The question “how much does an ERP system cost?” is one of the hardest to answer with a single figure. Unlike buying an asset with a fixed price tag, an ERP system involves a series of different considerations: which software is it, what work will be needed to set it up, who will be doing it, and what will the ongoing costs look like.
So, the honest answer is “it depends”. However, we understand that such answer is not particularly useful – that’s why in this article, we will break down each of the components that make up the costs of an ERP system and what might drive them up or down.
Licensing: paying for the software itself
Licence costs are usually the number people focus on first, largely because it's the easiest one to compare between different providers. ERP software is typically sold in one of two ways: a perpetual licence, where you pay a large sum upfront to own the software outright (plus ongoing maintenance fees), or a subscription model, where you pay monthly or annually, typically per user. Subscription-based (or “SaaS”) pricing is the more popular choice, particularly for small and mid-sized businesses, since it spreads the cost over time and usually bundles in security patches and regular software updates.
What's important to consider, though, is just how much licence pricing varies from one ERP system to another – when we compared ten of the most popular cloud ERP systems, we found that the range was significant (from around €20 per user per month to several hundred euros). Some providers also charge a flat monthly platform fee before you've even added a single user, so keep an eye out for the small print. Odoo is consistently ranked as one of the more cost-effective options in the market (check the current pricing in your region here).
Of course, the cheapest licence isn't always the best choice. It's worth weighing licence costs against what's actually included and whether that covers your business needs.
ERP software implementation
For most businesses, the licence fee turns out to be the smaller part of the equation. Licensing plus everything else involved in getting the system live (often referred to as the Total Cost of Ownership), gives a far more accurate picture.
Implementation itself, meaning the work of configuring the software to your processes, migrating your data across, testing everything, and preparing your team before going live, is very often where the bulk of an ERP budget goes. Companies usually work with a software partner who provides all of these services.
However, there are a few different factors involved in pricing the ERP implementation project:
- How many departments or modules are involved – do you just need CRM and accounting, or also manufacturing, inventory, and others?
- How closely do your current processes already match the software's standard functionality?
- The volume and quality of the data that needs to move across from your old system or spreadsheets)?
- How complex the business processes are (e.g. straightforward vs multi-company)?
Implementation is also where costs can hike up unexpectedly, which is one of the most common fears associated with ERP systems. The reason for this is usually a lack of proper needs assessment and project scope from the outset.
Customisation: where budgets creep the most
There's an important difference between configuring an ERP system and customising it. Configuration means adjusting settings, workflows, and fields within what the software already offers (the standard software). Customisation, on the other hand, means writing bespoke code to make the system do something it wasn't originally built to do, and this is where ERP budgets can escalate quickly.
It's important to understand, however, that the issue isn't in custom solutions themselves. Sometimes it's genuinely useful and needed for a specific workflow or regulatory requirement. The issue is when it becomes a first resort rather than a last one (i.e. customisations should only be used when standard software does not already cover those needs).
Beyond the initial development and programming, heavily customised systems tend to be more expensive to maintain, since every future software update needs to be checked against (and sometimes rewritten for) the custom code sitting on top of it. Therefore, custom solutions can bring ongoing costs too.
Hosting and infrastructure: cloud or on-premise
Where your ERP system lives can affect the total costs too. On-premise systems require you to buy and maintain your own servers, manage security patching and backups, and often have an in-house IT team to look after it all, which could become a significant, ongoing cost. Cloud-hosted (SaaS) ERP software shifts that responsibility onto the provider, which is why so many businesses are moving towards cloud ERP systems.
Odoo, for instance, offers a few different hosting options: Odoo Online, a fully managed cloud subscription; Odoo.sh, a hybrid and developer-friendly hosting platform; and the open-source Community edition, which is free to download and self-host but shifts all the hosting, security, and maintenance costs onto you or your own IT team.
Training and change management: the cost of adoption
Some companies look at training as a “soft” cost, but it can have real budget implications – both in terms of formal training time and the inevitable dip in productivity while your team adjusts to the new tools and ways of working. The businesses that get the best return on their ERP investment are, more often than not, the ones that budget properly for this rather than treating it as an afterthought.
Change management tends to cost more the further your new processes sit from your old ones, and the larger and more established your team is. However, there are a few things that can help keep this cost more predictable:
- Involving department heads and end users early, rather than presenting the system as a finished decision;
- Running a phased rollout instead of a single, organisation-wide go-live;
- Building in dedicated, hands-on training time before go-live rather than squeezing it in afterwards.
Find more information and tips on change management in ERP projects in our dedicated article on the topic.
Integrations, localisation, and add-on modules
Although ERP systems centralise everything you need for business management in one place, companies often still require integrations or connections with other third-party platforms, such as POS machines, e-commerce tools, payment gateways, courier's API, or country-specific tax and reporting requirements. Developing such integrations, if they don't already exist, adds to the total cost.
Localisation is a good example of this. Here in Lithuania, businesses often need specific accounting integrations to meet local reporting requirements and business accounting standards (LT VAS). At Via laurea, we’ve developed a set of accounting modules for Lithuanian localisation on Odoo, which can be purchased at a fixed price. If you decide to develop your own modules or connectors from scratch, it will become a considerable investment.
Ongoing support and maintenance
After your ERP implementation, there are also some ongoing costs to consider, such as software support and maintenance. This includes bug fixes, technical support, user administration, and regular software updates, all continuing for as long as you're running the system. It’s a good idea to ask your ERP partner early what those costs will be in the future and what will be covered (migrations to new software versions are usually not included).
Let’s calculate your ERP implementation costs together
The real ERP costs are the sum of everything above: the licences, implementation and development, data migration, hosting, training, integrations, and ongoing support. For a small or medium business with straightforward processed and a handful of core modules, the total sum can be relatively modest; for a larger, multi-entity operation with complex processes and customisation needs, it can run considerably higher.
As an official Odoo partner, Via laurea offers Odoo implementation and development, support and maintenance, and training services, as well as accounting solutions for lithuanian localisation. Book an online meeting with us and let’s discuss your unique business needs!
