ERP

PRICING
GUIDE
www.technologyevaluation.com
TABLE OF CONTENTS
Introduction 3

ERP Price & Company Size 4

ERP Pricing by Deployment Type 6

ERP Price and Vendor Tiers 9

ERP Price List—Basic ERP Price Examples 11

Open Source ERP Doesn’t Mean Free ERP 15

Implementation Problems That Inflate ERP Budgets 17

ERP Data Migration Costs 18

ERP Pricing—Variables in Determining Total Cost of Ownership (TCO) 19

ERP Price Negotiation 22

Select a Best-Fit ERP Solution at an Optimal Price 24

About Technology Evaluation Centers (TEC) 25

INTRODUCTION
The cost of investing in a new ERP system tends to be one of the most influential factors
when selecting a solution. Unfortunately, in many cases, vendors aren’t completely
transparent about ERP cost.

This doesn’t imply a critique of software vendors. ERP implementations can be massive,
complex projects requiring months or sometimes even years to complete. The price
of an ERP will depend on numerous factors, including the unique characteristics and
business requirements of your organization.

Technology Evaluation Centers (TEC) provides an insider view of fundamental factors

which affect the cost of enterprise solutions. Our ERP price guide includes the latest
numbers for some of the more popular vendors, along with variables which determine
the total cost of ownership (TCO) of an ERP.

Readers of this guide will find themselves better equipped to approach an ERP software
selection project from a pricing standpoint, including negotiations with those vendors
you identify as offering solutions that meet the needs of your enterprise.
ERP PRICE & COMPANY SIZE
One of the most impactful aspects of ERP pricing that depends on the company is
the size of the business purchasing the software solution. Small businesses with
fewer than 100 employees don’t need the same volume of users compared to large
enterprises which employ more than 10,000 personnel.

Managing thousands of employees through a centralized ERP increases the volume

of data processing and storage required to manage day-to-day operations. Large
enterprises are also likely to require a greater breadth of functionality, compared to
smaller businesses, which are more likely to specialize in a single product, service,
or vertical.

TEC’s Chief Technology Officer, Mehdi Aftahi, noted that, “the ratio of ERP expenditure
to the number of employees can be totally different across different industries.”
Despite the importance of the size of a company for pricing considerations, industry-
related functionalities, or specific factors may increase or reduce the cost of an ERP.
TEC’s 2019 ERP Experts Survey reveals a link between business size and ERP
budgeting benchmarks:
SMALL BUSINESS
(0-99 EMPLOYEES)
Most expert respondents recommended a
budget between $50,000 and $250,000 for
an ERP, with a minimum spend of $10,000
suggested by two respondents. One expert
in this cohort recommended a maximum
spend of $1,000,000.
SMALL TO MEDIUM BUSINESS
(100-999 EMPLOYEES)
According to the expert respondents, the
majority of small to midsize businesses
(SMBs) should invest between $250,000
and $1,000,000 on their ERP. One
respondent advocated a $50,000 spend
for an ERP solution, while two advised an
ERP implementation at a cost of just under
$5,000,000.
VIEW THE INTERACTIVE GRAPH 
MEDIUM BUSINESS
(1,000-9,999 EMPLOYEES)
The most common budget recommendation
for a medium business ERP is between
$1,000,000 and $2,500,000. A minimum
spend of $175,000 was prescribed by one
expert, while three respondents proposed a
$10,000,000 investment in ERP, the maximum
spend in this category of the survey.
LARGE ENTERPRISE
(10,000+ EMPLOYEES)
Most expert respondents from large enterprises
advised a budget between $5,000,000
and $10,000,000 for an ERP solution. The
least expensive ERP recommendation for
large enterprise was $300,000, while seven
respondents suggested a budget of $10,000,000
or more for an ERP solution, the most popular
response for this size category.
ERP PRICING BY DEPLOYMENT TYPE
Cloud computing capabilities have increased the deployment options for ERP software
systems. The traditional, on-premise deployment of ERP is no longer the sole option
for organizations seeking improvement through the use of enterprise software,
allowing a greater volume of businesses and business types to benefit from powerful
digital solutions.

