How much does it cost to develop ERP software?

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.

Factors affecting the cost of ERP development in 2023

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 -

1. Features and users

The first factor to consider when determining the cost of ERP development 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. 

Apart from the number of features, another important factor to consider in the cost of ERP implementation is the number of users that will get access to your system initially. ERP vendors generally 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. 

2. Maintenance

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. 

3. Implementation

As ERP systems are complex software applications, you are required to change the hardware, software, and operating systems for the ERP system to function properly. Instead of installing it yourself, it’s better to have professionals install it for you. This will make the process of implementation much easier for you. 

But you are required to include the ERP implementation costs to determine the final ERP development cost in 2023.

4. Customizations

You can include several third-party add-ons like social media logins or enterprise IMs tools to offer a range of services to your employees. You can also include specific modules like supply chain management. These customizations will cost extra, depending on what you need to include and which vendor you choose.

5. Software upgrades

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.

6. Training 

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. 

7. Technology additions

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. 

8. Development hours

The total time taken by developers to build an ERP system is another crucial factor that affects 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 you want less development hours to build complex software, then the team needs more professionals and developers to complete the tasks more quickly and efficiently. And this would mean you need to consider spending more money on your cost of ERP implementation strategy.

In case the software is simple, then you can hire fewer developers to build the software. This means you need to spend less money.

9. Location of software developers

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 of ERP implementation 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. 

Pricing models of ERP software development

There are two pricing models that vendors offer while providing ERP software development services - Subscription pricing model and perpetual licensing. In this section, we will dive deeper into the pricing models of ERP software development and help you understand how they work.

1. Subscription plans

Companies looking to leverage cloud-based servers for ERP software implementation prefer subscription pricing models. The vendor hosts and maintains the ERP system on a third-party server. The companies pay monthly/annual charges against the required software solution.

2. Perpetual licensing 

Organizations that want to host ERP software on-premise prefer perpetual licensing. With this pricing model, they need 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.

How much does it cost to build ERP software?

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. 

Creating your budget

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. 

Final thoughts

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.