How much does Microsoft Dynamics Cost?
The first question that most companies ask when preparing to select and implement a new Enterprise Resource Planning ("ERP") system is how much is this going to cost. While we have focused over the last decade on implementing Microsoft Dynamics NAV or Navision the guidelines that I'll provide here can be applied almost universally to any ERP implementation for a small to medium size company with moderate complexity.
The starting point for estimating the cost of any ERP system invariably starts with the type of company that will be implementing the system followed by the number and type of users that will access the system. The type of company is important since most ERP software is priced per concurrent or named user based on the functionality that the users will need to access in the system.
For a manufacturing or complex distribution company a good rule of thumb is 4K per concurrent user and for a professional services or light distribution company 2K per concurrent user. There is also the concept of light users which will require limited access to an ERP system and are typically priced on a named user basis for a few hundred dollars a piece.
Beyond the base software costs there are typically third-party software products that extend or enhance the manufacturer's software and typically represent anywhere from 10 to 35 percent of the overall software cost.
Implementation costs are typically estimated as a ratio of software to services. Common factors afftecting the software to services ratio in no particular order are industry, size, complexity, external integrations, scope of effort, and anticipated transaction volume. The single biggest factor affecting the software to services ratio is the ability of the company that is implementing a new ERP system to shoulder as much of the implementation effort as possible, reducing their reliance on external vendors or partners.
For a simple implementation with very few customizations and external integrations it is possible to achieve a software to services ratio of 1 to 1. However for most companies of moderate size and complexity it would be more common to see a software to services ratio of 1 to 1.5 or 1 to 2.5.
For most mid size companies this will result in a software and services estimates typically in the range of $150,000 to $750,000. These estimates would typically not include any hardware or infrastructure costs since these would be addressed separately. Also this assumes an on premise implementation where the software is run on a company's own servers and network versus hosting it or paying for the software on a subscription basis.
While these guilelines represent a broad range it should help companies as they begin their evaluation process to understand typical ranges for these types of projects. It is important to closely evaluate estimates significantly below or above the ranges presented here to make sure that the estimates are responsible and achieve the best balance of delivering maximum business value at least cost and risk.
Find out more about the cost of implementing or upgrading a Dynamics NAV solution.