9 Factors That Affect the Price of ERP Software

It feels like the price of Enterprise Resource Planning (ERP) software is often hidden. It’s one of the more frustrating things when looking for local government software. It’s the one thing you want to know and it’s the last thing the sales guy wants to talk about. But why? 

The short answer is: pricing is variable. There’s not one set price for ERP software because it depends on several factors. In this article, we’ll discuss those factors and the reasoning behind them so you can better understand how ERP software is priced. 

Factors 

1. Module / Number of Modules 

2. Functionality 

3. Number of users  

4. Size of database 

5. Scalability 

6. Customization 

7. Cloud vs. On-premise 

8. Implementation 

9. Customer Service 

Module/Number of Modules 

The most obvious reason for price variation is what type of ERP software module and how many modules you want. Do you want accounting software? Do you want reporting capabilities with it? How about budgeting and forecasting solutions? Do you need utility billing software, accounts payable automation, Payroll, or HR software? Maybe you want transparency, too. You may just want one program, or the whole suite! Buying more modules is a bigger expense and each software has a different level of complexity. More complexity equals a higher price tag (see Functionality below).  

Functionality 

The more features and capabilities an ERP software system has, the more expensive it is likely to be. More complex systems with advanced functionality—such as work order management, workflows, or project management—will typically be more expensive than simpler systems with basic features.  Why? Because 1) configuring and setting up more complex workflows specific to your organization requires expertise and industry insight from seasoned software developers and 2) software with more functions takes more manpower to maintain. 

Number of Users 

The number of users also affect the price of ERP software. Sustaining a platform with 20 users versus 2,000 users presents different challenges to IT staff and customer service representatives. It takes more time to implement software in a bigger organization because there are more people to train. Support tickets entered will be drastically different based on the number of users. The system maintenance will be more robust for a company with more users. The more people a company has on the platform, the more time goes in to sustaining and scaling it. 

Size of Database 

Database size determines the cost of ERP software, too. The more data that is on the cloud, the more cost is incurred to host it. It also has to do with the number of transactions that specialists need to convert to the new system. Many ERP solution companies just offer bucket conversions, which don’t take as much time, but are much less detailed. A transactional data transfer takes all transactions within a timeframe and converts them to the new system, giving you access to more specific data. This takes more time, thus costs more. But it also could be better for your organization. 

Scalability 

The ability of an ERP software system to scale with a business as it grows can impact the price, as well. Systems that can accommodate more users or handle higher volumes of transactions will generally cost more than systems that are limited in their ability to grow. Again, this has to do with functionality (see above). If you want your organization to grow though, you need a software that grows with it. 

Customization 

Customizing features of ERP software plays a role in cost. An ERP software that can be tailored to a company's specific needs will often be more expensive than off-the-shelf systems that cannot be customized. Customization can require additional development time and resources, which can drive up costs. The best financial reporting software will be adaptable and allow for add-ons to customize each experience. 

Cloud vs. On-Premise 

The deployment model of the ERP system can also impact the price. Cloud-based systems generally have lower upfront costs but require ongoing subscription fees, while on-premise systems require a larger upfront investment but may have lower ongoing costs. Cloud platforms also offer daily back-ups and necessary cyber security for local governments. Upkeep is the main factor of cost for on-premise servers, and for many it’s not worth the hassle. 

Implementation 

The cost of implementing an ERP system can differ depending on the level of support and training provided by the vendor. Some vendors may charge a flat fee for implementation, while others may charge based on the number of users or the complexity of the implementation. Implementation depends on the former financial software you used (if any), the learning ability and number of people who need to be trained, and the amount of data that you need to manage. 

Customer Service 

The reputation of the ERP software provider and the level of support they offer can also impact the price. Vendors with a strong reputation for quality and support may charge more than vendors with a weaker reputation. To gain and maintain a good reputation, vendors must compensate exceptional employees appropriately, thus cost is affected by the number and quality of customer service representatives kept on staff. The people on our team, for example, all have either an accounting degree or real-world local government experience, so they speak your language and are compensated for it. 

How We Quote Our Software 

We tend to give a price range to our potential customers. We do this early, so you know right away whether it makes sense to continue the conversation. All the above factors affect our quote, but we maintain that having great software and top-tier customer support and implementation is vital to giving you what you truly want and need: an ability to track your financials in a meaningful way that saves you time and energy.  

Conclusion 

There are many factors that affect the price of Enterprise Resource Planning (ERP) software. Overall, the cost of an ERP system will depend on a variety of factors, and public agencies should carefully consider their needs and budget when evaluating different options. 

To talk options and pricing, reach out to our regional managers. They are experts who know the industry inside and out.  

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