The True Cost Of Per-User Licensing ERP Systems For Ontario Businesses

Evaluating and questioning what an ERP system offers is part of the process. After all, businesses deserve to know what they are getting into. However, for most of them, pricing is still the most major criteria. But is getting software based on its initial cost alone wise? Especially for growing companies? 

The reality is that the cost of software changes as a business grows. What might have come across as a low-investment option initially might balloon out of budget as a company grows. The main culprit? Per-user licensing fee. This can quickly add up as a company adds new employees, departments, and users, making it difficult to manage rising costs. 

Understanding the real impact of per-user licensing fees in ERP systems is critical to managing company finances. Let us, ERPion – Ontario’s most affordable ERP – reveal how companies can choose systems that offer better long-term value. 

How Per-User ERP Licensing Works

Per-user licensing ERP systems charge a fixed amount per user. That means businesses have to pay a licensing fee for every single member of their team that accesses or uses the implemented ERP system. 

For small companies with very limited users, this system works. It can even be termed affordable. But no business is static. Growth is inevitable, and this growth can compound licensing fee amounts. In fact, company headcount and licensing fees are directly correlated. 

Here is how costs grow as your business grows: 

• More employees, more software costs 

As we said, they are directly correlated. As the sales team expands, the warehouse hires new workers, and production teams grow in size, more people naturally demand system access. Every new user added potentially increases regular software costs under a per-user model. 

• Growth automatically becomes expensive 

Even when it should not be. Growth isn’t supposed to be automatically expensive; it is meant to be a positive sign characterized by higher revenues and turnovers. However, if it is accompanied by substantially higher software fees, it becomes a problem. Instead of being predictable, increased ERP budgets force companies to restrict access – a cost-saving technique that can cost them more later. 

• Restricted access creates workarounds 

Controlling licensing costs has a ripple effect. Since many employees lose access or are forced to use shared accounts, they have to resort to other means to obtain information. Spreadsheets, emails, and verbal communication are not always reliable. These workarounds introduce inefficiencies and data inconsistencies. 

• Multiple systems are more expensive to maintain

An ERP system is supposed to be a unified platform. However, if their functionalities are limited due to their licensing structure, companies will have to find other systems to cater to other essential processes and functions. The use of multiple applications for specific processes means companies are now paying more for software than they ever used to.  

Why Switching To Modular ERP Solutions Can Help

Simply evaluating initial costs is not enough when choosing an ERP to run a business. Companies need to look beyond upfront pricing and evaluate it against the system’s functionality, scalability, and the system’s ability to handle unique business functions. 

Predictable pricing structures can help companies grow while keeping their budget in check. In fact, ERP solutions that feature a flat user licensing fee from the start make it easier for teams to access information without encountering unnecessary licensing decisions. 

Take ERPion, for example. Our flat, predictable pricing and no per-user fee model give businesses the flexibility they need to add new users without introducing new hurdles in the path of their growth. Our modular software also allows the addition of new functionalities to accommodate growing operations, making it inherently scalable. For growing businesses, ERPion is key to establishing predictable software billing cycles.

Conclusion 

No per-user ERP solutions like ERPion are exactly what growing Ontario businesses need to manage their budget and support sustainable growth. Contact us to learn more about our modular platform and its predictable and scalable approach that is designed to work in favor of your company. 

FAQs

Are per-user ERP fees charged monthly or annually?

Pricing structures depend on the ERP provider and licensing agreement they offer. Businesses must examine the terms and conditions thoroughly before investing. 

Do all employees need access to an ERP system? 

Not necessarily. Businesses have the flexibility to evaluate which users need access based on their company’s operational requirements. 

Can ERP licensing costs be negotiated? 

While some providers may be willing to discuss their pricing, pricing structures and contract terms are mostly fixed across different plans. Companies must verify available payment options before committing.