The cloud has not only changed the way that businesses operate but it has changed the ERP pricing model. More and more companies are choosing Cloud ERP solutions and electing to go with a software as a service (SaaS) license.
SaaS vs. On-Premises Pricing
With cloud ERP pricing, you typically don’t buy the software licenses or hardware — you pay a subscription fee that scales up or down based on your number of users. This works out cheaper up front than buying a perpetual license for the software along with the hardware you’ll install it on.
Compared to an on-premises deployment, which features higher up-front costs and ongoing support fees of 16 to 20 percent of the current list price of the software, cloud costs are baked into the monthly or annual pricing for license, hardware costs, and IT expenses (for data backup, security, and so on).
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. For more information on the different types of deployment models for ERP, click here.
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.