Considering an ERP system, but concerned about the cost of implementing an ERP system? You’re not alone. ERP system can revolutionize the business by making operations smooth, help increase efficiency & enhance profitability. They require an investment, but if you’re strategic and plan out effectively, you’ll get what you put in.

By understanding the ERP costs at the start, companies can eliminate budget overruns, hidden charges, and delays. An ERP system, when embraced correctly, will be a long-term asset that maximizes your resources and propels growth.

So how much should you allocate for ERP development services? And what can increase the price? To put it all in perspective, we’ll break it down here — from pricing breakdowns to factors affecting that cost. This will help you plan smarter and avoid expensive surprises. Let’s get started!

What is ERP?

Enterprise Resource Planning (ERP) – ERP is a business management software that assists organizations in integrated and automated critical day-to-day operations. An ERP system is generally used for managing key business functions like accounting, procurement, project management, compliance, and supply chain operations.

A fully integrated ERP suite comes with Enterprise Performance Management (EPM) tools, helping businesses plan, budget, forecast, and report parts of past performance and future projections with higher accuracy.

When properly deployed, ERP solves the problem of data silos by creating a single source of truth. This helps to reduce duplication and ensure data is accurate and up-to-date when needed.

What is The Cost Of Implementing An ERP System? 

The cost of implementing an ERP system can differ greatly according to business size, deployment model, customization requirements, and integration complexity. Typically, the cost of ERP implementation runs from $30,000 to $350,000 for a business.

The total investment generally includes:

• Initial Expenses: Software licenses, hardware, customization, integration, employee training, etc.
• Recurring Costs: Maintenance, systems updates, support, and cloud subscription fees.

While smaller businesses might choose standard cloud solutions with low upfront prices, enterprise clients require a high degree of customization and integration that pushes the cost of implementing an ERP system up. Well-structured and proficient planning and budgeting will help avoid shock expenses and guarantee a steady ERP implementation.

Here’s a table explaining the cost of ERP implementation based on business size: 

Business Size	Estimated Cost Range	What’s Included?
Small Business	$50,000 – $150,000	Licensing, basic customization, and minimal hardware. Cloud-based solutions reduce costs.
Mid-Sized Business	$150,000 – $750,000	More customization, integrations, and employee training. Costs increase with complexity and user count.
Large Enterprise	$750,000 – $4M+	Extensive customization, large-scale integration, advanced training, and ongoing maintenance.

Factors Affecting The Cost Of Implementing ERP System

1. Module

The biggest driver behind the cost of implementing an ERP system is the number and type of modules you require. Here are a few important questions you might consider before implementing the ERP: 

•  Do you just need a basic accounting system, or do you need extra features, such as financial reporting, budgeting, and forecasting? 
• Does your company need specialized tools like payroll, HR management, accounts payable automation, or utility billing software? 

Some organizations may choose a single, critical component, while others purchase the entire suite to unify disparate business functions. 

Each module has its own level of complexity, and the more advanced the functionality, the more expensive it is. An enterprise resource planning (ERP) system with many modules will undoubtedly ask for a bigger budget, but, will enable higher efficiency and transparency of data in departments. With your specific business needs in mind, this information should help guide you to an informed decision. This way you can invest in the right modules at the right time, and avoid unnecessary expenses. 

2. User Count

User base is a considerable factor in the cost of implementing an ERP system. A platform appropriate for 20 users will work very differently from one that scales for 2,000. With an increasing user count comes an increasing implementation cost. Here are some questions you might consider asking yourself:

• Does your business need ERP access for a few employees or your whole company? 
• How many employees will need to be trained to get up to speed? 
• Is your IT team able to effectively manage end-user support and troubleshooting as the system scales?

In addition, more users mean longer implementation timelines, more IT support needs, and more system maintenance needs. And as the workforce expands, so do the challenges around infrastructure, security, and general system performance.

As a result, an ERP system fit for a larger user base will need more planning, more resources, and a larger up-front investment. But when these factors are expected from the outset, companies can enjoy a smoother rollout, fewer disruptions, and long-term costs will also be kept in check.

3. Functionality

An ERP system that offers more features comes at a higher cost. Enhanced features such as work order management, automated workflows, and project management further increase the cost. Here are some questions that might be considered before implementing ERP:

• Basic ERP functions or advanced tools for complex operations? 
• Do you want your team to take advantage of automated workflows and personalized processes? 
• Can your IT staff handle the upkeep of a rich feature system?

Moreover, the implementation of complex ERP features requires skilled software engineers. More sophisticated systems also require continual upkeep, driving up costs in the long run.

It is therefore imperative to invest in the correct level of functionality.  While advanced features can increase efficiency, selecting only those things that your business needs can also help to balance the cost of implementing an ERP system with derived value.

