1. How much does ERP software cost?

According to an ERP 2022 report , the average budget per user for an ERP project is around $9,000. An ERP implementation can cost between $150,000 and $750,000 for a mid-sized business.

ERP software pricing depends on many different factors, including software version, number of subsystems, customization requirements, etc. Among the factors affecting software pricing, the cost of implementing an ERP project will depend on the following main factors:

• Software Version: The off-the-shelf packaged version will cost less than the version that needs to be customized according to business requirements.
• Deployment model: ERP on cloud or ERP on premise
• Number of subsystems and modules in the system: The number of subsystems that a business wants to deploy is a factor that greatly affects the cost. Businesses need to clearly plan the subsystems that they want to deploy. Important ERP subsystems include: finance - accounting, production, customer management, logistics, etc.
• Business size: The size of the business and the number of users are also important factors. The implementation unit will base on the number of users to give an ERP software quote.
• Programming language in software: Depending on each country to install the appropriate language.

In addition to the factors that may affect the budget mentioned above, businesses need to anticipate other hidden costs such as: Internal system administration personnel costs, infrastructure upgrade costs, data cleaning costs, personnel training costs, maintenance costs, consulting and post-implementation support costs, etc.

See more: What is ERP? Applications and how to deploy ERP system

2. Determine the appropriate ERP pricing model

Currently, there are 2 ERP pricing models commonly used by businesses. Including the perpetual license model and SaaS. Each model has specific advantages and disadvantages below:

2.1. Perpetual license model (on-premise ERP deployment)

This model allows users to store data and install software on the enterprise's server. The cost to deploy this model is quite high, so it is more suitable for large enterprises with ready hardware capacity than small and medium enterprises. 

Some advantages and disadvantages of the on-premise ERP model:

Advantage:

• The cost of ownership is clearly defined.
• Software license is permanent.
• For large enterprises, in the long run, deploying ERP on premise will have a lower total cost of ownership (TCO) than other models.

Disadvantages:

• The initial investment cost is quite large, difficult to apply for small and medium sized businesses.
• Costly to scale as business grows due to need for further infrastructure upgrades

2.2. SaaS model (on-cloud ERP deployment)

Compared to the perpetual license model, SaaS is trusted and used by many businesses for business. Because this model focuses on flexibility when the business needs to expand, combined with cloud data storage services, businesses do not need to invest in upgrading infrastructure, hardware or huge upfront licensing costs. 

The SaaS model also offers users the following specific advantages and disadvantages:

Advantage:

• Costs are based on the number of transactions or users, providing greater flexibility and scalability
• Lower initial costs due to no hardware expansion or upgrades
• Low initial licensing costs

Disadvantages:

• For large businesses, the budget to pay for the SaaS model over time can be larger than that of a perpetual license.

To be able to choose between these two deployment models, you will need to re-evaluate your existing infrastructure, predict your business growth rate, anticipate the ability to scale, and balance the initial deployment costs and the costs that will arise after implementing ERP.

See more: AI Application Trends in ERP System: Smart Business Management System

3. How to estimate and implement ERP properly

Here are the steps to estimate and budget an ERP system:

Assess existing resources and infrastructure

Businesses conduct an assessment of infrastructure and personnel resources that need to be supplemented or upgraded to support the ERP system if necessary. This will help businesses minimize risks when implementing the ERP system and anticipate possible costs.

Define project scope and requirements

Businesses need to clearly define their needs, ERP subsystems and desired features.  

Request a quote and consultation from the supplier

Contact a few ERP vendors, describe your business needs to get advice on suitable solutions and receive a price list for implementation. This will help you evaluate and compare vendors to choose from, as well as get more professional advice to build a better system.

Identify factors affecting the ERP implementation process to avoid risks for the business

Create a comprehensive project budget

Based on the fees that the consulting provider charges and the scope of the project, you create a specific project budget. Note that you need to anticipate hidden costs such as: Internal system administration personnel costs, infrastructure upgrade costs, data cleaning costs, personnel training costs, maintenance costs, consulting and post-implementation support costs, etc.

Identify cost-saving strategies (cost optimization)

Look for opportunities to reduce costs during ERP implementation. This may involve negotiating costs with vendors, identifying features that can minimize customization, leveraging existing infrastructure or resources, etc.

Related articles:

• Summary of popular ERP software in Vietnam today
• Enterprise Management System: Concept, Role and Optimization Steps

The question “ How much does ERP software cost ?” will be difficult to answer accurately and in detail . Determining the price of an ERP system depends on many factors. EDUTO hopes that through the information shared in this article, businesses will have an overview of ERP costs so that they can budget for their projects. If you have any questions related to ERP, units/organizations can contact EDUTO for detailed consultation and demo.

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