# How to Budget for ERP Software | Capterra > Enterprise resource planning software can help centralize and automate different business processes in a single system. Here’s how to budget for one. Source: https://www.capterra.com/resources/how-to-budget-for-enterprise-resource-planning --- # How Much Should You Budget for ERP? By Devin Partida Devin Partida Devin Partida is a small business and technology writer, covering data and data privacy, cybersecurity, the future of work, and more. She has written for AT&... [See bio & all articles](https://www.capterra.com/resources/author/devin-partida-guest-contributor/) Published October 17, 2022 4 min read Table of Contents - [ERPs are growing in popularity](#erps-are-growing-in-popularity) - [How should you budget for an ERP program?](#how-should-you-budget-for-an-erp-program) - [Some red flags to watch for during your software search](#some-red-flags-to-watch-for-during-your-software-search) The first step in choosing the right ERP (enterprise resource planning) solution is determining your budget. Many outside factors can affect the cost of [ERP software](https://www.capterra.com/enterprise-resource-planning-software/)—and that doesn’t include internal factors such as the number of users that need access, implementation, deployment, and configuring customizations that will meet with your specific business needs. What is enterprise resource planning (ERP)? Enterprise resource planning (ERP) is a business management practice and methodology that centralizes and helps automate different business processes in a single system. ERP software helps businesses manage a wide range of activities, including human resources, accounting, finance, sales, marketing, logistics, and manufacturing. This article provides an overview of ERP benefits, a breakdown of the costs, and tips on how to stay within your budget.  ## ERPs are growing in popularity More companies, both large and small, are using ERPs to grow their business, improve workflows, and build a knowledge base for their employees. In the past, large manufacturers were the most frequent users of ERP software—many needed a platform that managed complex business processes. However, thanks to cloud-computing software, there’s now an ERP program for various levels of affordability. While many manufacturing and distribution companies favor ERP systems, the solution at its core is resource management. Therefore, it has been adopted among a variety of industries to help integrate operations into a single shared database.  By offering a single information source across departments, ERP software helps businesses increase efficiency and improve overall decision-making. ## How should you budget for an ERP program? Consider these different cost factors of an ERP in order to account for the total cost of ownership:  ### 1\. The number of users Some ERP vendors will charge you based on how many people will use the software. Essentially, the more users there are, the more expensive it will be. Also consider how the price will increase in the future if your company grows and you need to add new users. ### 2\. Customizations and configurations Many ERP vendors offer third-party integrations or options to add on specific modules for functionality enhancements. Adding customizations or configurations to an ERP tool can be costly for your business. Look for a tool that includes as many of your must-have functionalities as possible in its core product in order to save money that would otherwise be spent on customized add-ons.   ### 3\. Cost and time for implementation The time and costs associated with implementing an ERP solution depend on your IT team’s technical expertise and bandwidth. Some companies may opt to hire a consultant to help make the ERP implementation process much smoother. This is one factor to consider, especially if you're implementing an ERP for the first time, or you're on a short timeline.  Most vendors provide support, which may offer employee training and installation. However, consultation services will most likely cost extra. Consider working this part into your budget if you need more dedicated technical assistance. ### 4\. On-premise vs. cloud  The cost of deploying and maintaining an on-premise ERP system is generally more than a cloud-based solution, especially for upfront costs. Due to costly factors such as customization, maintenance, and hardware, an on-premise system can be a large investment.  Some businesses prefer the deployment of a cloud model: it typically costs less because you don't have to store or manage any data on-site, and it can be accessed from anywhere. ### 5\. Training and support Training and support are two elements that are important to consider when budgeting for an ERP solution. Some vendors may offer a free online help center or knowledge base, and then further offerings, like in-person or live training sessions, that may not be included in the original cost. If hands-on training suits your team the best, know that there will likely be an additional cost that isn’t included upfront.  ### 6\. Upgrade fees Program upgrades are an essential cost to consider. You should factor this into your budget, as vendors may not include these costs in the original price. Ask the vendor how often they update the software and whether they add that into the software’s price. ## Some red flags to watch for during your software search Even the best laid plan can go off course. Here are some pitfalls to avoid to help you stay on track during your search.  ### Scope creep While you may find a lot of solutions that check all the right boxes, keep in mind that the more vendors you assess, the more you are in jeopardy of running into scope creep, which can waste time and even get you further away from making a final decision. Before starting, it helps to get a good understanding of everything needed before implementation. ### Unnecessary functions Some vendors may suggest additional modules for future purposes. As mentioned previously, add-ons can increase the cost. Plus, they might not be right for your business, making them a waste of resources. Instead, only consider adding extra modules when it meets a current need of your business. Find the best enterprise resource planning software for your business Whether you are still balancing your budget and shopping for free solutions to try, or if you are looking to make a final decision for your enterprise, [check out Capterra's extensive directory of ERP tools](https://www.capterra.com/enterprise-resource-planning-software/), including reviews from users like you. * * * Looking for Logistics software?Check out Capterra's list of the [best Logistics software](https://www.capterra.com/logistics-software/) solutions. ### Was this article helpful? * * * ## About the Author [### Devin Partida](https://www.capterra.com/resources/author/devin-partida-guest-contributor/) Devin Partida is a small business and technology writer, covering data and data privacy, cybersecurity, the future of work, and more. She has written for AT&T Cybersecurity, TechRepublic, and Enterprise Networking Planet. She is also the editor-in-chief of ReHack.com. ### RELATED READING - [XLAs: How Experience‑Level Agreements Improve Help Desk Performance](https://www.capterra.com/resources/xlas/) - [Marketing ROI: Prioritizing Your Next Sales and Marketing CRM Investment](https://www.capterra.com/resources/marketing-roi-strategies/) - [How Integrating Email Automation With CRM Systems Boosts Customer Engagement](https://www.capterra.com/resources/integrating-email-automation-with-crm-systems/) - [ERP for Small Businesses: Do You Need It and What to Look For](https://www.capterra.com/resources/does-your-small-business-need-erp/) - [Project Management Software for Creative and Marketing Workflows](https://www.capterra.com/resources/project-management-software-creative-marketing-workflows/) - [5 Key Learning Management Software (LMS) Features With Top Products That Offer Them](https://www.capterra.com/resources/key-features-of-learning-management-system/) - [How to Choose Project Management Software With Confidence: Insights From Real Buyers](https://www.capterra.com/resources/project-management-software-buyer-insight/) - [LMS Pricing Models Explained: Hidden Costs, Plans, And Comparisons](https://www.capterra.com/resources/lms-pricing-models-guide/) - [Payroll Pricing Explained: Flat-Rate vs Per-Employee Models](https://www.capterra.com/resources/payroll-pricing-models-guide/)