How Much Does it Cost to Develop an ERP Software?​

When we run a business, there are many moving parts involved. These parts include the staff, customer relationships, and more. However, managing all these separately can quickly become chaotic and take a lot of your time. This is where ERP software becomes a saviour for businesses.

With the help of ERP or Enterprise Resource Planning, you can perform all your business operations in one place. An ERP system allows you to manage everything from only one dashboard instead of using various different tools to handle tasks.

It allows different departments to connect easily, let them communicate more clearly, and helps businesses run more smoothly. ERP software saves time and reduces errors. An ERP system can enhance your efficiency, give you better control, and set your business up for lasting success.

But while the benefits are clear, many businesses still wonder: how much does it cost to build one? That’s exactly what we’re about to explore.

Why Do Businesses Need ERP Software?

In case you don’t have a proper system, each department will work in isolation and use different tools and data.

This may make them feel confused, they can make more mistakes, and there can be delays. ERP software is the best solution for this problem. That is because it brings everything into one central system.

With the help of this software, different departments can stay connected, which allows them to share and discuss information and work together easily.

Here is an example for clear understanding. When a sale is made, the system can automatically update inventory levels, notify the finance team, and delivery schedules can be adjusted based on that.

Here are some of the key reasons businesses need ERP software:

🔘Improves efficiency

🔘Allows you to make better decisions

🔘Reduces costs

🔘Supports business growth

🔘Keeps data in one place

So, ERP software helps you run your business more easily, save money, and grow it successfully. Whether you are a small business or a large enterprise, having the right ERP in place can be helpful.

Total Cost Estimate to Develop an ERP Software

The total cost to develop ERP software can vary a lot depending on your business size, the features you need, and how the software is built. You will get to know your estimated ERP development cost by the complexity, number of users, customisation, and integration needs. Here is the ERP software development cost based on business size and complexity.

1. Small Businesses

Estimated Cost: £10,000 – £30,000

Timeline: 2 to 4 months

Small businesses have limited budgets and simpler needs. There are fewer users, and customisation needs are lower. They usually require basic ERP functions like:

🔘Accounting and finance

🔘Inventory tracking

🔘HR and payroll

🔘Customer management (basic CRM)

2. Medium-Sized Businesses

Estimated Cost: £30,000 – £100,000

Timeline: 4 to 6 months

Mid-sized businesses have more departments, higher user counts, and more data. These businesses may need integrations with third-party apps or legacy systems, as well as a scalable setup when they expand their business. Their ERP systems include:

🔘CRM and marketing automation

🔘Inventory and warehouse management

🔘Human resources and employee performance

🔘Supply chain and logistics tracking

🔘Custom reporting and analytics

3. Large Enterprises

Estimated Cost: £100,000 – £500,000+

Timeline: 6 to 12+ months

Large businesses need more customised ERP platforms than other businesses. That is because they handle data in large volumes and have many users and operations in multiple locations. Key modules often include:

🔘Advanced CRM and customer service automation

🔘Multi-level HR, recruitment, and payroll

🔘Production planning and quality control

🔘Advanced finance, budgeting, and audit features

🔘Compliance, security, and access control systems

🔘AI and predictive analytics integration

It is always a good idea to start with a clear plan, know the features you want, and get multiple quotes before starting development. This can help you stay within budget while still building an ERP system customised for your business.

Key Features That Affect ERP Development Cost

When planning to build ERP software, the features you choose will affect the overall cost. It is important to understand which modules are essential and how each one impacts development time, resources, and budget to ensure the software meets the business needs.

Here are the features that can impact ERP development cost.

1. Core Modules

These are the standard features that most ERP systems include. The more modules you add, the more complex and expensive the system becomes.

🔘Finance & Accounting

This is one of the most essential modules. It includes general ledger, accounts payable and receivable, budgeting, invoicing, and tax management. Building this requires strong security features and compliance capabilities, which can increase cost.

🔘Human Resources (HR) & Payroll

In this module, employee records, recruitment, attendance, leave tracking, payroll processing, and more are managed. It gets complicated when local laws and tax systems are integrated.

🔘Inventory Management

The inventory management keeps track of stock levels, where products are stored, purchase orders, deliveries, and stock checks. Businesses with warehouses or many branches often need live tracking and barcode scanning, which can increase development costs.

