ERP Cost: Key Points To Consider During Software Selection | TranZact

Mar 2, 2021 in ERP for SME Manufacturers



When deciding whether or not to implement a software solution, it’s quite important to first make sure if your company can actually afford it. When a business grows to a certain point, managing work through different software gets difficult. This is when companies start looking for an integrated solution like ERPs. Everyone in SME industry knows that ERP cost a lot. What they don't know is that ERPs are despite being a hefty investment aren't a one-time investment. Also, there is no clarity if the implementation is successful.

ERP Cost and return on investments

In this article, we’ll discuss key aspects of ERP cost, the factors that affect the price of an ERP system.

Factors that affect the price of ERP

1. Number of Users

When deciding whether an ERP program is affordable or not for your business, you need to estimate the number of users that will initially have access to the software. Many ERP vendors charge on a per-user basis, meaning the more people who use it, the more expensive it gets. You also need to account for the cost of adding new users to your system. How that expense could increase in the future as your company grows. You’ll need to check with the specific ERP you’re interested in to see if they charge per-user. This is important especially if you have a large number of employees who will need access, as the costs will add up.

2. Add-Ons/Customization

Add ons and customization in ERPs are not cheap. That is why finding a software/solution that fulfills all your immediate needs should be a priority. Many vendors offer integrations with third-party add-ons or the option to include specific modules for increased functionality in your program. The cost of these additional capabilities differs depending on what you decide to include and which vendor you go with for your base package. You should take this factor into consideration along with ERP cost.

3. Number Of Modules

An ERP usually has these following modules-

    1. Finance
    1. Procurement
    1. Manufacturing
    1. Inventory Management
    1. Order Management
    1. Warehouse Management
    1. Supply Chain Management
    1. Customer Relationship Management
    1. Professional Services Automation
    1. Workforce Management
    1. Human Resources Management
    1. Ecommerce
    1. Marketing Automation

As good as all of these modules look, a lot of them may not be useful for SMEs. An SME usually doesn’t have an HR department or a workforce management department. They also won’t need marketing automation for a business their size. So a lot of what small businesses will pay as ERP cost will actually not be useful. This should be taken into consideration before making such a hefty investment.

4. Implementation Strategy

Depending on the technical expertise of your internal employees, you may have to leverage an ERP consultant to help make the process of implementing an ERP system more simple. Most SME owners face a lot of problems in the implementation of ERP as these systems are complicated mostly meant for big companies who are not new to the concept of digitization.

If you are implementing ERP for the first time, you will likely need more dedicated technical assistance than a company that has experience deploying this type of program. Hiring an ERP consultant is also not cheap for any business. So this makes it a key factor to consider when looking for the best ERP software for your business.

Read More - Why Does ERP Implementation Take So Much Time

5. Deployment method

The upfront cost of deploying an ERP solution on-premise is more expensive than that of a cloud-based program. There are pros and cons to both of these deployment methods, with upfront payment being one aspect that makes cloud deployment more appealing to some businesses. If you’re more interested in an on-premise solution though, you should remember that although upfront costs are higher. Companies with cloud ERP software end up paying a lot because of the add-ons/customization without even knowing if the system has been successfully implemented or not.

6. Training & Customer Support

Training and customer support are two essential components to consider when estimating the cost of an ERP solution and how well a program will work with your company’s needs. Support and maintenance costs make up, on average, 15-20% of a software budget, making it a big chunk of your price consideration when it comes to calculating ERP cost. Some vendors offer their own training options on-site and via online tutorial videos and classes. However, this assistance may or may not be included in your overall software price depending on the vendor you go with. But some solutions like TranZact provide 24/7 customer support and training at the time of implementation for free. So this is an important point to consider while making the decision to implement ERP for your business.

Read More - ERP for SMEs? Think again

Way Forward

ERP cost ranges in lakhs of rupees, but the price you pay is dependent on your company’s needs and how good is the software designed for your company's needs. The cost of ERP doesn’t just limit to your subscription to or licensing of a program — it includes aspects such as the number of users, deployment method, and training. Therefore, when estimating how much it will cost your business, you need to consider these diverse factors.

There are also a lot of digital solutions available out there that are not ERP but are easy to use and affordable, with an excellent customer support. TranZact is one such solution. It has helped over 1000 SMEs take the first step towards digital transformation. What's best about it is that the basic version of the solution is completely free so that business owners don't have to worry about making a big investment on a solution. Sign up today to streamline your business processes.


TranZact is a team of IIT & IIM graduates who have developed a GST compliant, cloud-based, inventory management software for SME manufacturers. It digitizes your entire business operations, right from customer inquiry to dispatch. This also streamlines your Inventory, Purchase, Sales & Quotation management processes in a hassle-free user-friendly manner. The software is free to signup and gets implemented within a week.