A company may consider the idea of purchasing a new Enterprise Resource Management (ERP) or CRM system for several reasons such as their current software being outdated or not being able to manage the growing requirements of the enterprise. Some systems may also be replaced due to their incompatibility with third party software. One of the biggest things to consider when buying an ERP or CRM system is the cost of the system, as they don’t come cheap. Unfortunately, determining the total amount of capital that a system will cost is a tedious task. See, it’s not just the initial cost of licensing fee that determines the price; there are other substantial expenditures as well. Let’s explore a few of these to see how much an ERP or CRM system will cost you in total.
Size of Company and Number of Users
Truth be told, there’s no hard and fast rule that determines the price of an ERP system. In fact, the cost of the same ERP software may vary from client to client, depending on the number of users and size of the company. An average company that has departments for manufacturing and accounting operations would surely require a greater number of features and more complex software than, say, a retailer or brick and mortar store.
A majority of ERP systems today are priced based on the number of individuals using the software along with the range of features offered to them. As such, you may expect these systems to be priced at around $3,500-$4,500 per user for a company that goes under range 1 (manufacturing as well as handling orders), while simple sales and service retailers may be charged around $2,500. Some ERP vendors may, however, offer light licenses that offer a limited number of features. These usually go for under $1,000 per user.
Third Party Charges
Often times, a standalone ERP system may not be ideal for a particular industry or enterprise. The functionality of these systems can be enhanced by adding third party software packages that are not originally included in the system. This costs around 20-30% of the licensing cost.
Many enterprise owners forget that buying software isn’t everything. In fact, it’s just half of the total cost. The new ERP system may not be handled adequately by their current IT department, because of which more resources will need to be generated, including upsizing and buying servers. The cost of the hardware may generally range around $5,000 for a small standalone system. The enterprise may also need to outsource its processing tasks to external vendors, which adds to the cost.
An average sized company can expect to shell out around $200,000 to $600,000 for the total cost. Though this is a huge range, the fact is that the total cost will depend entirely on the number of users, the resource limitations as well as other factors such as add-ons.