The biggest hype behind cloud ERP solutions often focuses on the lower cost of cloud-
based, Software-as-a-Service (SaaS) implementations. However, when studied in detail,
cloud ERP solutions aren’t always automatically less expensive than on-premise ERP.
Viewed over a longer period of time, the costs of a subscription-based pricing model
may start to become more expensive after four or five years, especially considering
the possibility of an increase in monthly subscription rates, or the need to upscale
capabilities or transaction quantities as time goes on.

ON-PREMISE CLOUD
FACTORS INFLUENCING THE COST OF
ON-PREMISE ERP SOFTWARE

• User licenses for the ERP software, which are paid up-front.

• The biggest cost variables include number of users, number and types of
modules, add-ons, customizations, and the scope of the implementation.

• On-premise ERP price profile is typically suitable for medium and large
enterprises.

• Implementation is generally more expensive compared to cloud due to

hardware, software, and hosting requirements.

• Up-front cost of on-premise deployment is far greater than cloud but costs
over a five-year period can make cloud deployment more expensive than
on-premise.

• Maintenance fee is a percentage of overall license cost, often around 20%

per year. For some ERPs, third-party support may provide an option to
reduce maintenance fees.

• Buyer owns the software and hardware infrastructure, often requiring

internal IT personnel and/or vendor/third-party maintenance, increasing
overall cost of ownership.

• Buyer is responsible for patches, upgrades, and new features.

FACTORS INFLUENCING THE COST OF
CLOUD ERP SOFTWARE

• Monthly or yearly subscription model.

• Similarly to on-premise, the most significant cost variable is usually the

number of concurrent users, with modules, add-ons, customizations,
modifications, and scope increasing overall cost.

• Allows smaller businesses to access powerful solutions previously only

available to large enterprises.

• Initial deployment not without cost—vendors may have to configure, or

consultants might need to be hired.

• Scalability may incur considerable additional costs, especially when price

model includes data transaction volume.

• Cost of SaaS can be more expensive than traditional license over a multi-
year span, especially if the cost of a monthly subscription rises.

• Cloud enables upgrades and integration of best practices and software

improvements, performed by the vendor, at a lower cost.

• Cost of having the infrastructure taken care of by software vendor and

included in subscription fee, along with patches, upgrades and some new
functionalities.

• Since SaaS vendor owns software and hardware, data ownership isn’t
guaranteed, which may result in additional costs to ensure data ownership.

• Base functionality for SaaS is often part of the low cost of entry, but additional
functionalities may greatly increase subscription costs.
ERP PRICE AND VENDOR TIERS
ERP vendor tiers exist to provide an easy classification scheme for software companies
and solutions. As technology and business needs evolve, this method of expressing
the size of companies and their solutions has started to change. Cloud computing,
Software-as-a Service (SaaS) deployment, globalization of markets, and the overall
democratization of ERP all contribute to a shifting foundation for vendor tiers and
pricing.

The rise of SaaS and the fall in prices of raw computing power and internet bandwidth
have pushed more powerful ERP solutions to the masses. As such, ERP tiers have
become less rigidly defined, with some vendors capable of providing solutions across
multiple software tiers.

SAP
MICROSOFT ZOHO
EPICOR

SAGE IFS
ODOO

ORACLE
ERPNEXT
NETSUITE INFOR

Tier 1 ERP Vendors Tier 2 ERP Vendors Tier 3 ERP Vendors

The Tier 1 group of ERP software consists of three well-known giants—SAP, Oracle,
and Microsoft. As a more recent member of Tier 1, Microsoft grew from an operating
system provider into a more dynamic business software corporation, bringing the
company alongside SAP and Oracle in terms of ERP solution capabilities.

Companies with global operations, complex business processes, significant market

caps, and massive revenue form the client base for Tier 1 and Tier 2 vendors. ERP
solutions for giant enterprises often require software capable of handling extreme
complexity, large volumes of data transactions, and complicated reporting requirements
which integrate numerous departments, localities, and business processes. The sky
is the limit for customization, with Tier 1 and 2 vendors capable of creating cutting
edge solutions and bespoke functionality, albeit at copious expense.

