Shopping for an ERP system and can’t get a straight answer on price?
You’re not alone. Ask five vendors what ERP pricing looks like for a small business and you’ll get five different answers. The majority of them start with “well, it depends…”
And that’s frustrating.
Here’s the problem:
The pricing page tells you almost nothing about what you’ll end up paying. Licences rarely account for the majority of the cost. Expect setup, training and data migration to double (or triple) your bill.
The good news?
Once you see where your money is actually going, you can budget something that works.
Here’s the full breakdown…
Inside this guide:
- What Does ERP Actually Cost A Small Business?
- The 4x ERP Pricing Models You’ll Come Across
- The Hidden Costs Nobody Tells You About
- So, How Much Should You Really Pay?
- 5x Ways To Keep Your ERP Costs Under Control
What Does ERP Actually Cost A Small Business?
Start with the number everyone wants.
Most small-business cloud ERP vendors charge per user, per month. Today, prices range from around $70 to $200 per user/month depending on functionality required.
Wow, so depending on what packages a team of 10 people go with… They could be spending between $ 8,400-$24,000 per year on licences alone.
Most consumer-grade small business systems fall within that spectrum. Consider how Microsoft Dynamics 365 Business Central pricing stacks up against other small-business ERPs — the low-end, per-user pricing lands toward the bottom of that range. Which is why many small teams who are already using Outlook + Excel start here when they look at ERP pricing.
But here’s the kicker…
Licenses themselves are just one part of ERP costs for small businesses. In the long term, the actual figure is much higher. Industry research found the average five-year cost to small businesses equates to $7,143 per user.
And that’s not pocket change.
The 4x ERP Pricing Models You’ll Come Across
You must understand how vendors bill before you compare quotes. There are 4x main pricing models:
- Per-user subscription: Monthly fee per person who logs in. This is by far the most common pricing model used by cloud ERP vendors.
- Tiered plans: You choose a tier (basic, standard or premium) which unlocks more features as you go higher.
- Module-based pricing: Pay per module you use, like finance/inventory/payroll, etc.
- Perpetual licence: Upfront cost is hefty but all yours. You pay annually for updates and support.
In that order.
Per-user subscriptions are far and away the most common today. Perpetual licences are being phased out.
So which one is best?
Truthfully, a cloud subscription works best for most small businesses. There’s no need for servers. There’s no need for a large IT department. And your monthly expenses are predictable.
Perpetual licences … can end up cheaper over 7-10 years… but that initial cost is hard to justify for an expanding business.
The Hidden Costs Nobody Tells You About
This is where most small businesses get caught out.
The visible price is your software subscription. But beneath that, many other costs lurk. Watch for these….
Implementation
Implementation involves getting the system ready to go live for your business. This includes mapping your processes, configuring settings and integrating your other tools.
Most often, it is the largest expense of them all. On average, implementation services range from 1x to 2x your software bill. For a small business, that typically means $10,000 – $25,000 for a standard implementation.
Data Migration
Your customer lists, inventory records and financial history must all be transferred to the new system. The dirtier your data, the more you can expect to pay.
Cleaning up old spreadsheets takes time… and time costs money.
Training
New software won’t do you any good if your employees don’t know how to use it. Allocate funds for training classes — not a demo right after launch.
Customisation & Integrations
Need the ERP to integrate with your ecommerce store or CRM platform? Each add-on integration will be added to your invoice. Extensive customisation will cost you another 50% or more on top of your licence fees.
Ongoing Support
Being alive is just the beginning. Maintenance, patches, and support plans are all charged annually.
Add it all up, and it becomes clear why ERP projects fail so often. On average, one survey found that only 35% finished on budget, while over a third exceeded the budget by at least 26%.
Pretty scary, right?
So, How Much Should You Really Pay?
There’s a simple way to think about it.
When planning your ERP budget for year one, this is what you should expect for 5-15 users in a small business:
- Basic setup: $20,000 to $50,000
- Mid-range setup: $50,000 to $100,000
- Complex setup: $100,000+
Those numbers include licences, implementation and training.
After year one, expenses decrease. You are basically paying for subscriptions and support from that point forward.
Here’s the golden rule:
Multiply your annual licence fee by 2-3x. That’s how much your first year will probably end up costing you.
Not exact. But WAY closer than what’s listed on the pricing page!
5x Ways To Keep Your ERP Costs Under Control
Spending money on ERP isn’t the problem. Wasting money is.
Here are 5x simple ways to stop that from happening.
Know What You Need Before You Shop
List the exact problems you want to address. Stock control? Invoicing? Reporting?
When you have your list, adhere to it. Don’t spend money on bells and whistles you won’t use for the next three years.
Start Small And Grow
Many cloud ERPs allow you to add users/modules down the road. Implement with the basics (typically finance/inventory) and expand later.
Your budget will thank you.
Keep Customisation To A Minimum
Keep in mind that every custom functionality you create is something you’ll be paying to support. Force your process into the software whenever possible.
Clean Your Data First
Clean up your spreadsheets prior to migration day. The less cleanup your implementation partner has to do, the less money you’ll spend.
Get A Fixed Quote
Request a fixed-price quote based on a detailed scope of work. Hourly billing with an undefined scope is how minor projects become silent nightmares.
Simple, right?
The Bottom Line On ERP Costs
ERP software pricing doesn’t have to be daunting for small businesses… after you understand where your money is going.
To quickly recap:
- Licences usually cost $70 to $200 per user each month
- Implementation is often the highest single cost
- Data migration, training and integrations add up fast
- Multiply your yearly licence by 2-3x to estimate year one
Do your due diligence, stay within scope and DOCUMENT everything. That’s how you ensure your new ERP investment earns a return… rather than wiping out your savings account.
