How the Cloud Changes ERP Cost
More and more companies are choosing cloud ERP solutions and electing to go with a software as a service (SaaS) license. This means that the vendor will host the software and your employees will access it online. Cost is certainly one motivator for choosing the cloud. With cloud ERP pricing, you typically don’t buy the software licenses or hardware — you pay a subscription fee that scales up or down based on your number of users. This works out cheaper up front than buying a perpetual license for the software along with the hardware you’ll install it on. And with cloud ERP, your vendor will usually provide maintenance and support as part of your subscription fee.
How Annual Fees Factor into ERP Pricing
Whether your ERP software is hosted as a SaaS solution or installed on-premises and paid for through a perpetual license, you’ll need to keep paying an annual subscription fee for as long as you use the software. For perpetual license software, you’ll pay an annual support fee that’s 16 to 20 percent of the current list price of the software. This means the amount you pay over the first 5 to 6 years will be equal to or greater than the original purchase price. Of course, this fee doesn’t include hardware upgrade or maintenance costs.
With SaaS, there’s an annual fee that covers license, hardware costs, and IT expenses (for data backup, security, and so on). But for some companies, this is an advantage; they enjoy lower up-front costs and lower ongoing IT expenses, and they can record their ERP cost as an operating expense rather than a capital expense.
Business Growth and ERP Pricing
There’s something else you should consider about on-premises perpetual license solutions. As your business grows, so will your volume of transactions and documents. Along the way, you’ll be responsible for providing any additional resources needed, including computing power and data storage.
By contrast, when you subscribe to a hosted SaaS solution, your host will be responsible for providing increased resources. Thus, you’ll need to plan for resource upgrades and budget to pay for them as you consume them.
Finding the Best of All Worlds
In an ideal world, you’d be able to find an ERP solution that meets all your business needs while fitting perfectly into your budget. In the real world, you’ll need to make some decisions about what’s most important to your company. But finding a vendor that offers a flexible and fair pricing structure will help you get the most functionality and greatest usability for your dollar.
You can get exceptional value by finding a vendor that offers:
- A cloud ERP solution. Cloud ERP is generally designed to be highly usable right out of the box, and makes it easy for even your non-IT staff to perform customizations. Cloud solutions also make it easy to “switch on” additional modules if and when you need them.
- Your choice of implementing in the cloud or on-premises. This way, you can either minimize your IT burden or make full use of the hardware you’ve already purchased—and you can record your software as either a capital or operating expense.
- Pricing based on resources used, not users. Charging by the user benefits the ERP vendor, not the customer. Why should you have to purchase a separate license for each employee who might need to log onto your ERP system only a few times per month? It’s much more fair to pay only for the amount of computing bandwidth you’re using.
Only one vendor gives you all the benefits of cloud ERP while also charging you based on resource used, not users: Acumatica. Learn more about Acumatica ERP pricing.