Tier 2 companies offer many of the same features and functionalities in their ERP
offerings as the Tier 1 titans, including innovations unavailable through top tier
vendors. However, the second tier doesn’t possess the same capacity as the top
tier for handling the biggest businesses on the planet. That said, some international
companies large enough for Tier 1 solutions may opt for the second tier without
losing a competitive advantage.

Tier 2 ERPs target mid-market organizations which require customization to meet

specific industry and vertical best practices. Tier 2 solutions also provide excellent
functionality, innovation, significant customization options, and room to grow. For
many, these solutions will represent a more flexible, cost-efficient path to implementing
an ERP which extracts a superb return on investment.

Tier 3 companies serve small to medium businesses, providing fundamental ERP

functionality at a cost which reflects a lower level of business volume and complexity.
Dozens, perhaps hundreds, of software companies occupy this tier, serving businesses
which don’t require or don’t have access to expensive ERP software.

The cost of Tier 1 solutions can rise into eight, nine, and even ten figures for massive
implementations. Tier 2 solutions are more affordable, especially for medium and
large businesses, with a cost that ranges from six figures to tens of millions of dollars.
Prices for Tier 3 ERP will range greatly, starting in the thousands but potentially
reaching seven figures under the right circumstances.
ERP PRICE LIST—BASIC ERP PRICE EXAMPLES
Most software vendors keep their cards close to their chest when it comes to ERP
pricing. In some cases, when a company reveals price details for their solution, total
costs still aren’t straightforward to determine.

ERP software implementation includes a considerable number of variables which impact

the overall cost of the project. To be fair, many vendors don’t want to publish prices
because the initial quote is unlikely to accurately represent the solution that the
purchaser needs.

Cloud implementation will likely result in different costs compared to an on-premise

installation. Additional modules and functionalities may increase the price, along with
a larger number of users. Costs may rise if the purchaser requires additional training,
support, or hosting from the vendor.

Ergo, most ERP software providers do not publish specific prices on their website,
making it difficult to obtain firsthand knowledge of cost. The following ERP price list
consists of basic examples from players of different sizes across industry verticals,
providing a good starting point to understand the cost of ERP software.
ERP PRICE LIST EXAMPLES

These ERP system prices were obtained directly from vendor websites in 2019
and are subject to change at any moment. This price list does not include
specific cost details, such as modules, add-ons, extra training, additional support,
potential maintenance fees, or implementation. Due to the complex nature
of ERP pricing, this list should be considered an educational tool instead of a
resource to leverage during negotiations.

(Costs are in USD, unless specified)

SAP (Business ByDesign)

$2,267/month (CAD)
Self-service user $23/month
Team User $119/month

Oracle (ERP Cloud)

$625/user/month, min. 10 users

Self-service user $20/user/month, min. 100 users

Microsoft (Dynamics 365)

$210/user/month

Odoo (Odoo)

22.50€-27.50€/user/month
Apps 10€-60€/month
Integrations 30€-80€/month

KPI (KPI)

starts at $10/user/month per app

Exact (Exact)

$319-$559/month for one user and one company

$15-$25 per extra user/month
$15-$25 per extra company/month
$15 per extra shop floor user/month
ERPNext (ERPNext)

Basic $5/user/month
Standard $10/user/month
Pro $25/user/month

BizAutomation (BizAutomation)

$79.95/user/month
one-time implementation fee quoted separately

Cetec ERP (Cetec ERP)

$40/user/month
add $500/month for Standard Plan
$3,200/month for Enterprise Plan

DBA (DBA)

5 users: $599/user/month
10+ users: $499/user/month
Annual License $90/user

Equipsoft (Equipsoft)

$170/user/month
one-time implementation fee determined by scope

JustFood ERP (JustFood ERP)

$170/user/month
one-time implementation fee determined by scope

OpenPro ERP (OpenPro ERP)