🔘Customer Relationship Management (CRM)

CRM helps manage leads, customer interactions, sales pipelines, and after-sales support. If the CRM software needs to integrate with email marketing or call tracking tools, development time and cost go up.

2. Custom Modules

The core modules are standard, but many businesses need features based on their industry. For example, a custom ERP for small manufacturers or a manufacturing company might be needed for production planning and quality control, while a school may need exam and attendance tracking.

That is why when these custom modules are built from the start, more time and effort are put into them, which leads to a higher cost of ERP software development.

3. Integration Capabilities

Most ERP systems need to connect with other software tools. These tools can include payment gateways, CRM platforms, accounting software, or third-party apps. So, when these tools are integrated, extra coding, testing, and sometimes building APIs are required, which increases the budget.

4. Role-Based Access & Permissions

A user permission system is needed to allow different users (like managers, employees, or HR) to access different parts of the system safely. The more complicated the access structure, the more time it takes to build and secure it.

5. Reporting & Dashboards

Data dashboards and custom reporting tools help managers make better decisions. However, building interactive and live reporting features with charts, filters, and export options requires extra design and development resources.

6. Mobile Access & Responsive Design

If you want your ERP to work on smartphones and tablets, it must be built with a responsive design or have a mobile app. This adds to both frontend and backend development time.

7. User Interface (UI) and User Experience (UX)

An easy-to-use design is not just about looks, but it also impacts how the user will use the app and productivity. If you invest in a well-designed UI/UX, it will help improve user satisfaction, but it also requires skilled designers and more software testing.

Also Read: Importance of UI/UX Design in Software Development

8. Security Features

Security is essential for ERP systems since they handle business and financial data. The cost can increase when you add role-based access control, encryption, multi-factor authentication (MFA), audit logs, and GDPR compliance.

9. Multi-Currency and Multi-Language Support

If your business works globally, your ERP system may need to support different currencies and languages. This requires extra development and testing, which means more cost.

Factors Influencing ERP Development Costs

The cost of developing ERP software is also influenced by many other factors. If you know what affects the development cost, it can help you plan better, avoid any surprises, and make decisions that are best for your business.

Below are the key factors that influence ERP software development costs.

1. Business Size and Complexity

The first factor that is definitely going to affect your development cost is the size and complexity of your business. That is because this will impact how much complicated your ERP system needs to be.

For example, a small retail shop may only require basic modules, such as sales and inventory. However, a large manufacturer will require supply chain management, production planning, warehouse control, and more.

The cost increases when you need more features, integrations, and customisations because of more users, departments, and processes.

2. Number of Users

ERP systems are priced based on the number of users or access levels. A small team of 10 users will cost much less than an organisation with 300 employees across departments.

The more users you have, the more the system must support in terms of performance, role-based access control, data storage, and licensing, and this all adds to the cost.

3. Customisation Requirements

Off-the-shelf ERP solutions come with standard modules, but not with custom software. However, most businesses have unique workflows that require custom features.

Customising your ERP to match your processes takes more time and effort compared to using ready-made tools. If your system requires more customisation, it will take longer to build and test, which increases the total cost.

4. UI/UX Design

Good design isn’t just about appearance, but it also affects how easily it can be used. A well-designed ERP system helps employees work quickly and with fewer errors.

However, creating a user-friendly design requires time from UI/UX designers and frontend developers. If your ERP needs to work well on desktop, tablet, and mobile, you can expect the cost to rise.

5. Technology Stack

The programming languages, frameworks, and databases used to build your ERP also affect the cost. For example, using the latest technologies will provide better performance and scalability.

However, some stacks may need more experienced (and expensive) developers. The choice of tech should meet your business goals and the business plans you have for the future, but more advanced stacks can cost more.

6. Development Team Location

The location of your ERP software development team is another factor that affects the total development cost. If you hire a team based in the UK, they may offer the best quality, but it can be expensive.

However, hiring from other regions like India, the development cost can be lower. You can also opt for a hybrid approach, like you can hire a UK-based project manager and outsource development to regions that offer lower costs.

