Manufacturing software – how much does it cost?

When you make a decision to purchase or upgrade your old accounting, ERP or manufacturing software (MRP), the next logical question is – how much the software actually cost?

Let’s compare MRPeasy and Microsoft Dynamic NAV (former Navision).

At Microsoft Dynamics NAV Community website we found the following information, published by Greg Kaupp, CEO of ArcherPoint, LLC, a Northern California Microsoft Dynamics NAV partner:

“The following guidelines apply to most small- to medium-sized companies looking to implement any ERP system.

#1. Type of company and number of users – Not all companies have the same requirements of their ERP system. Generally, a moderately-sized manufacturing company will require more complexity than a similarly sized professional services company. Since most ERP systems are priced according to the number of concurrent users and the level of access each of these users will require from the system, companies should expect to pay around $4,000 per concurrent user for a manufacturing or complex distribution company and around $2,000 per concurrent user for a professional services or light distribution company. Additional licenses for “light” users (users only requiring limited access to the system) are usually priced at a few hundred dollars per named user.

#2. Third-party software – Third-party software products are often available to extend the ERP software or enhance it with applications tailored for a specific industry or specific business process needs. Third-party add-ons typically account for 10% to 35% of the overall software cost.

#3. Implementation costs – There are many factors that influence the actual cost of implementation: the company’s industry, the size of the company, the anticipated transaction volume, scope and complexity of the implementation, and the number of third-party integrations, to name a few. Most implementation costs are calculated based on a ratio of software to services. The more the company implementing the ERP system can handle on its own without relying on external vendors, the closer the software-to-services ratio can get to 1 to 1. For most companies of average size and complexity, however, it is more common to see software to services ratios of 1 to 1.5 or 1 to 2.5.

#4. Customizations – Very few ERP systems can be installed and used “out-of-the-box.” Therefore, most companies will require some amount of customization to integrate the ERP software into their workflow. The amount of programming, testing, and training is directly related to the size and scope of the effort.

The bottom line – For a typical mid-sized company, the total software and services cost will range between $150,000 and $750,000.

#5. Hardware and infrastructure costs are usually addressed separately, and typically these estimates assume an on-premise implementation rather than a hosted or subscription-based solution”.

This is good, realistic article, we agree with the most of above mentioned. Just a final remarks:

• Starter Pack is min. 3 users;
• The author forgot to mention area #6 – Annual Maintenance Fee. The price is 18% from the software list price. Obligatory during 1-st year, after voluntary but strongly recommended.;
• When you purchase on-premise implementation, add to hardware and infrastructure costs also your system administrator’s salary.

Let’s check what you should pay in case of MRPeasy implementation:

1. Initial Software/License price – doesn’t exist;
2. Third-party software – we don’t charge for the integrated software;
3. Implementation costs – the software is ready to use from day one, we don’t ask any implementation payments;
4. Customizations – MRPeasy is “out-of-the-box”, “Plug and Play” ERP/MRP software. As a rule we do not customize it, because we provide one, the same software to all customers. So, no customization costs;
5. No hardware, infrastructure and its administration needed – no costs;
6. Subscription fee. Yes, this is only your expense in case of MRPeasy. For medium sized company it is close to above-mentioned Maintenance Fee.

As a conclusion – read this post before choosing your new ERP/MRP software.

Additional information about software prices:

ErpSoftware Blog.

http://panorama-consulting.com/what-our-research-reveals-about-manufacturing-erp-implementations/