How Business Software is Priced: ERP, CRM, and Accounting Software

Business software like ERP, CRM, and financial management products often come with a hefty price tag. In addition to the cost of the software itself, you’ll also pay to have it set up and configured for your business. Here’s a breakdown of how business software is priced, why the cost often seems high, and what exactly you’re getting for that price tag.

What is Business Software?

Business software is any product that helps you run your business. That could be a financial management solution that supports your accounting team, an ERP (enterprise resource planning) solution that supports your manufacturing and distribution needs, or a CRM (customer relationship management) solution that supports your sales, marketing, and customer service teams.

Business software often focuses on efficiency—automating mundane manual tasks and streamlining repetitive workflows so your team has more time to devote to more important tasks. It also focuses on business insight—giving you better and faster access to information to evaluate your business performance and make strategic decisions.

How is It Priced?

First, you’ll pay for the software itself. In some cases, you can purchase the software outright by paying a one-time fee (called a perpetual license). But today, subscription pricing, where you pay a monthly or annual fee for ongoing use of the software, is much more popular.

Second, you’ll pay for implementation. This is setup and installation of the software. Implementation involves getting all of the data stored in your existing software into your new solution. And tailoring the software to the way your business works. For example, setting up your chart of accounts, establishing rules for inventory replenishment, or creating an automated workflow to assign leads to a salesperson.

In some cases, the software provider will sell you the software and also handle your implementation. In other cases, the software provider relies on a network of partners to help their customers implement the software. For example, Cargas is a Sage and Microsoft partner. Sage and Microsoft develop and provide software products, and Cargas helps customers implement those products.

Third, you’ll pay for ongoing support. Every software provider is different, but support plans typically cover software upgrades and enhancements, access to self-help resources and training materials, and phone or online support to answer questions and solve technical problems. Support may be included in the cost of the software. Or it may be something you have to pay for separately.

Just like with implementation, some software providers will offer support plans, while others rely on their partners to support their customers.

What Drives Costs Up? And What Keeps Them Down?

Every software product has a starting point. A base package with core functionality. And every product offers additional (usually more advanced) functionality that can be purchased for an additional cost.

For example, pretty much every accounting solution gives you the capabilities to manage your general ledger, accounts payable, and accounts receivable. But fixed assets, project accounting, and revenue recognition are usually add-ons. So if you need functionality for fixed assets, you’ll pay for the software’s base package, plus the fixed assets module.

You can manage functionality costs by purchasing the software in phases. You might start with the base package for an accounting solution, but wait a year before purchasing the fixed assets module.

You might also consider the cost of the software against your expected return on investment. How much does the software cost? How much time do you expect the software to save your team? Is the value of the time saved equal to or greater than the cost of the software?

There are several factors that determine the complexity of your implementation. First is related to the functionality you purchase. The more modules you buy, the more there is to set up, so your implementation will take longer and cost more than if you purchase the software’s base package.

The second is configuration. You can choose to use the software as it is out of the box. Or you can configure it to better match your business processes and workflows. Configuration is like choosing the background image for your computer. The device has several options baked in, and you pick the one that’s the best fit for you.

While that analogy makes configuration sound very straightforward, it’s important to remember that business software handles large, complex portions of your business. It may be responsible for inventory planning, tracking all of your financial transactions, or managing the activities of your sales team. Telling the software how you want it to handle all of the different scenarios associated with your business takes time and effort. The more you want the software to be configured to your needs, the more your implementation will cost.

The third is data conversion. Part of implementation is moving all of your existing data from your old software into your new software. In some cases, it’s easy to pass data between the two products with very little manual effort. And in some cases, exporting data from your old software and formatting it in a way that’s usable for your new software can be very labor intensive.

You can manage implementation costs by implementing the software in phases. For example, if you purchase an ERP solution, you might start by implementing the software’s accounting functionality, but wait a year before implementing the distribution functionality.