7. Maintenance and Support

Another factor that most of us don’t take into consideration is that you will also need the budget for maintenance and support. It will include the following:

🔘Bug fixes

🔘Feature updates

🔘Server management

🔘Ongoing support for users

Maintenance can cost 15–20% of the initial development cost per year. This percentage will depend on your agreement with the development team or vendor.

8. Data Migration

If you are switching from a system that you used earlier, you will need to migrate existing data like customer records, financial data, or inventory logs.

This process must be done carefully to ensure no data is lost or errors occur, and it often involves custom scripts and testing, adding to the total cost.

9. Compliance and Security

ERP systems manage sensitive data, including finances, payroll, and customer details. To stay secure and legally compliant, you will need to add:

🔘Encryption

🔘Data backup systems

🔘Audit logs

🔘Access control

🔘Regular security updates

When you implement these features, it can take more time and money, but they are important for protecting your business and avoiding legal trouble.

Cost Breakdown by ERP Development Approach & Its Timeline

When planning to build an ERP system, the development approach you choose will determine the total cost and timeline. Here are the most common approaches and their cost and timeline.

1. Off-the-Shelf ERP Software

Cost: £5,000 – £25,000+

Timeline: 1 to 2 months

These are pre-built ERP solutions that you can buy and start using quickly. They are best for small businesses with standard needs. However, customisation is limited, and ongoing licence or subscription fees may apply.

2. Custom ERP Development

Cost: £20,000 – £150,000+

Timeline: 6 to 12 months

In this approach, ERP is built from scratch to match your exact business needs. It’s ideal for medium to large businesses with unique processes. The timeline is longer, but you get complete control and scalability.

3. Open-Source ERP Customisation

Cost: £10,000 – £60,000+

Timeline: 3 to 6 months

Open-source ERPs are free to download and use. However, you will need developers to customise them. It allows you to save on licensing costs but requires technical expertise and proper configuration.

4. Low-Code/No-Code Platforms

Cost: £8,000 – £40,000+

Timeline: 1 to 3 months

With low-code or no-code tools, ERP solutions can be built using visual interfaces and pre-built modules. They are faster to develop and suitable for new startups or teams without full-time developers. However, they may not support complex custom logic.

Recommended Reads: Software Development for Startups: A Complete Guide

Different Pricing Models for Developing ERP Software

When developing ERP software, businesses can select from many pricing models. Each model offers different benefits. Here are the most common ERP pricing models:

1. Fixed Price Model

In the fixed price model, the total cost of the ERP project is decided before the work begins. This model is good for businesses that have a clear plan and needs.

It helps keep the budget steady from start to finish. However, it doesn’t allow many changes once the project starts, so it's best for small to medium projects with clear goals.

2. Time and Material Model

This model lets you pay based on the time and resources used. It's flexible, which is helpful if your project's needs might change during development. You pay for the hours worked and any materials used.

This model works well for large or ongoing projects, but you need to track it carefully because costs can go up if the project takes more time than expected.

3. Subscription-Based Model

In this model, you pay a monthly or yearly fee to use ERP software provided by a company. It’s a good choice for startups or businesses that want to avoid high upfront costs.

You get access to the software, support, and regular updates. However, with time, the total cost may be higher, and there is limited room to customise the software.

4. Perpetual Licensing Model

In this model, you pay once to own the ERP software permanently. It can save money in the long run, especially for large businesses. You have complete control over the system and your data.

However, you may need to pay extra for updates, support, and maintenance. This model is best for organisations looking for a lasting solution without ongoing fees.

Hidden Costs You Should Know About

When you decide to build an ERP software, you may not know about the hidden costs. These hidden costs are the ones that are often overlooked. That is why it is essential to be clear about your business and the ERP software you want to build.

Let’s begin with the first one, which is data migration. When the old data is moved to the new system, it requires more effort and help from experts.

Another cost is employee training. As the team will need to learn how to use the new system, they will require more time and resources to adapt to it. You may also need to connect the ERP with other tools or apps your business already uses. This might need extra work and payment for licences.

You may want to add more features or users when your business starts to grow, which will also increase the cost.

Finally, there are regular costs for support and updates, which help keep the software working well. Thus, if you know about these costs before getting your ERP software developed, it can help you plan your budget better.