$1,000 per user

$1,000 per major module one-time fee
implementation fee extra
Striven (Striven)

$20/user/month + $99 subscription fee (Less than 20 users)

$15/user/month + $299 subscription fee (Less than 50 users)
$10/user/month + $499 subscription fee (unlimited users)

Jonar (ParagonERP)

$150/user/month (1-25 users)

Volume pricing for more than 25 users

Info-Power International (ABW)

$1,000/server
service fees extra

ECOUNT ERP (ECOUNT ERP)

$55/month
OPEN SOURCE ERP DOESN’T MEAN FREE ERP
At first glance, an open source ERP appears to provide a path forward without the
need for payment. However, open source software isn’t the same as free software.

The Free Software Foundation nonprofit defines four vital freedoms required for a
solution to be considered free:

• Freedom to run the program for any purpose, at any time.

• Freedom to study the source code and change the software to achieve the
desired functionality.
• Freedom to redistribute the software to help other people and entities.
• Freedom to distribute modified copies of the software to other people and
entities.

If one of these four tenets is not satisfied, the software is considered non-free.

Open source software refers to source code that people may inspect, improve, or
change, but the licensing behind open source software may restrict how the licensee
handles the software. As such, the license may prevent people from enjoying one of
the four freedoms which define free software.

Some open source ERP solutions don’t feature a licensing fee or a subscription fee,
allowing access to the software without payment. A couple of these options feature
outstanding code, a solid user interface, functional modules, and a path to scalability.

Considering the price of most ERP systems, open source software may appear to
be an attractive solution. However, the costs quickly add up when you consider the
investment required to go live. Downloading the code may be free, but someone
needs to implement the solution, tailor the system to meet business requirements,
and provide maintenance for the hardware and software infrastructure.

The overall financial benefits of a free or open source ERP may not materialize due to
performance issues or other inconsistent functionalities, even if the implementation
goes well. If financial benefits aren’t achieved, any time spent on an open source
installation becomes wasted.
Popular open source ERP, such as Odoo and xTuple, are paid software solutions,
requiring a fee to access the solution and services like hosting, support, upgrades
and consulting. Individuals and companies may access and inspect the basic source
code for free, but accessing the extensive business functionality of the ERP requires
a paid license agreement. Hence, open source ERP isn’t free.

Even free ERP solutions require some sort of investment, including spending time or
hiring IT personnel to ensure the functionality of the software.
IMPLEMENTATION PROBLEMS THAT
INFLATE ERP BUDGETS
ERP implementation is a complex process which may result in some cost overruns
due to challenges, some of them expected and others avoidable. The most common
causes of inflated ERP budgets were revealed by ERP experts during a recent TEC
survey, listed from most common to least:

• Software customization demands

• Business process scope change
• Enlarged overall project scope
• Unrealistic initial budget
• Implementation timeframe
• Technical infrastructure problems

Three out of four experts reported that the need to customize ERP solutions created
budget overruns for implementation projects. This fact shows the importance of
determining the specific technological needs of an ERP in relation to business processes
which facilitate key objectives.

Scope changes in overall ERP implementations and business processes were the next
most common cause of inflated budgets, which is also related to pre-implementation
planning. Sometimes, project stakeholders underestimate the massive undertaking
of establishing an ERP which integrates numerous business functions and software
into a single database. This cause of budget overruns can be related to customization
or scope change occurring later on in an implementation process.

An extended implementation timeframe, including missing key implementation dates,

was reported by one out of four experts as a major cause of increased cost. Issues
with technical infrastructure were the least common response, indicating the rarity
of hardware problems when setting up ERP software.
ERP DATA MIGRATION COSTS
Migrating data from legacy systems to your new ERP can be one of the most complex
aspects of implementing enterprise software. The risk of losing or corrupting key
business data sometimes acts as a deterrent when companies consider implementing
an ERP system.

In terms of overall ERP project costs, data migration may be one of the least predictable
aspects of implementation, especially if legacy data requires a lot of time to clean,
organize, and verify before uploading the information into the new business solution.

