In this article, we will look into the overall costs of developing an ERP system and the factors that influence the ERP software development cost.
There comes a time when entrepreneurs can’t handle all business-related issues on their own. Accounting, supply chain, and other operations require deep knowledge and high-level management in the niche.
However, enterprise resource planning (ERP) software helps to boost operational efficiency and productivity by eliminating redundancy and automating such business processes.
ERP software also empowers organizations to be adaptive to customer needs and optimize the customer experience. The global ERP software market size is expected to reach $100.7 billion by 2025, indicating a steady pattern and high demand for software support.
When it comes to integrating ERP software into your business, the primary concern revolves around the ERP software development cost. The average cost of ERP software development can range from $25,000 to $350,000, depending on your business requirements and complexity.
However, you need to uncover all the factors affecting the cost of ERP development and then start the planning.
In this article, we will discuss the estimated cost of ERP development and the factors that directly impact the cost to develop an app.
The total cost of ERP development is affected by various factors, including implementation and maintenance costs, location of app developers, number of features, and more. Let’s discuss each of these factors in detail below -
When deciding whether an ERP system development is affordable for your business, the first factor to consider is the number of users that will initially have access to your system. Many ERP vendors charge on a per-user basis. This means the more users you add to your ERP system, the higher the cost to develop ERP software will be.
You also need to take into account the new users and how this amount can increase over time as you scale your business.
Apart from the number of users, another important factor is the number of features your ERP system needs.
Some of the key features that you can include in your ERP system development are data analysis, automation, and reporting tools. The more features you add, the more will be the cost to develop ERP software.
ERP systems are complex software applications, and so you are required to change the hardware, software, and operating systems in order for the ERP system to run properly.
If you are implementing ERP for the first time, it’s advisable to have professionals install and configure your system. This will make the process of implementation easier and simpler for you.
But you are required to include the ERP implementation costs to determine the final ERP development cost in 2023.
Your on-premise ERP system would require frequent updates and maintenance to ensure it is functioning properly at all times. Maintenance costs of an ERP typically run between 15 and 20% of the initial purchase/implementation price.
In order to offer a comprehensive range of services and features to the end-users, you can include several third-party add-ons like social media logins or enterprise IMs tools. You can also include specific modules like supply chain management. These customizations will require you to pay the extra money, depending on what you need to include and which vendor you choose.
You need to ensure that your ERP system continually updates as you develop your budget. The last thing you would want is for your system to become obsolete and invite bugs and issues.
Your software needs upgrades that vendors may not include in your base software costs. Ask your vendor how often you need updates and if the cost of these upgrades is added to the base price.
Training and customer support are two essential factors to consider when estimating the ERP system cost. It might not be easy for your employees to use the new system. That’s why they might require additional training from the vendor on how to use it.
Often, the vendors may offer training as a part of the purchase price. If not, you will need to factor in the cost of training while estimating the final cost of ERP development.
The ERP software cost can vary greatly depending on what technologies you choose. The more technologies you add to your system, like blockchain, artificial intelligence, and cloud, the more will be the enterprise software development cost.
The total time taken by developers to build an ERP system also plays a huge role in determining the final cost of your ERP system. The time taken to build an ERP system is directly related to the number of developers you hire.
If your software is complex and you want less development hours, then the team needs more professionals to complete the tasks more efficiently and quickly. And this would mean you need to spend more money.
Location is another factor that plays a pivotal role in deciding the final enterprise software development cost. For instance, if you hire a development team from a country like the US, then the hourly cost of the developers will be different from software development companies in India or Ukraine.
This is due to the fact that services around the world vary significantly in terms of cost and quality.
Apart from the above-mentioned factors, the pricing model is another factor that helps decide the final ERP software price. So, let’s look at the different ERP pricing models available in the market.
Vendors mainly use two pricing models when offering ERP software development services - Perpetual licensing and subscription pricing model. In this section, we will dive deeper into the pricing models of ERP software development and help you understand how they work.
Organizations that want to host ERP software on-premise prefer perpetual licensing. It allows them to pay the one-time up-front cost of the ERP software. The cost of a perpetual license depends on the number of users and customizations. With perpetual licenses, organizations are not required to pay recurring costs for maintenance and updates.
Companies looking to leverage cloud-based server for ERP software implementation prefer subscription pricing models. In this pricing model, the vendor hosts and maintains the ERP system on a third-party server. The companies pay monthly/annual charges against the required software solution.
As we have already seen, the cost of developing ERP software is not fixed. It is dependent on several factors, such as the location of app developers, the technology stack used, pricing models, and more.
However, the average ERP software cost can range from $25,000 to $350,000. To get a rough ERP development cost estimate, you can contact a reputable software development company and discuss your project.
How much should your company spend on an ERP platform? It is advisable to know the answer before initiating the project with a vendor. When estimating how much you will spend, you will want to account for the different costs associated with an ERP system.
ERP software can be a significant expense. When developing your ERP budget, you will need to access your company’s financial data and budgeting information. After all, you don’t want to lose your financial footing while implementing your ERP system.
You need to consider the recurring fees associated with the ERP system and ensure that your company can afford them. Also, take into consideration the factors that we have mentioned above. When creating your budget, secure more funds than you think you will need because ERP implementation costs generally exceed expectations.
So, what is the cost of ERP system for small businesses? Well, there is no clear-cut answer to this question. Considering all the influencing factors should help you arrive at a nearly accurate ERP software price to turn your project idea into a reality.
In case you still feel that calculating the final cost of ERP software development is strenuous, you can consult reliable software development companies in the USA and around the globe for top-notch development services. The experts will guide you through the development process and answer all your questions related to ERP development cost breakdown.
Aparna is a growth specialist with handsful knowledge in business development. She values marketing as key a driver for sales, keeping up with the latest in the Mobile App industry. Her getting things done attitude makes her a magnet for the trickiest of tasks. In free times, which are few and far between, you can catch up with her at a game of Fussball.
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