Many small-to-medium enterprises (SMEs) implement ERP to stay competitive and improve their productivity. At the same time, they face serious challenges allotting and sticking to their ERP budgets, which depend on a variety of factors including:
- Industry type
- Number of ERP users
- Level of customization and integration into existing infrastructure
And much more…
While larger corporations have sufficient capital to absorb any cost overruns, the same is not true for SMEs, which often work on a fixed budget. Here’s an “eye-opener” about the current ERP software price in India and the factors impacting the cost.
What is the ERP Software Price in India?
For SMEs, an ERP solution is priced between ₹60,000 to ₹20 lakhs in India. On the other hand, a larger corporation can pay between ₹25 lakhs to ₹1 crore for a large-scale ERP implementation.
Multiple factors, in addition to the size of the business, can determine the actual cost of any ERP solution in India. Being budget-conscious, SMEs in India must gain a deeper understanding of their ERP software price before investing in the right tool.
Next, let’s look at other factors that can determine your ERP software price – and how to control each of these factors.
6 Key Factors that Determine the ERP Software Price
Below are the six prominent factors that determine the price of an Enterprise Resource Planning software:
1. Number of users
ERP products are typically priced on a user-based cost model. The higher the number of users, the higher the ERP costs will be.
ERP software costs between ₹2,000 to ₹10,000 per user in India. To save costs, determine the number of users who need access to the ERP tool.
Based on your business growth, choose the ERP software that can support your existing user base and your expected increase in ERP usage. During negotiating with ERP vendors, understand their user-based pricing policy and how they plan to charge for any increase in your ERP user base.
2. Required ERP modules
ERP modules are among the other cost factors for any enterprise. The ERP price can escalate depending on the number of purchased modules. The required modules also depend on the industry vertical or segment. For instance, a manufacturing company may require ERP modules like inventory management, procurement, and production planning.
As a practice, enterprises must not spend on ERP modules that don’t deliver business value. They can significantly reduce their ERP costs by investing only in essential modules like finance, sales & marketing, and accounting.
3. Type of industry
Your industry domain or type of industry segment also determines ERP pricing. For example, companies in the manufacturing, distribution, and services industries are among the major users of ERP software, thus incurring the highest costs. These industry segments are followed by the healthcare and retail industries, which incur comparatively lower ERP implementation costs.
You must opt for industry-specific ERP solutions designed for your business and industry requirements to reduce your ERP costs. Based on your business requirements, choose the ERP tool that’s the best fit in terms of both functionalities and costs.
4. The volume of ERP customization
Depending on their specific business needs, enterprises need to customize ERP modules and add-ons instead of opting for the in-built feature. Companies may also need to add ERP features that are not part of the standard ERP package. This can impact their long-term ERP implementation costs. Other companies can choose to modify their ERP solution to improve their performance and usage.
Customization costs can add to the existing ERP software price and are also subject to the chosen ERP solution (and solution provider). As a cost-effective practice, try to minimize the volume of customization to what’s necessary for your business operations.
5. Pricing model
ERP costs are also determined by the two types of pricing models, namely:
- On-premise licensing model: In this model, enterprises install the ERP solution in their on-premises infrastructure. Companies adopting this model can incur high installation costs initially, but can lower their total cost of ownership over a longer duration.
- Cloud-based subscription model: This model is popular among SMEs and smaller companies due to its zero investment in infrastructure. Besides, it provides enterprises with more flexibility and scalability over time.
Enterprises can opt for a hybrid pricing model that delivers the best of both licensing and subscription models to reduce their ERP costs.
6. Customer support after installation
The ERP software price is not just restricted to the ERP procurement and installation. Depending on the level of post-implementation support, enterprises can incur a long-term cost due to activities such as multi-site ERP deployment, data migration to the new system, and integration with third-party systems.
When choosing the optimum ERP solution, enterprises must assess the post-installation charges likely to be levied by their chosen ERP vendor. This includes cost metrics related to:
- ERP software updates, bug fixes, and security patches
- Dedicated 24/7 customer support
- Employee training and development
- Third-party ERP add-ons
Tips to reduce your ERP software price in India:
- Choose the right ERP solution designed for your industry needs.
- Limit the number of customizations to minimize the overall costs.
- Create an ERP budget to determine the best pricing model.
- Negotiate with ERP vendors to reduce your post-installation charges.
Conclusion
Designed for the benefit of SMEs in India, SAP Business One (or SAP B1) is a fully functional and cost-effective ERP solution that can transform your business. With SAP B1, companies are assured of a reliable ERP solution that can cater to their specific industry requirements.
As an experienced SAP business partner, Praxis Infosolutions offers its technical expertise in the ERP domain and the assurance of the best SAP ERP software price in India. Our ERP professionals can assess your existing system and provide an accurate ERP price based on your requirements.
If you’re looking for a cost-effective ERP solution, it’s time to contact us.