There is a huge range of factors that determine the pricing of Enterprise Resource Planning (known as ERP) software. The starting cost of a simple ERP system is estimated at around $50,000, and this cost can go as far as $1 million for the more sophisticated systems such as Oracle or SAP.
For a first time buyer, there are several factors to consider, which will indubitably affect the price of an ERP.
These are as follows.
One of the determinants of the cost of a good ERP is the number of software modules required. If you need a full ERP software solution consisting of all its modules- including finance, inventory, purchasing, and others, it will come at a higher cost. The second determinant of the cost of a good ERP is the number of users. Majority of traditional ERP solution offer seat based or per user pricing, which changes based on the number of total users that you need.
Thirdly, the price of an ERP is determined by the degree of customization required. The implementation of ERPS, is typically complex and more often than not requires the services of a third party to implement. Therefore, the total price of the ERP has to include the cost of implementation, which is determined by the degree of customization needed. The more the man hours needed to implement the ERP, the higher the anticipated total price.
The cost of an ERP is also determined by recurring costs. The standard annual maintenance cost for majority of ERP software provider is 20%, and this should be factored in when drafting the cost estimate.
Other costs to consider include the use training costs, which depend on the level of tech savviness of your employees. Efficient and effective usage of ERP software solutions tend to necessitate a steep learning curve. Lastly, there is always room for negotiations when making the purchase, just like for any other business to business software, especially if you are a high spending customer.