the cost of an ERP?

The type of system will determine the final price, differentiating between on-premise or cloud systems .

On-premise

1. Initial installation:

• The cost of ERP software.
• The hardware necessary for the system ( servers , infrastructure).
• System implementation .
• Module customization .
• Project management .

2. Recurring:

• Licenses .
• Maintenance, technical service.

3. Occasional:

• Staff training .
• Updates.
• External consulting service.

Installing an on-premise ERP system is usually a bit more expensive compared to a cloud system. The need for hardware, an infrastructure implementation and conditioning process, as well as the costs of software and its customization can easily drive up the total price of an ERP system.

On the cloud

1. Initial:

• Migration of data and programming of company processes in the ERP in the cloud.

2. Recurring:

• Cost of subscription to the service (usually monthly).

3. Occasional:

• Staff training.
• External consulting service.

The main advantage of an ERP system like Microsoft Dynamics 365 in the cloud is the lower investment cost for its implementation. There is no hardware to purchase, as the company providing the ERP system will provide it for you. Regarding the cloud, it should be noted that the price of maintenance, updates and technical support will be included in the monthly subscription, at no additional cost to the company.

Hidden costs of an ERP

Sometimes, hidden costs of a project can be included that directly affect expenses not contemplated by companies. Therefore, budget problems are found after the acquisition of an ERP system. In the ERP Guide , in addition to information on hidden costs, you will find a comparison of the budgets of different companies with real calculations.