For some data migrations, legislative and regulatory requirements must be upheld
to avoid running into legal problems due to non-compliance. Companies which have
to meet standards, such as the Health Insurance Portability and Accountability Act
(HIPAA) or Financial Industry Regulation Authority (FINRA) requirements for data
retention, must perform precise data migration while maintaining strict standards
for privacy, security, and accuracy.

Companies purchasing a new ERP will be held responsible if they run afoul of HIPAA
and FINRA regulations because of mistakes during the migration process, adding to
the overall cost of implementation. Businesses which misplace, corrupt, or destroy
valuable data because of migration processes will also endure an increased cost
burden. Investing in a great data migration team will be essential for companies who
wish to avoid problems and escalating software costs due to data transfer issues.

Few businesses already employ the personnel necessary to perform outstanding

data migration. This may not be a problem in some scenarios, but if your company
hosts complex or sensitive info, hiring a data migration specialist or ensuring that the
software vendor has extensive experience handling complex data migration makes
sense. It may add to up-front costs, but the price of data management failure when
transferring from one solution to the next will incur greater costs—especially when
you hire a data migration crew after failure.
ERP PRICING—VARIABLES IN DETERMINING
TOTAL COST OF OWNERSHIP (TCO)

HUMAN RESOURCES HARDWARE AND SOFTWARE

AND PRODUCTIVITY INFRASTRUCTURE EXPENSES

ADDITIONAL ERP
ERP KNOWLEDGE COSTS
SOFTWARE COSTS

The most detailed and accurate method of pricing ERP software involves a breakdown
of total cost of ownership (TCO) over the entire lifespan of the solution. Similarly to
the software selection process as a whole, determining the TCO encompasses a wide
range of variables, including business objectives, hardware, software and human
resource considerations.

No universal template exists to calculate TCO for ERP for all business types, revealing
the complex nature of determining this cost metric. Organizations vary in terms of
company objectives, personnel, expertise, locality, industry, existing IT resources, and
business processes. Ergo, TCO calculations must be tailored to the unique properties
of your business. However, TCO for an ERP solution is generally calculated over a
given timeframe, such as five or ten years, including the following four factors.
1. HUMAN RESOURCES AND PRODUCTIVITY
During the transition from your previous business software to your new ERP, the
potential for reduced productivity exists due to delays caused by the transition
from one solution to the next. Server and software downtime prevents employee
productivity during business hours. In a worst case scenario, customers may be unable
to purchase goods and services or browse marketing materials due to downtime.

To ensure the best possible outcome of ERP implementation, staff may be diverted
from other projects to focus on the new software. In this scenario, additional costs
will occur if you need to hire personnel or contractors to cover for people reassigned
for the purposes of implementing the new ERP. Predicting human resource and
productivity costs may not result in a precise number, but a best estimate should be
attempted as part of TCO calculation efforts.

2. HARDWARE AND SOFTWARE INFRASTRUCTURE EXPENSES

Calculating the costs of hardware and software for ERP projects goes beyond funds
paid for servers, networking, licenses, or subscriptions.

Unless you plan to use a completely static ERP, maintenance and potential upgrades
should be included in TCO documentation. New modules, a greater volume of data
transactions (in the case of cloud-based ERP) and the price of adding more users
to your solution will determine the costs over several years. Scalability is a highly-
desired feature for ERPs, especially those implemented via the cloud, but there’s few
situations where a significant scale-up of operations won’t result in added expenses.

Testing the speed and capacity of hardware systems to ensure a smooth-running

ERP, along with complete testing of the software solution prior to going live, will
add to the overall TCO. These tests prevent costly failures down the line, including
risk management endeavors which reveal potential vulnerabilities of software, data
storage, networking, and servers.

This type of expertise may not be present within your organization, adding to human
resource and productivity costs discussed in the previous section.
3. ERP KNOWLEDGE COSTS
Training before, during, and after ERP implementation will be a necessary expense
to ensure that staff know how to use the solution in an efficient manner. Obtaining
a strong ROI from your ERP will be impossible if no one knows how the software
functions.

