ERP Pricing: 5 Vendors, 5 Models & 6 Factors
ERPs are popular for providing end-to-end solutions, with the ERP market projected to reach ~$52bn in 2024.1 However, 47% of organizations faced cost overruns in their ERP implementations in 2023, often due to unclear pricing 2 This article explores ERP pricing models, factors influencing costs, and the pricing structures of 5 vendors.
Pricing of 5 ERP software
*The data in the table is extracted from one of Accumatica’s partner organizations.3
**The costs can differ depending on the modules. For detailed analysis, check the table below.
***The data in the table is extracted from one of NetSuite’s partner organizations.4
****SAP mostly offers higher pricing modules that include customization, training, and integration costs. Check out the tables below.5
Table features:
- The ERP software in the table were selected based on their popular use and the breadth of services they offer.
- The vendors are sorted according to alphabetical order.
5 ERP software pricing models
1- Accumatica
2- Dynamics 365
Due to the comprehensive pricing structure of Dynamics, we have created 3 tables:
- the first table explains the pricing structure only in the Sales industry,
- the second table explains the pricing structure in other industries,
- and the third table explains the pricing structure only in the service industry.
3- Netsuite
4- SAGE
5- SAP ERP
6 factors influencing ERP Pricing
Software licensing models (perpetual vs. subscription)
ERP software can be licensed either through a perpetual license, where a one-time fee is paid for indefinite use, or a subscription model, where a recurring fee is paid regularly. The choice between these models impacts the total ERP software cost over time.
Number of users and access levels
The ERP cost is influenced by the number of users who need access to the system. Different access levels, such as basic users versus administrators, also play a role in determining the cost.
Customization & integration
The extent to which an ERP system needs to be customized to fit specific business processes and integrated with existing systems affects the overall ERP project cost. More customization and complex integrations generally lead to higher costs.
Implementation & training costs
Implementing an ERP solution involves several costs, including setting up the system, migrating data, and configuring the software to meet business requirements. Training employees to use the new system can also contribute to the implementation costs.
Maintenance & support fees
Ongoing maintenance and support are necessary to keep the ERP system operational and up-to-date. These fees cover regular updates, troubleshooting, and technical support, adding to the long-term ERP costs.
Hosting options (On-premise vs. cloud)
ERP systems can be hosted on-premise, where the organization manages its own hardware and infrastructure, or in the cloud, where the ERP vendor handles hosting. Cloud ERP often involves a subscription-based pricing model, while on-premise solutions may require higher upfront costs for hardware and infrastructure.
5 Types of ERP pricing models
Perpetual licensing
This model involves a one-time payment for indefinite use of an ERP software.
- Advantage: One-time payment for indefinite use of the ERP software can lower long-term costs.
- Disadvantage: High initial investment increases the ERP implementation costs and impacts the ERP budget.
Subscription-based pricing
This model requires regular, recurring payments over time.
- Advantage: Regular, smaller payments make it easier to manage cash flow and ERP costs over time.
- Disadvantage: Total cost may be higher over the long term compared to a perpetual license.
Tiered pricing structures
- Advantage: Different tiers allow organizations to choose a plan that fits their specific needs and scale as they grow.
- Disadvantage: Moving to a higher tier can increase costs significantly, impacting the ERP budget.
Usage-based pricing
This model offers different pricing tiers based on the features and services included.
- Advantage: Costs are based on actual usage, which can be beneficial for organizations with variable usage patterns.
- Disadvantage: Unpredictable usage can lead to fluctuating costs, making it challenging to maintain a stable ERP budget.
Hybrid pricing models
This model charges based on the actual usage of the ERP system.
- Advantage: Combines elements of different pricing models that offers flexibility in managing ERP costs.
- Disadvantage: Complexity in understanding and managing the different components of the ERP pricing structure.
Hidden costs in ERP implementation
Data migration expenses
Transferring existing data into the new ERP system can be time-consuming and complex, adding to the overall ERP cost.
Customization costs
Modifying the ERP system to fit specific business processes, such as inventory management or customer relationship management (CRM) can significantly increase the total cost. (data)
Ongoing maintenance and upgrade fees
Regular updates, technical support, and necessary upgrades involve ongoing costs that contribute to the long-term expenses of ERP solutions.
User training and change management
Training employees to use the new ERP system and managing the organizational change process incurs additional costs, impacting the overall ERP budget.
5 tips to consider with ERP pricing
- Request detailed quotes: Ask ERP vendors for detailed quotes that break down all costs, including licensing, customization, implementation, and ongoing maintenance.
- Evaluate total cost of ownership: Consider the total cost of ownership, including hidden costs such as data migration, training, and upgrades, to understand how much the ERP solution will cost over its lifespan.
- Negotiate terms and pricing: Engage in negotiations with ERP vendors to secure the best possible pricing and favorable terms, potentially lowering the overall ERP implementation cost.
- Check vendor support: Assess the quality and availability of vendor support and services, as poor support can lead to increased costs and disruptions in the long run.
- Evaluate future scalability: Ensure the ERP solution can scale with your business needs without incurring blocking costs for your business for future requirements.
What is ERP software?
Enterprise resource planning (ERP) software serves as a business solutions that allow organizations to manage, connect, and facilitate data flow across various business processes, including:
- Financial analysis
- Procurement
- Accounting & accounts payable
- Supply chain management
- Human resource management
Reference Links
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE and NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and resources that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised enterprises on their technology decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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