When it comes to ERP (enterprise resource planning) pricing things are not always as they appear.  The logical thing to do when shopping for an ERP system is to go out onto the internet and research the prices of various systems.  This is only one step.  ERP pricing is never as it would first appear for a variety of reasons and even if the task is simply to get budget numbers, there are so many variables involved in purchasing end-to-end business software that the numbers obtained in a cursory fashion will never bare any real resemblance to actual prices.

ERP pricing

ERP Pricing, all is not as it seems

Getting ERP pricing even if it is only for budgetary reasons is a complex task.  The devil is indeed in the details and ultimately in the negotiations.  Negotiations aside for the moment, getting numbers that will give an accurate picture of the cost of ERP software is a process and as such requires planning and research.

There has to be a roadmap and detailed shopping list to work from.  Clearly defined goals and high-level, long term objectives are necessary before the pricing exercise can begin.  An organization that does not have a clear picture of its needs and wants cannot hope to even get ballpark figures.  As with the purchase of a car, it is not useful to get estimates on a bare bones model if the luxury version is required.  ERP pricing is dependent largely on options aka functionality.

To continue the automobile analogy, purchasing the right vehicle is also dependent upon where and how it will be driven.  High-end sports cars are built for speed and appearance but if the intent is to drive on dirt roads and rough terrain the situation would be better served by an SUV or truck.  The sports car carries a much higher price tag, would not meet the buyer’s needs and would not be practical so pricing the SUV would be much more important.  Once the base decision is made options can be added and budget numbers obtained.  

ERP pricing is affected by whether the system is an integrated or modular package.  Third party add-ons or utilities are often necessary to obtain certain functionality and should be added into the mix.  The expertise of technical staff and use of consultants is required to paint the complete picture.  Implementation and infrastructure requirements are other items that should be factored in.  

Software prices as listed on a website is usually negotiable and deep discounts will be negotiated into the agreement as well as value adds like training and support personnel for a smooth transition.  Maintenance and support agreements are to be negotiated from the start.  A good negotiation will result in a figure below 20% of the purchase price.  Given that the software will likely go much lower than MSRP numbers, maintenance can often be folded into the purchasing budget.

Ultimately, knowing what is needed and having a clear sense of purchase objectives is essential before getting any budget numbers while keeping in mind that ERP pricing is extremely negotiable.

Written by :

warren