The option to customize helps to make sure that the software solution will fit with
important business processes, but customization should be performed only when
absolutely necessary. In many cases, engineering business processes to adjust to
the ERP will provide an easier path than recoding the software to match outdated
processes.

In some cases, you’ll need to audit your current processes and compare their output
to potentially optimized processes. This activity helps to establish a better alignment
of IT and business processes, at the expense of increasing the TCO.

4. ADDITIONAL ERP SOFTWARE COSTS

Accomplishing business objectives through an ERP may require additional software
that caters to industry-specific functionality. A design firm which uses an AutoCAD
integration may want to consider that as part of the overall TCO, even if the application
appears to be a discrete cost. Depending on the ERP solution selected, you may wish
to bolster security for the solution by shoring up digital defenses. Certainly, many
SaaS and cloud companies perform data and network security at a high level, but if
your solution will be on-premise, it’s essential to invest in your own security system
for defense and disaster recovery.

Adhering to regulatory principles may require extra work to ensure compliance

for HIPAA, FINRA, GDPR, or DCMA legislation, among others. Depending on the
requirements for compliance, additional work or specific infrastructure configurations
will impact the TCO bottom line.
ERP PRICE NEGOTIATION
By now, you should realize that shopping for an ERP solution is much more complex
than the majority of purchases performed by your business. Unlike retail or wholesale,
which often feature set prices for goods and services, cost negotiation is a significant
aspect of ERP pricing.

During software selection, price quotes will change as the process moves closer to
determining a short list of vendors which best meet the needs of your business. At
the beginning of the process, the prices provided by individual vendors will not reflect
the final cost. These initial assessments will be based on incomplete information,
forcing sellers to create a ballpark figure to estimate overall costs.

As your business process and technology needs are narrowed into a more precise
understanding, the precision of the price quote from the vendor becomes more
accurate. One of the biggest price changes often occurs during the final stages of
the software selection process.

In some cases, vendors will offer a 10% discount after the demo to help seal the deal.
In other scenarios, vendors will increase costs when they understand that additional
modules, functionalities, or customizations will be required to create business
processes that support the objectives of your organization.

Negotiation performed by an experienced, brand-agnostic software selection consultant

can help to reduce the overall cost of the solution. If 20% of the ERP’s functionality
won’t be used by the purchaser, a negotiation may focus on that fact to score a
discount. Instead of a discount, a rival vendor with similar features and capabilities
may be prodded into adding a feature without extra cost to sweeten the deal.

In addition to price reduction, the negotiation phase may be utilized to lock down
favorable payment terms for a business, aligning the vendor’s pay with achievement of
specific implementation benchmarks. Negotiation may also revolve around deployment
method. For example, a cloud deployment might require specific negotiation of data
ownership rights, including a clause which prevents the vendor from holding business
data hostage for an inflated ransom.
Prices may also rise because of extra modules, integrations, and add-ons, including
training, additional maintenance, and third-party software consolidation. When
choosing an ERP vendor, negotiating specific terms and coding them into the contract
will reduce price uncertainty and extra costs throughout the implementation phase.

EXPERT KNOWLEDGE CAN SAVE YOU

AN ADDITIONAL 20%-40%
SELECT A BEST-FIT ERP SOLUTION
AT AN OPTIMAL PRICE
Choosing an ERP which meets the needs of your business will boost the productivity of
your organization. Implementing the solution at the best possible price will decrease
the time required to obtain a return on investment for your software system.

This price guide for ERP discusses valuable information about software costs based
on the experience and expertise of impartial industry experts in the area of software
selection and negotiation.

Contact Technology Evaluation Centers today to access our ERP price experts and
learn more about the costs of an ERP solution for your business.
ABOUT
TECHNOLOGY
EVALUATION
CENTERS (TEC)

Technology Evaluation Centers (TEC) is a global consulting and advisory

firm, helping organizations select the best enterprise software solution
for their needs. TEC reduces the time, cost, and risk associated with
enterprise software selection with its advanced decision-making process
and support application, software selection experts, and extensive
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and detailed information on more than 1,000 leading software solutions
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