4. Size Of Database

The amount of data in your database impact ERP pricing. More data stored in the cloud means higher hosting fees, and transferring large volumes of data requires more time and effort. Additionally, database development plays a crucial role in structuring and optimizing data storage, which can affect overall costs. Here are some questions you might consider:

• How much historical data does your business require? 
• Are you okay with a straightforward data transfer, or do you require an elaborate migration? 
• Can your team absorb the additional time and cost of transferring each transaction?

A standard transfer is more rapid and less expensive but might leave out all the details. On the flip side, full data migrations retain all the records, but they are slower and cost more.

The right approach will keep costs down while giving you data that suits your business.

5. Customization

Customization of an ERP system increases the total expense. Custom solutions cost more than out-of-the-box systems because they take more time and resources. Here are some questions that you might consider:

• Does your business need features that commercial ERP solutions can’t provide? 
• Is having a flexible system will support your better operations? 
• How invested are you going to be in making the software work for you?

Customization leads to longer implementations and higher costs. However, a thoughtfully managed system can effectively increase throughput and scale with your business over time.

Investing in the right amount of customization ensures your ERP has the support it needs for your operations while maintaining some cost control.

Also Read: Top Custom Software Solutions in Abu Dhabi

6. Scalability

The cost of implementing an ERP system is influenced by its ability to grow with your business. Systems that can accommodate more users and greater volumes of transactions are often pricier.

• Is your business going to grow in the next years? 
• Does your ERP have the capability to accommodate the growing demand? 
• How critical is long-term scalability for your operations?

A scalable ERP saves you costly upgrades or migrations in the future. Though this approach may cost more upfront, it ensures your system will support growth going forward without interruptions.

Opting for an ERP solution with the perfect scalability aids your business in adapting without any glitches. This can prove time and cost-saving in the long run.

Top ERP Platforms

1. Netsuite

NetSuite ERP is hosted in a multi-tenant environment as a cloud-based business management solution. It has four levels of service and a pricing model based on three things: the core platform, optional modules, and users.

It offers additional industry-specific advanced modules, with prices varying by edition. Baseline technical support is included with the NetSuite license. Moreover, 24/7 support is available at a cost via NetSuite Premium Support, which is calculated as a percentage of the software’s contract value.

2. Odoo

Odoo is an open-source suite of enterprise resource planning (ERP) software to automate and optimize all facets of a business. This includes finance, inventory, sales, customer relationship management (CRM), human resources (HR), and marketing systems. It also offers flexible deployment options to fit various business requirements.

• Odoo Online – A cloud solution that provides software services, round-the-clock technical support, unlimited bug-fixing, and security updates, all controlled by Odoo.
• Odoo. sh – An advanced option giving businesses the capability to install custom modules and make their ERP system even more flexible.
• On-Premises – Installed on a third-party or local server with complete power over upgrades, upkeep, and limitless customizations with no constraints on add-ons.

3. Microsoft Dynamics 365 Business Central

Microsoft Dynamics 365 Business Central is the one-stop business management solution for streamlining financial, sales, supply chain, manufacturing, and project management processes. It offers functionalities for businesses from different sectors and provides extensive product documentation. 

Support Services:

• Standard Support – Available with every Dynamics 365 purchase.
• Professional Direct Support – Prioritized issue handling and proactive servicing for a minimum of 20 users for $9 per user/month
• Unified Enterprise Support – Meant for larger companies with critical needs, across all the Microsoft apps. It offers Professional Direct Support, plus on-site diagnostics and servicing, with custom pricing.

4. Microsoft Dynamics 365 Finance & Operations

Microsoft Dynamics 365 Finance & Operations is an end-to-end solution for medium to large enterprises. It manages key business processes, such as finance, supply chain, HR, and commerce.

Deployment Options: 

• Cloud (SaaS) – Hosted on Microsoft Azure, providing advanced security and tight coupling with Azure services.
• On-Premises — Offers complete control of the IT environment and allows greater flexibility when customizing software.
• Hybrid Deployment – Offers a blend of cloud and on-premises advantages enabling organizations to find a balance between security, control, and scalability.

5. Acumatica

Acumatica is cloud ERP software developed for small- to mid-sized businesses in every kind of industry including but not limited to manufacturing, distribution, services, construction, software, retail, and eCommerce.

The cost of Acumatica is based on three main features:

• Edition Type – With industry-specific modules and business function modules.
• Licensing Model – Flexible licensing model based on business requirements.
• Consumption of resources – Pricing varies based on the volume of transactions and the degree of system usage.

Conclusion

ERP implementation is a great investment and therefore requires meticulous planning. So, the right solution really comes down to your business needs, budget, and long-term goals. Identifying key factors affecting the costs enables you to eliminate surprise expenses, manage your budget, and achieve better ROI.

Also, initial and continuing costs are correlated with customization, user numbers, and scalability. Thus, a systematic approach guarantees seamless deployment, increases efficiency, and facilitates business expansion. Ultimately, a good partnership with the correct ERP provider simplifies implementation and maintenance, resulting in long-term success. This is where Talentelgia can help you out. With over 12+ years of experience, we have acquired a skilled workforce and expertise in ERP software development services and can assure the best in the industry.