No one wants to overpay for their software, but you need to make sure you’re spending enough to accommodate the majority of your needs. Accounting software solutions are a continuous investment — not a one-time purchase. You’ll need to consider ongoing costs such as maintenance, support, updates, etc. in addition to the initial purchase of your software. These costs are necessary in order to keep your software updated and functioning properly. Balancing all of these elements and making sure you’re getting a good deal can be overwhelming! To help you evaluate ERP software pricing, we’ve summarized three of the top articles we’ve found on the subject.
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Comparing ERP Pricing Models
Among today’s enterprise software solutions, there are typically two accepted pricing models to choose from: local server-centric, also known as on-premise systems (OPS), or software as a service (SaaS), also known as cloud-based.
On-Premise Systems – ERP Licensing
This approach is most efficient for businesses that manage and operate their own small peer-transaction networks like ERP managed point-of-sale (POS) systems. In this case, simple transactions can pass directly from one or more of the store’s POS terminal(s) to a locally-hosted server, while avoiding any requirement to interface with any other larger network.
The primary disadvantage of this ERP software pricing model is that it limits growth since the enterprise will have to add more infrastructure to keep up with growth beyond its initial configuration. The initial set-up costs can also be prohibitive for small businesses.
Cloud-Based Systems – ERP SaaS Subscription
This pricing model is where most modern SMBs tend to lean. A cloud-based ERP allows an enterprise to recover it’s implementation costs in as little as two business years, while essentially leaving only monthly licensing costs to deal with going forward. SaaS subscription pricing is particularly advantageous if an enterprise needs to expand quickly to accommodate more resource processing sooner. This potential for growth also makes SaaS subscription ERP pricing models attractive to smaller businesses looking to expand.
Questions to Ask About ERP Software Pricing
First things first, when you are discussing ERP pricing with a vendor or implementation partner, be sure to ask for a detailed breakdown of line-item pricing between the companies you’re considering. If implementation dollars or hours vary widely among proposals, request and expect an explanation. To get you started we’ve listed some basic questions below.
Is support included in the price, or is it something separate I have to purchase?
Is implementation included, or is it a separate price?
How much does customization cost?
What are my monthly licensing fees?
What does it cost to acquire a server?
How much extra is it to add users?
What is the cost of data conversion?
What is the cost of training?
How Cloud-Based Software Changes ERP Cost
More and more companies are choosing cloud ERP solutions and electing to with software as a service (SaaS license) – with one of the primary reasons being the cost savings. With cloud ERP pricing, you typically don’t buy the software licenses or hardware — you pay a subscription fee that scales up or down based on your number of users. This works out cheaper up front than buying a perpetual license for the software along with the hardware you’ll install it on. And with the cloud ERP, your vendor will usually provide maintenance and support as part of your subscription fee. There is an annual fee with the SaaS model that covers license, hardware costs, and IT expenses (for data backup, security, and so on). But for some companies, this is an advantage; they enjoy lower up-front costs and lower ongoing IT expenses.
In an ideal world, you’d be able to find an ERP software solution that meets all your business needs while fitting perfectly into your budget. In the real world, you’ll need to make some decisions about what’s most important to your company. But finding a vendor that offers a flexible and fair pricing structure will help you get the most functionality and greatest usability for your dollar.
Looking for an ERP software solution in Calgary or Vancouver? Get in touch with the Aqurus team to talk more about Acumatica, our gold-certified implementation process and growth-friendly licensing model!