How to Establish a Reasonable Budget for ERP Software

Published By - Akash & karan

Date:03/07/2025
how-to-establish-reasonable-budget-for-erp-software

Investing in an ERP system is one of the biggest steps a business can take toward streamlining its operations, boosting productivity, and scaling faster. But before jumping in, it’s critical to understand one thing: the cost of implementing an ERP system.

ERP pricing can vary widely, from a few lakhs to several crores, depending on your business size, the features you need, and how you plan to deploy it.

Why ERP Budgeting Matters

Many ERP projects fail not because of bad software, but due to unclear or underestimated budgeting. Knowing what to expect helps you:

  • Avoid hidden costs
  • Allocate resources effectively
  • Select the right vendor and features
  • Plan for long-term ROI

Components of ERP System Cost

When calculating the cost of an ERP system, break it down into the following areas:

1. Software Licensing or Subscription

  • Cloud ERP (SaaS): Billed monthly or annually, often ₹1,000–₹5,000 per user per month.
  • On-Premise ERP: One-time license cost, usually starting from ₹2–5 lakh for basic systems.

    • This is the core of your ERP software price, but it’s just the beginning.

    2. Implementation & Customization

    ERP implementation cost depends on how much you need to tailor the system. Expect this to be 1.5x–2.5x the software cost.

    Activities include:

  • Business process mapping
  • Module configuration
  • Custom feature development
  • Integration with other systems

    • 3. Training

    A well-implemented ERP won’t help unless your team knows how to use it.

    Training may cost ₹25,000–₹1 lakh, depending on the number of users and complexity of the system.

    4. Data Migration

    Transferring data from spreadsheets or legacy systems isn’t just copy-paste. Data must be cleaned, mapped, and validated, adding to both cost and time.

    5. Support & Maintenance

    If you're using a cloud ERP, support is often bundled into your subscription.

    For on-premise ERP, factor in annual maintenance contracts (AMCs), typically 10–20% of your software cost.

    Tips for Setting an ERP Budget

    Here’s how to keep your budgeting practical and effective:

    1.Start with your must-haves
    List the core features you need, finance, inventory, HR, etc. Prioritize them over “nice to have” features that can be added later.

    2.Plan for implementation, not just purchase
    Don’t let your budget focus only on the ERP software cost. Implementation, training, and change management often take up 40–60% of the total budget.

    3.Ask about hidden costs
    Clarify if the pricing includes updates, training, user support, or any extra modules.

    4.Consider long-term ROI
    A system that improves accuracy, saves hours of manual work, and boosts decision-making will pay for itself in 1–2 years.

    Final Thoughts

    The cost of ERP software varies, but what really matters is whether the system delivers lasting value. Set a realistic budget by understanding your needs, knowing what’s included, and planning for both setup and long-term use.

    For growing businesses, options like Bigsun ERP offer scalable, affordable solutions with transparent pricing, custom-built to fit your budget and workflow.

    Because in 2025, ERP isn’t a luxury. It’s a necessity, and it should be priced like an investment, not a gamble.


    Frequently Asked Questions:

    It helps avoid overspending, sets clear expectations, and ensures the project stays on track financially and operationally.

    Core components include software licensing or subscription fees, implementation costs, training, data migration, customization, and ongoing support.

    Start with your business size, user count, and required features. Then consult vendors for detailed quotes.

    Many businesses allocate around 1% to 3% of annual revenue, though this varies by industry and ERP scope.

    Yes—cloud ERP has lower upfront costs and predictable monthly fees, while on-premise has higher initial costs but no ongoing subscription.

    Customization, user training, data cleanup, third-party integrations, and post-launch maintenance can all add to the budget.

    Choose only the features you need, use pre-built templates, and phase the implementation if possible.

    Yes—modular ERP lets you start small and add components as your needs and budget grow.

    Highlight the long-term ROI—such as process automation, better decision-making, reduced errors, and improved productivity.

    Absolutely—ongoing support, updates, and user training are essential for long-term ERP success and should be factored into your budget.


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