How Much Does An ERP System Cost?

erp cost

Enterprise Resource Planning (ERP) is a critical business automation system that helps streamline various business functions and operations. Shopping for an ERP system is no easy task, especially if you have no idea how much to spend on such software.

The best way to start the search for a new ERP software is to set a budget. With planning and thorough understanding of what your business needs, it will make it easier to find the right ERP software.

But, first, let’s answer the question everyone’s asking…

How much does ERP software cost?

It’s impossible to give you the precise cost of an ERP without understanding your actual needs. The size of the business, numbers of users, customization requirements, and complexity of the company are some of the factors that influence the ERP cost.

Since the cost of implementing an ERP varies greatly depending on the number of users, functions used, and the size of the company, many companies express the sentiment that they cannot calculate the approximate cost before implementation. So, as a general example, this article will explore some of the approximate costs of implementing ERP for small and medium-sized enterprises such as Microsoft Dynamics GP and Microsoft Dynamics NAV, using the number of users as a guide.

Total cost comparison: Examples of three companies with different numbers of users and functions

Implementation cost comparison: Cost Details

Company A 3 users: Financials only

Software license cost: about $5,000-$8,000 (Includes purchase costs such as the first starter pack and annual maintenance fee for the first year.)

  • New users can be added for $ 3,600 per user. (Such as Microsoft Dynamics GP.)

Implementation Service Fee: about 90-120 hours (System design / development, data migration, user training, etc.)

  • Typical vendors charge between $ 150 and $ 195 per hour.
  • Assuming that customization and integration with other system are unnecessary.

Hardware Cost: If a dedicated server machine, related license, or new network equipment are needed, it costs about $12,000 to $20,000.

Company B10 users: Financials, Sales, Inventory Management

Software license cost: about $30,000 (Includes purchase costs such as the first starter pack and annual maintenance fee for the first year.)

  • New users can be added for $ 3,600 per user. (Such as Microsoft Dynamics GP.)

Implementation Service Fee: about 220〜320 hours (System design / development, data migration, user training, etc.)

  • Typical vendors charge between $ 150 and $ 195 per hour.
  • Assuming that customization and integration with other system are unnecessary.

Hardaware Cost: If a dedicated server machine, related license, or new network equipment are needed, it costs about $25,000 to $35,000.

Company C15 users: Financials, Sales, Inventory Management

Software license cost: about $48,000 (Includes purchase costs such as the first starter pack and annual maintenance fee for the first year.)

  • New users can be added for $ 3,600 per user. (Such as Microsoft Dynamics GP.)

Implementation Service Fee: about 300〜450 hours (System design / development, data migration, user training, etc.)

  • Typical vendors charge between $ 150 and $ 195 per hour.
  • Assuming that customization and integration with other system are unnecessary.

Hardaware Cost: If a dedicated server machine, related license, or new network equipment are needed, it costs about $30,000 to $40,000.

ERP project cost structure

1. Software license fee

  • (When using cloud-based ERP) Monthly subscription price
  • (When using on-premise ERP) Initial software purchase.  Annual maintenance fee in addition, usually costing 16% to 25% of the software license fee.  By paying annual maintenance fee, you are guaranteed an upgrade to new versions.

2. Implementation service cost

  • Implementation service (average hourly fee: $150-$195, varying by vendor)
  • Generally, costs such as system design / development, data migration, and user training are included.
  • Technical support (average hourly fee: $150-$195, varying by vendor)

3. Hardware costs, etc.

  • Dedicated server machine and related license costs, server construction costs, etc.
  • Firewall (usually not a requirement for ERP projects, but required if you are not using a corporate firewall)
  • Data backup solution (if necessary)

Cost benefits of ERP systems

While many businesses focus on the cost of ERP, they forget to consider the savings they make to switch to a modern ERP system. Here are some examples of the cost savings of an ERP:

  • Controlling IT costs
  • Providing financial visibility 
  • Securing all company data in one place
  • Creating single analytics or reporting location
  • Making it easier to accurately track inventory and sales
  • Streamlining collaboration between employees in different departments
  • Improving customer service
  • Increasing supply chain efficiency
  • Providing smarter business intelligence

Dynamics 365 Pricing

With Dynamics 365 licensing, you can leverage the benefits of a robust ERP system to manage your business. It is a cost-effective solution that offers end-to-end functionality.

When comparing Dynamics 365 licensing options to find the best solution for your business, there are a few things that you need to consider. You first need to consider your business’s needs, the functionality being offered, and if there is a need to customize individual apps. The number of users also plays a role in the total cost of your ERP.

  1. How to Select an ERP
  2. How Much Does An ERP System Cost?
  3. How Long Will An ERP Project Take To Implement?
  4. Cloud ERP vs On-Premise ERP – Which Is Better?
  5. How to Select an ERP Vendor
  6. How To Get The Best Price On An ERP System
  7. ERP Project – Fixed Bid or Time and Materials?
  8. ERP Comparison: Dynamics 365 Finance and Operation, Dynamics 365 BC, Dynamics GP
  9. What is a Cloud ERP Solution?

If you have any questions about ERP system implementation, please feel free to contact Calsoft Systems anytime.