How to Reduce ERP Development Costs

You need to plan carefully and make smart decisions; otherwise, the ERP custom software development will become costly. If you also want to reduce development costs, you can implement these ways that actually work to save money during ERP development.

1. Start with Clear and Detailed Requirements

The main reason ERP projects go over budget is when you aren’t clear or change your requirements frequently. You can avoid this by taking time to understand your business's process and the features you really want to add before development. You can also create a document that includes:

🔘The goals of the ERP system

🔘Departments and workflows it will serve

🔘Features you need now and want to have later

🔘Integration needs with existing tools

2. Focus on Core Features First

You can choose a Minimum Viable Product or MVP software that has the most essential features. This allows your team to:

🔘Start using the ERP faster

🔘Collect user feedback early

🔘Decide which features are needed in later versions

🔘Spread out the total investment over time

This approach helps you stay within budget and not spend your money on features that may never be used.

3. Choose a Skilled Development Partner

Another way to reduce the cost of developing an ERP software is to choose a skilled development partner, but also one that offers lower costs. It can be easier to work with local developers as you can communicate easily with them, but they have higher hourly rates.

You can outsource software development to experienced agencies in cost-friendly regions. Also, ensure they have a portfolio, clear communication and pricing models, good client reviews, and excellent technical expertise.

4. Opt for Open-Source and Cloud-Based Technologies

One of the effective ways to cut costs is to use open-source frameworks and cloud hosting services. These platforms remove the need for expensive licensing fees. Cloud ERP systems help save money by removing the need for physical servers, regular maintenance, and extra IT staff.

5. Keep the UI/UX Design Simple

A good user interface is important, but spending too much on fancy or highly customised designs can quickly increase costs. Instead:

🔘Focus on user-friendly and easy navigation

🔘Prioritise usability over visuals that are complex

🔘Follow standard design practices to save development time

A simple and user-friendly design is more cost-effective and easier for employees to learn and use, which makes them more productive and increases adoption rates.

How Can Arramton Help You Develop an ERP Software?

Arramton is one of the best software development companies, and it can support you throughout the ERP software development process by offering custom solutions based on your business needs.

Our team starts by understanding your workflows, challenges, and goals. We then plan and design a system that can make your daily operations simple.

Our developers build the software with the technologies needed to ensure it works well, is easy to use, and can grow as your business expands. We also manage software testing before launch, so you don't face any problems when using it.

Once the ERP is live, our support team ensures regular updates, user training, and fixes any issues that come up. Whether you're a small business or a large company, Arramton makes sure you get a custom ERP solution that helps you work better and stay organised.

Bottom Line

The cost of developing ERP software can vary depending on many important factors, such as the type of business, the number of features you need, the complexity of your system, your design needs, and whether you choose custom or ready-made solutions.

However, prices can range from £15,000 for a simple ERP to over £200,000 for a customised solution for large enterprises. Costs are also affected by where your development team is located and the kind of support you need after launch.

It is important to plan carefully, start with the most needed features, and work with a team that understands your goals to avoid spending more than necessary.

Need help building an ERP system that fits your business and your budget? Partner with Arramton to build the right ERP solution for you. Reach out to us today!

Frequently Asked Questions

Q1 How long does it take to develop ERP software?

Ans The time it takes to develop ERP software can be around 3 to 12 months or more. A basic ERP with a few modules can take around 3 to 4 months, while a larger and more customised system can take 6 to 12 months.

Q2 Can I build ERP software with a limited budget?

Ans Yes, you can. If your budget is limited, the best option is to start with an MVP (Minimum Viable Product). This means building only the most important features first and adding more later. You can also save costs by choosing a cloud-based system or hiring a development team from a region where costs are lower.

Q3 What is the best tech stack for ERP?

Ans Many ERP systems are built using technologies like Node.js, Python, React, Angular, and PostgreSQL. These tools help make the software fast, scalable, and secure. Your development partner can guide you in choosing the stack that is suitable for your project.

Q4 How often will I need to upgrade my ERP system?

Ans Most businesses upgrade their ERP every 2 to 3 years. This helps keep the system secure, updated, and running perfectly as your business grows or changes. Regular upgrades also make sure your software stays compatible with new technologies and legal requirements.