How Much Does An ERP System Cost?

The following two tabs change content below.
Wing Chan has been providing solutions for the Microsoft Dynamics (AX, GP, NAV) channel for the past 15 years. He specializes in ERP and MRP solutions for distributors, manufacturers, logistics providers, the trading industry and the travel industry.

ERP BUYING GUIDE SERIES (Article 3 OF 10)

Scroll to the bottom to see additional articles in this series. This interrelated series of blogs will focus on the important essentials to help you streamline the process of evaluating and procuring a new ERP system.

How Much Does An ERP System Cost?

Figuring out how much an ERP system costs (or perhaps fair market value) is a tricky question to answer. And the right answer for it is “it depends”, thus this article is intended to provide you some general guidelines as a basis for further research.

I’ll focus on costs for mid-market solutions in this article. Dynamics GP and Dynamics NAV are positioned by Microsoft as ideal for companies with $20Mil – $700 Mil in annual revenues. Both of these two ERP systems base the software licensing on concurrent users (# of users that can be in the system at the same time) instead of named users (actual # of people that will ever need to be in the system).

High Level Summary Costs of 3 Different On-Premise Scenarios (See Below For More Details):

  • (1) 3 CONCURRENT USERS – FINANCIAL MODULES ONLY
    This scenario is about $20,000-$30,000 (software & implementation services. Hardware is extra).
    Presumes that no customizations are needed. Presumes no integrations are needed.
  • (2) 7-10 CONCURRENT USERS – FINANCIALS, SALES & INVENTORY FUNCTIONALITY
    This scenario is about $60,000-$90,000 (software & implementation services. Hardware is extra).
    Presumes that no customizations are needed. Presumes no integrations are needed.
  • (3) 12-15 CONCURRENT USERS – FINANCIALS, SALES, INVENTORY FUNCTIONALITY
    This scenario is about $120,000-$180,000 (software & implementation services. Hardware is extra).
    Presumes that few customizations are needed. Presumes little to no integrations are needed.
  • (For clients needing; project accounting, manufacturing, eCommerce, etc functionality then please contact Calsoft for pricing for your specific needs.

Here Are More Details About The 3 Different Pricing Scenarios

(1) COSTS FOR A 3 CURRENT USER SYSTEM – FINANCIAL MODULES ONLY

  • Software: About $5,000 – $8,000 (includes one-time software purchase and first year of annual maintenance). First 3 users are $6,000 and it’s roughly $3,600 per additional concurrent user.
  • Implementation Service: About 90-120 hours (set-up, configuration, testing, training and maybe a very brief requirements analysis [i.e. 8 hours]). As a reminder vendors typically charge $150-$195 per hour. Presumes that no customizations are needed. Presumes no integrations are needed.
  • Hardware & Related: Roughly $12,000 – $20,000 if you don’t have any of the hardware & related items.

(2) COSTS FOR A 10 USER ON-PREMISE SYSTEM – FINANCIALS, SALES & INVENTORY MANAGEMENT

  • Software: About $30,000 (includes initial software purchase and first year of annual maintenance). Roughly $6,000 for 3 users and roughly $3,600 for each additional user.
  • Implementation Service: About 220-320 hours (includes; requirements analysis, set-up, configuration, testing, training and go-live support services). As a reminder vendors typically charge $150-$195 per hour. Presumption that no customizations are needed. Presumption that no integrations are needed.
  • Hardware & Related: Roughly $25,000 – $40,000 if you don’t have any of the hardware & related items.

(3) COSTS FOR A 15 USER ON-PREMISE SYSTEM – FINANCIALS, SALES & INVENTORY MANAGEMENT

  • Software: About $48,000 (includes initial software purchase and first year of annual maintenance). Roughly $6,000 for 3 users and roughly $3,600 for each additional user.
  • Implementation Service: About 300-450 hours (includes; requirements analysis, set-up, configuration, testing, training and go-live support services). As a reminder vendors typically charge $150-$195 per hour. Presumption that few customizations are needed. Presumption that little to no integrations are needed.
  • Hardware & Related: Roughly $35,000 – $55,000 if you don’t have any of the hardware & related items.

Cost Components Of An ERP Project

1. Requirements Analysis Service

  • The detailed requirements analysis (RA) is typically the initial phase of the project.
  • Most vendors will provide ballpark pricing until a detailed RA has been completed.

2. Software Costs

  • Monthly subscription pricing (if evaluating SAAS solutions).
  • Initial software purchase (for on-premise solutions).
  • Annual software enhancement (valid for on-premise solutions). Typically 16% – 25% of the retail price of the software annually. Annual enhancement typically entitles the client to software upgrades (and sometimes technical support services).

3. Service Costs

  • Implementation costs ($150-$195 is the average hourly rate of service providers).
  • Typically one-time costs for set-up, configuration, training, etc.
  • Technical support services (ongoing costs that vary and depend on the client needs). $135 – $175 is the average hourly rate of service providers in the mid-market.

4. Hardware Costs (If Needed)

  • Server and related server software.
  • Firewall (this is not really an ERP project requirement but a business class firewall is always recommended if one is not already being used).
  • Database back-up solution (if needed).
  • Fail-over solution (if needed).

If you found this article valuable then I encourage you to read some of the other articles in this series:

And of course Calsoft is available to assist. Call 1-888-838-8422 or Send us an email.

The following two tabs change content below.
Wing Chan has been providing solutions for the Microsoft Dynamics (AX, GP, NAV) channel for the past 15 years. He specializes in ERP and MRP solutions for distributors, manufacturers, logistics providers, the trading industry and the travel industry.
This entry was posted in Blogs, Distribution, Home, Logistics, Manufacturing. Bookmark the permalink.