Editors Note: This post was updated on February 12, 2017.
The advantages of a top-notch ERP (Enterprise Resource Planning) solution are well documented and no doubt as your business has grown and moved beyond such introductory offerings as Quick Books and Excel sheets, you’ve been pondering the advantages of a new system.
You will, of course, have lots of questions about functionality and maybe even customization, capabilities, third party add-ons and ROI. However, we’ve found that one of the most fundamental questions you’ll have to ask is whether your budget can support the cost of a new or upgraded ERP solution. In other words, “how much will it cost?”
Well, there is no way around the fact that implementation of an enterprise-wide integrated accounting and business system requires a significant investment, and even with the many variables to take into account, it can be helpful to have a general idea of what to expect.
There are some questions that will apply to most small to mid-sized businesses considering implementing an ERP solution:
- What is the type of business and how many employees plan to use the ERP solution?
Generally speaking, a mid-sized manufacturing company will have more complex requirements that say a similar sized professional services organization. Most ERP systems charge based on the number of users and the level of access they require. If yours is a manufacturing or complex distribution company, you might expect to pay around $4,000 for each concurrent user. On the other hand, if you have a professional services business, you might pay $2,000 for each concurrent user. If you have users who will require only limited access to the system, additional “light user” licenses could be priced at a few hundred dollars each.
- Will you require third-party software?
Third-party software products are designed to adapt the basic out-of-the-box software to better meet the needs of specific business processes that may be unique to your industry or preferred practices. Third-party add-ons typically account for 10% to 35% of the overall software cost.
- Implementation costs
Software-to-services ratio can be as low as 1:1, but more common is a ratio of from 1:1.5 to 1:2.5. The above-mentioned factors; industry, number of employees, unique requirements, and third party add-ons all enter into the price of implementation as do volume, scope, complexity and internal resources as well as the need for customization and training.
So, what kind of figures are we talking about?
For a typical mid-sized company, the total software and services cost will range between $150,000 and $750,000. Hardware and infrastructure costs are usually addressed separately, and typically these estimates assume an on-premises implementation rather than a hosted or subscription-based solution, which might greatly reduce your overall costs.
We admit, this is a pretty big ballpark for an estimate, but it may help those just starting their ERP research to understand what factors influence the total cost of an ERP implementation. It should also give you a place to start when choosing an implementation partner. Beware of estimates that are way higher or way lower. Ask questions and be sure you know what you are getting for your investment dollars.
Quick Quote Tool
The ERP Software Blog has a very useful Quick Quote tool designed to help you in your budgeting for an ERP software solution. You’ll simply enter the answers to the questions above about your type of business, number of users and whether you would prefer on-premises or in the cloud application and the Quick Quote tool will automatically generate an estimate and email it to you along with recommendations for next steps.
Try the ERP Software Blog Quick Quote tool. It’s fast, easy and no commitment.
By ERP Software Blog Writers, Find a Local ERP Software Consultant
Thanks for great info about ERP and the article is help full and full of thoughts.
Great article! I would state that yes, customers should question "estimates that are way higher or way lower." However, Clients First, Texas, has a team approach to implementation keeping your implementation quote lower than competitors. Read more below:
There is the Dynamics 365 has a 10$ month version and it goes way up from you will pay like a trial version of a games with kids.
I decided not to deploy it and went back to MOA 2009(Microsoft Accounting 2009) a stable program Microsoft is trying to bury under the rug to kill everyone with the cloud and high costs.
It came out like less than $200 as they tried to steal Peachtree and QuickBooks growing customers as the economy flurried in 2006. By 2009 all the small business even if they were in good credit standing were destroyed by the banking industry and people in power. Like American Express canceling lines of credit and Mortgage lending out of hand. Microsoft did there share of damage to hard working small business pulled the plug and went to Great Plains and Dynamics.
I think they made a basic business blunder going to the cloud. Who trusts that anyone in those "Powers That be Could buy out or get your data"
I am a small businessman.I have a retail store of agriculture equipment.I want to implement ERP. the reason behind that total number of purchase product is not equal to sold products.because of some robbery in between by workers.Can ERP is useful for me?
Hey , very nice information given , it is more important how much a potential client willing to spend , it all depends on size of company and turnover per year
i understand about $25000 should be minimum expenditure
ERP is the best solution when it comes to customizing businesses in your own way. There are multitude of benefits with ERP, such as low operational costs and effective utilization of information etc.
Hello,
We are SAP Service provider company in Bangalore and USA.
We are specialized in implementing SAP Business One for Small and Medium sized industries.To know more information,please visit url;www.sapintellect.com
Thanks
Vara
There are number of companies providing ERP solution SAP / ORACLE / MICROSOFT etc... It's very important to deploy correctly to get maximum return.
How to set up cash sales entry such as daily Petrol cash sales in Fuel Station, without passing a separate Receipt entry and Sales Entry in Dynamics GP 2013?
Very nice information about ERP Implementation Cost. Good information keep on posting my friend.
Hello!
I am Vikas from Himachal. I need to buy a software solution for my Truck fleet management, fuel station and workshop management. The software shall be capable handling financial accounting, operations, payroll etc and multiple reports can be generated. Kindly suggest the best value for money solution.
Your suggestion shall be helpful for me as I am confused what to do? What do you advice ?
Thanks.
Thank you so much for sharing such a informative post with us. I was searching on the internet for identical information and came across your blog post. It was proved to be a very helpful for me.
Thanks for the article, it's interesting. But just one doubt: how many workers do you mean when talking about "middle-sized" companies?
Regards
We have our ERP system developed in asp.net and the price is less then you expect. contact me for further queries
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Names of Governments using Microsoft Dynamics or Navision as a Financial Management System?
The average total cost of an ERP implementation was $2.8 million, or 4.6 percent of annual revenue.
Thinking-minds.com
Hello Greg,
I stumbled upon this article when doing a google search for SAP implementation cost and I must say you have included the most crucial points. I also agree to what Globalteckz says above. It would be nicer if this article covered costs involved when companies opt for free open sources. I am going to definitely use the information you posted here to talk to my future clients who need more information when choosing a solution that fits in their budget and I will push them this url in the process.
By the way does a great job in the cost effective Custom ERP/CRM applications using free open source. You might get some information from there.
Thanks
Good informative on SAP pricing , one mejor part is Hardware. i have found this site on vast SAP costing analysis and Return on your investment calculation.
Very nice information about the pricing for ERP implementations. My suggestion is to cover Open source v/s proprietary ERP implementation cost. This will allow user to understand the effectiveness of Open source incase of budgets are low.
apart from the above which you covered there are other ERP costs also such as - support cost, future customization
Thanks
GlobalTeckz
These numbers are up there. I never knew it would take that much.
thanks for sharing the erp implementation cost ... very nice.