How The Cloud Has Changed ERP pricing

The rise of cloud technology has not only transformed business operations but also revolutionized the pricing model for ERP systems. An increasing number of companies are opting for cloud-based ERP solutions, embracing the software as a service (SaaS) license.

What is SaaS pricing, compared to on-prem?

In cloud ERP pricing, there is no need to purchase software licenses or invest in hardware. Instead, businesses pay a subscription fee that adjusts according to the number of users. This approach proves to be more cost-effective upfront compared to buying a perpetual license for the software and the accompanying hardware.

Contrastingly, on-premises deployments come with higher initial costs and ongoing support fees that range from 16 to 20 percent of the software's current list price. Cloud costs, on the other hand, are seamlessly integrated into the monthly or annual pricing, covering licenses, hardware expenses, and IT requirements like data backup and security.

Multiple Types of Cloud Pricing

While there is a major difference between cloud pricing and on-premises pricing, there are also two methods of cloud pricing—per-user and resource-based.

The Per-User Problem

In addition to the cost of the software itself, most ERP vendors will charge a fee for every user of the system. Software vendors usually charge more for users that require access to the system as part of their work compared to “light” users, who only require occasional access for minor tasks, such as price look ups or to enter time and expenses.

This is an extensively vendor-friendly pricing model, in which everyone is treated the same no matter how they use a product.

Resource-Based Pricing: The Fair Alternative

Rather than the traditional per-user model, there is an alternative: Consumption based/resource-based pricing. One of the many things that makes Acumatica unique, businesses are charged based on the resources your company requires for the transactions you anticipate. And you can always increase or decrease these resources when necessary.

Offering a much more flexible pricing built to handle the changing needs of your business, you start with what you need now to handle the transaction volumes you expect and adjust resource levels and data storage as your business grows, to maintain the correct service levels as you add users and increase transactions. The Acumatica pricing model comes in incremental tiers and can be adjusted as needed.

Pricing and deployment are inherently linked, and as you forge toward a decision, you will need to plan for both and understand how the two fit together in calculating TCO, ROI, and other metrics critical to your ERP decision.

Embracing your role as a modern CFO is your call to take your business into the future, embracing a new mentality that leverages technology to facilitate growth and operate more efficiently. Whether you are just beginning your journey to new technology or have begun evaluating your options, we would love to help.

At Milestone Information Solutions, we have helped companies just like yours to leverage the right ERP technology for their business for over two decades, and as a leader in the ERP implementation field, we understand exactly what it means to drive a business further. We invite you to contact us for a free consultation.