You can also choose to use the software as it is out of the box with little configuration. It’s important to factor in the cost of configuration versus the benefit of a tailored solution. While configuration may take more time and therefore cost more, the result is a system that’s designed for the specific needs of your business.

If your old software does not handle data the same way your new software does, there’s not much you can do to manage the costs associated with a manual data conversion process. However, you can streamline the process by making sure your existing data is as clean as possible. This way, you’re not spending time and money to transfer bad data to your new software.

If you link your software to other systems you use for your business, you’ll pay to set up this connection. If you don’t integrate your software products, you don’t have to worry about this cost. However, there are major benefits to integrated systems. Example: Integration reduces manual work, like entering the same information into two different systems.

Every product comes with configuration capabilities, but customization means introducing something new to the software that wasn’t there before, like a new field or screen. This may involve writing new code or using advanced platform services from the software provider. If you want to customize your software, you’ll need to pay the software provider or partner for that work.

Once again, the cost of customizing the software may be well worth it to your business.

Some software providers talk in terms of users and some in terms of licenses. What they really mean is people. The more people you have using the software, the more you’ll pay. There’s usually an individual cost associated with each person using the software.

You can manage license costs by carefully evaluating who truly needs to do work in the software versus who simply needs information from the software. Also, many software providers offer different licenses at different prices. For example, Microsoft offers a very inexpensive Team Member license for its products that provides read-only access.

Why Are Some Implementation Prices So Expensive While Others Are So Cheap?

Software partners like Cargas offer implementation services at a variety of price points. You’ll see prices as low as $3,000 and as high as $100,000 or more. Why such a big range? The difference is what you’re getting with each implementation.

Think of it this way. You can plan your own international trip. Research and book your own flights and accommodations. Figure out transportation. Read scores of travel blogs to figure out where to go and when, the best places to eat, the hidden destinations most tourists miss. Will your trip be successful? Of course. But all the effort will be on your end, and you’ll be relying solely on your ability to do the research and figure things out for yourself.

This is the equivalent of a $3,000 software implementation. You’re paying $3,000 because your implementation partner isn’t really offering you a lot. They’ll deliver the software as it is out of the box and maybe throw in a few pointers about setup. But it will be on you to do all the configuration and training. You’ll have to figure it out on your own, and hope you’re making the right decisions.

On the other hand, you can work with a luxury travel agency that specializes in unique travel experiences. Not only will they take care of your flights and accommodations, they’ll find out what your interests are and tailor your trip to you. If you’re a foodie, they’ll give you a list of the best places to eat. If you’re physically active, they’ll recommend the best hiking, climbing, surfing, and swimming locations. They’ll have good relationships with the locals and be able to offer you experiences unavailable to most tourists.

This is a $100,000 software implementation. You’re paying $100,000 for the experience and knowledge of your implementation partner. For their ability to guide you through the process and tailor the software to meet your exact needs. Not only will they handle the technical aspects of setup and configuration, they’ll have a proven implementation methodology, including project management services.

They’ll provide training, go-live support, and have a transition plan in place to help you start using your new software. A partner offering this level of service will want to maintain a long-term relationship with you to provide ongoing support and help you adapt the software over time as your business and needs change.

Where Does Cargas Fall?

You’ll find Cargas’ implementation pricing falls in the mid to upper portion of the range outlined above. We have more than 30 years of experience helping businesses use software to meet their strategic goals. We’ve been designated a Microsoft Gold Partner and s Sage Intacct Premier Partner.

Our consulting team has the technical expertise needed to help you implement and configure the products we sell. They also have real-world experience in our areas of focus (accounting, operations, and sales and marketing), so they’re better equipped to understand your business and your needs.

Our company purpose is shared success. We don’t believe we’re successful unless you’re successful. As an employee-owned company, our team cares for our customers as an owner would.

With hundreds of implementations under our belt, we highly value our knowledge and experience, and we believe you will too. That’s what you’ll see reflected in the price for our services.

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