Blog Post

How Much Does an ERP System Cost? A Guide

Enterprise resource planning (ERP) systems can transform management and oversight for a wide variety of businesses.

By connecting nearly all areas of operation, ERP solutions increase transparency. They make it easier to see how a business operates as a whole. ERP software provides context not just about a specific department or activity, but the overall health of the company as well. Along with the data and reporting they provide, that leads to more informed and effective decisions.

ERP also boosts efficiency by automating a variety of time-consuming and menial — but nonetheless important — tasks. This saves time for staff, who can focus on more complex and time-sensitive work.

For manufacturers, ERP systems make it easier to find new opportunities and address issues that might otherwise go unnoticed. Connecting everything from the ordering of parts and raw materials to customer delivery makes the larger business workflow clearer. Problems and potential improvements both become easier to identify.

Just like any other application or asset, ERP software comes at a cost. There are many options on the market and just as many differences in their capabilities and functionality. Add-ons, modules, and customization create even more distinctions.

For that reason, there’s no single answer to the question “How much does an ERP system cost?” However, there are some average prices to consider. There’s also guidance that can help you find an ERP system that fits into your budget while being useful and effective.

Let’s take a closer look at ERP and the cost of ERP implementation, along with the software itself.

A businessman interacts with a holographic representation of an ERP menu.

What are the Benefits of ERP Solutions?

ERP software is a replacement for a variety of digital tools used to manage business processes. However, that’s just a small part of what makes it so popular, dependable, and useful.

The connected and automated nature of ERP reduces technological friction. You don’t have to worry about whether accounting, HR, and inventory management software are all compatible with each other, for example. ERP is expressly designed to operate similarly to a successful, well-organized business: all of the parts fit together and work together.

Some of the most important specific benefits delivered by ERP include:

Operational Cost Savings

Because we’ll focus on the cost of ERP in the next section, it’s important to consider the full picture of price and savings. As mentioned, ERP saves time through automation, freeing up employee work hours to put toward the most important and pressing tasks and concerns.

Reporting related to inventory, sales, billing, and more highlights financial concerns in those areas and makes it easier to address them. Similarly, reporting about shop floor productivity and output can guide changes and improvements in that crucial area of operations.

Ultimately, ERP has the power to boost efficiency for staff and reduce a variety of administrative costs in the long term. That’s a critical point to keep in mind as you consider the cost of ERP systems.

Real-time Business Visibility

ERP does more than provide reporting after the fact. It offers real-time business information that can help address issues as or shortly after they occur. This allows your business to be better prepared as key indicators show the potential for everything from increased business to a supply chain delay.

Better Supply Chain Management and Customer Service

With the right ERP solution, you have real-time visibility into everything from customer orders to available inventory and parts and labor costs. That makes it easier to fulfill orders on time and make adjustments when issues arise.

This also enables better customer service. ERP systems help you deliver on orders, share accurate information with them when needed, and even analyze customer data to guide strategic decisions.

Learn more about other important advantages of ERP.

How Much Does it Cost to Implement an ERP System? How Much Does it Cost to Purchase ERP?

Broadly speaking, ERP pricing depends on how it’s delivered:

  1. Traditional implementation, hosted on a company’s own servers and based on an upfront cost.

  2. Cloud implementation, delivered digitally without the need for onsite servers and based on a recurring service delivery cost.

ERP Focus explains that, for traditional ERP, costs can range from $150,000 to $750,000 for a midsize business. That cost is manageable for established and larger organizations, but it’s not always a good fit for leaner companies like machine shops.

A cloud implementation breaks that large cost up into much more manageable monthly payments. Instead of trying to pull together funding or balance a business budget, machine shops can focus on the benefits ERP provides through cloud implementation.

Cre8tive Technology and Design supplies machine shops with a turnkey, cloud-implemented ERP solution designed expressly for their unique needs. Learn more about our approach to turnkey ERP.