How Much Does Custom ERP Software Development Cost?

What is ERP Software?

ERP stands for Enterprise Resource Planning. It's software that helps businesses manage and integrate their core business processes. ERP systems centralize data from multiple departments, such as finance, human resources, supply chain, manufacturing, sales, customer service, and more, into a unified system. This enables companies to optimize operations, improve data accuracy, and increase decision accuracy.

Understanding ERP Software Development Costs

RP software helps companies manage different parts of their business. This includes tasks like finance, inventory, and human resources. There are two main types of ERP software: custom and off-the-shelf.

Custom vs. Off-the-Shelf ERP Software

Custom Enterprise resource planning software is made to fit your company's specific needs. It aligns with your processes and can offer a unique solution. Off-the-shelf ERP software is ready-made and can be used by many businesses. It may not match all your needs but is usually quicker to set up.

The Importance of Budgeting for ERP Development

Planning your budget is key when considering ERP implementation. ERP systems can be a significant investment. Knowing your budget helps you choose between custom and off-the-shelf options. It also allows you to plan for costs like implementation and training.

Usual features of ERP Systems

Centralized Database:

ERP systems provide a shared database where all business data is stored and accessible to different departments. This ensures consistency, eliminates data silos, and reduces the need for multiple software systems.

Modular Design. ERP software typically has a modular structure, meaning businesses can choose and implement only the modules they need. Common modules include:

Finance & Accounting
Human Resources (HR)
Sales & Marketing
Inventory Management
Manufacturing
Customer Relationship Management (CRM)
Supply Chain Management (SCM)

Real-Time Data Processing:

ERP software allows for real-time data entry, analysis, and reporting. This helps businesses make quick and informed decisions, as they can monitor processes and performance in real-time.

Automation:

By automating repetitive tasks, such as invoicing, payroll processing, and inventory tracking, ERP systems reduce manual labor and minimize errors.

Scalability:

ERP systems can grow with the business. Companies can add new modules or users as needed, making it suitable for both small businesses and large enterprises.

Reporting and Analytics:

ERP software offers tools for generating reports and performing data analysis. This helps businesses gain insights into key performance indicators (KPIs) and improve overall efficiency.

Factors That Affect ERP Cost

1. Software Licensing

On-Premise vs. Cloud-Based: On-premise has high initial costs; cloud is subscription-based.
User Count: More users mean higher fees.
Modules: More features and modules increase cost.

2. Customization

Customization Needs: customzing software to specific needs raises costs.
Integration: Connecting ERP to other systems requires extra development.

3. Implementation and Deployment

Complexity: Configuration, data migration, and setup affect costs.
Consulting Fees: Expert help during implementation can be expensive.

4. Training and Change Management

User Training: More users and complex software need extensive training.
Change Management: Managing process changes adds to expenses.

5. Ongoing Maintenance and Support

Maintenance: Regular updates, patches, and upkeep for on-premise systems. Additionally, hidden costs such as unforeseen maintenance and support expenses can arise, impacting the overall budget.
Support Services: Additional support packages may increase costs.
Upgrades: Keeping systems updated can be costly.

6. Company Size and Industry

Scale: Larger companies with more complex needs pay more.
Industry Needs: Specialized industry features can raise costs.

7. Vendor Selection

Choice of Vendor: Different vendors offer varying pricing models.
Contract Terms: Length and terms of contracts impact overall cost.

8. Geographical Location

Regional Pricing: Costs vary by region due to labor and regulatory differences.

How much does ERP cost?

It depends if you want to build a custom in-house ERP solution or if you want to use an off-the-shelf ERP implementation. Both have their strengths and weaknesses, but if you want custom ERP software built from scratch, I have put all the features from the text above into this AI Software Cost Estimator tool to help you have a better understanding of how much it would cost.

the estimated cost for developing a comprehensive custom ERP solution ranges from $87,500 to $105,000. This price covers the entire project, including design, development, quality assurance, and deployment. The estimate is based on using a low-code and no-code development approach, which helps in efficient implementation, particularly when integrating multiple business functions like finance, HR, sales, inventory, and manufacturing.

Key Cost Factors:

Development Approach: Utilizing low-code and no-code tools to speed up development.
Modular Design: Allows for flexibility in adding or customizing modules as needed.
Customizations & Integrations: The budget includes a buffer to handle potential customizations and integration with third-party systems.
Security and Scalability: Ensures data encryption, real-time synchronization, and a scalable architecture.

Project Timeline:

The total development time is estimated at 35-39 weeks, broken down into:

Design & Analysis: 7 weeks
Development Planning & Architecture: 3.5 weeks
Development Timeline: 18 weeks
Quality Assurance (QA): 7 weeks
Deployment & Handover: 3.5 weeks

The cost can range depending on the features you want but here is the full estimate you can read here.

Examples of Popular ERP Software

If you are not interested in building a custom ERP solution or just want lower ERP software cost, it can be a great way. Here are some ERP software vendors:

SAP ERP: A solid ERP solution for large enterprises, offering modules for financials, HR, supply chain, and more.
Oracle ERP Cloud: A cloud-based ERP suite providing integrated financial, supply chain, HR, and project management capabilities.
Microsoft Dynamics 365: A modular ERP platform that can be tailored to specific business needs, offering solutions for finance, operations, sales, and customer service.
Infor ERP: Industry-specific ERP solutions designed for manufacturing, distribution, and service industries, providing tailored functionality.
NetSuite: A cloud-based ERP solution for small and mid-sized businesses, offering a unified platform for financials, CRM, and e-commerce.
Odoo: An open-source ERP platform with a modular approach, offering a wide range of business applications, including CRM, HR, and accounting.
Epicor: ERP solutions for manufacturing, distribution, and retail industries, providing functionality for operations, supply chain, and financials.

Is ERP cost-effective?

While there are upfront costs associated with implementing an ERP system, the long-term benefits in terms of cost savings, efficiency gains, and improved decision-making can make it a worthwhile investment for many businesses.

Final thoughts

It's really important for businesses thinking of investing in custom ERP software to understand the cost involved. The costs depend on a few different things, like software licensing, customization, and ongoing support. On top of that, the size of your company, what your industry needs, and regional ERP pricing all affect the cost. To get a better idea of what to expect, businesses should think about what they need and think about costs in the short and long term.

When it comes to choosing custom ERP software, it's important to weigh the benefits against the costs. Building something from the ground up gives you more flexibility and features that are customized to your needs, but it can cost more than buying something off the shelf. If you're looking for specific features, investing in custom ERP software implementation might be a better bet in the long run, even if it costs more upfront.