What does an ERP system cost? Licences, implementation and hidden costs worked out

The structure of total cost of ownership (TCO)

The cost of an ERP system is more than the software licence. For a first budget you can take three years: long enough to see one-off set-up and recurring expenses together. With a different contract, choose a suitable term. What matters is the same cost basis, not a mandatory term.

Anyone who does not map out the proportions between these cost items in advance will face unexpected extra costs during the project. When exploring the options in the ERP systems category, it is advisable to keep fixed licence amounts structurally separate from variable consultancy hours.

Fixed licences, modules and pricing models

Software suppliers use different pricing models that determine how the recurring costs develop:

• Named users: Each employee has their own user account. Many suppliers distinguish between heavier accounts for employees who post transactions daily and lighter accounts for colleagues who only record hours or view data.
• Modular suites: The organisation pays a base amount for the core platform, supplemented by specific modules for, for example, financial administration, inventory management, projects or production.
• User bundles with fixed functionality: All available modules are accessible to every authorised user, with the total number of active licences determining the invoice amount.

Look at AFAS ERP and Exact ERP, for example, as candidates. Ask both for a quotation for the same processes, user roles and integrations. A broad brand has several products: an entry-level accounting package is not an equivalent price reference for an ERP implementation.

• With the supplier AFAS Software ERP, financial administration, projects and logistics processes are connected within one integrated platform. AFAS prices are on request and are tailored to the size of the organisation and the set-up required.
• With Microsoft Dynamics 365 Business Central, licences are built around functional levels such as Essentials and Premium. The software is delivered through a partner network that sets its own hourly rates for configuration and support. According to the official Microsoft documentation on Copilot in Business Central, the availability of AI-driven features differs by language, region and functionality; this assistant is functionally separate from Microsoft 365 Copilot.
• With Exact, licences are tailored to specific editions and administrative volumes. In a software selection, you must verify the exact limits for postings and documents in the current terms of the edition concerned.
• Odoo combines an open-source base with enterprise licences per user, where additional custom modules and hosting choices determine the final cost.

Implementation costs and additional project expenses

The one-off expenses for putting an ERP system into use are closely related to the complexity of the existing business processes and the state of the historical data:

• Data migration and cleansing: Transferring accounts receivable, accounts payable, open items and item files from old systems requires careful checking. Polluted source data leads directly to extra correction hours.
• Integrations and interfaces: Connecting webshops, specialised inventory systems or payroll software requires configuration work and periodic technical maintenance. Integrations can simplify data exchange, but require ongoing checks for synchronisation errors.
• Training and adoption: Employees must learn workflows before the system goes live. Targeted instruction for key users ensures a smooth transition.
• Internal staff hours: Project managers and process owners spend considerable time during implementation testing set-ups and drawing up process descriptions. These hours represent a real business expense and belong in the budget.
• Contingency reserve: Set aside an explicit amount for uncertainties in the project scope. Record which cost items the percentage is applied to.

Fictitious cost example that you can adjust yourself

This example uses the same input as our download. These are our own assumptions, not prices from AFAS, Exact or any other supplier. All amounts are exclusive of VAT.

The reserve applies here to all one-off costs, including the internal project effort. Support counts in each of the three years. The model does not automatically account for price indexation, VAT deduction or extra modules. Add any necessary integrations to the relevant input item.

Download the SoftwareWatcher ERP cost model

To draw up a structured cost estimate yourself, SoftwareWatcher provides a formula-driven calculation model via Download the ERP cost model.

This spreadsheet automatically calculates the total cost of ownership over three years based on the variables you fill in yourself:

• Total implementation: The one-off expenses for external set-up and project support.
• Data migration: The budgeted cost of cleansing and converting historical data.
• Training: The allowance for training key users and end users.
• Internal hours and internal hourly rate: The number of budgeted internal project hours multiplied by the internal hourly rate used.
• Users and monthly licence costs: The number of active users multiplied by the monthly subscription amount.
• Annual support: The ongoing costs of support contracts and technical maintenance.
• Contingency reserve: A configurable surcharge percentage on one-off items for unforeseen expenses.
• Total cost of ownership over 3 years (3-year TCO): The formula-based sum of all licence, consultancy, maintenance and staff costs over 36 months.

Bear in mind how this template is set up: the Excel file is a clear, formula-driven calculation model for your own internal budget. It contains no automated links to suppliers' price lists and does not take into account complicated volume discounts or currency fluctuations.

Selection criteria for your ERP budget

Draw up your software shortlist based on your process complexity and budget structure:

• Organisations with standardised core processes: Prefer cloud packages with transparent subscription prices and pre-configured best-practice processes. That keeps your spending on external consultancy manageable.
• Companies with specific trading or assembly processes: Look into modular systems with an experienced partner network. Reserve enough budget in advance for data migration, system integrations and user training.
• Organisations with complex production or multiple sites: Choose platforms with extensive configuration options. Be aware that process harmonisation and internal project support are substantial items here, and plan enough internal capacity.