Choosing an ERP system isn’t just about the upfront price tag—it’s about understanding the total cost of ownership (TCO) over the life of the system. For distributors and building materials suppliers, that means looking beyond software licenses to account for all the hidden and long-term costs that impact your bottom line.
Here’s how to evaluate TCO the right way—so you invest in a system that delivers real value, not just flashy features.
- Understand What TCO Actually Means
Total Cost of Ownership includes everything it takes to implement, run, support, and grow your ERP system over time. That means:
Initial purchase or subscription fees
Hardware and infrastructure (if on-premise)
Implementation and setup costs
Customizations and integrations
Training and onboarding
Maintenance, support, and updates
User licenses or usage-based fees
Upgrade and scaling costs as your business grows
The true cost is usually far more than just the monthly or annual license. Understanding TCO helps you avoid surprises and make better long-term decisions.
- Start With the Core Software Costs
Every ERP vendor prices differently—some charge per user, some by module, and some by transaction volume.
Make sure you understand:
What’s included in the base price
Which features or modules are extra (e.g., mobile access, warehouse management, CRM)
How pricing scales as you add more users, warehouses, or product lines
If cloud vs. on-premise hosting affects costs
Pro tip: Don’t compare pricing until you’re clear on what is included in each quote.
- Factor in Implementation and Customization
Implementation is often the biggest upfront cost—and it’s easy to underestimate.
Key cost drivers include:
Data migration (from spreadsheets or legacy systems)
Custom workflows for your quoting, inventory, or delivery processes
Integration with barcode scanners, CRM platforms, or e-commerce systems
Testing and pilot rollout phases
Internal time commitment from your team
Even with an out-of-the-box ERP, tailoring it to how you do business takes time and budget.
- Include Training and Change Management
An ERP system only works if your people use it correctly. That means:
Initial training for different departments
Follow-up support during rollout
Onboarding new hires
Creating internal documentation or cheat sheets
Ongoing user support
This is often a hidden cost that affects your actual ROI. Budget for it early.
- Ongoing Support and Subscription Fees
Most modern ERPs offer a cloud-based, subscription model—but don’t assume that support is included.
Check for:
Tiered support plans (basic vs. premium)
24/7 support availability for urgent issues
Charges for ticket resolution, bug fixes, or consulting hours
Update and patch management (is it automatic or manual?)
You’ll want a system that’s easy to maintain without requiring constant IT involvement.
- Plan for Scaling and Growth
Your ERP should grow with your business—but growth can come with costs.
Ask your vendor:
How easy is it to add new users or warehouses?
Do additional licenses trigger price hikes?
Are new modules (like job-costing, mobile apps, or reporting tools) priced separately?
Can the system handle your future volume and complexity?
A lower-cost system now may cost you more in upgrades or rework later.
- Don’t Overlook Downtime and Productivity Costs
During implementation—or if things go wrong—downtime costs you real money.
How long will you be in “dual systems” mode?
What happens if your ERP goes offline?
How long will it take to fix data issues or restore access?
Do your teams need backup workflows during the transition?
Reliable support and a clear rollout plan reduce these risks—but they need to be budgeted for, too.
Final Thought
The best ERP decision isn’t always the cheapest one—it’s the one that delivers value, supports your workflows, and scales with your business. By evaluating total cost of ownership from the beginning, you avoid budget shocks and set your team up for long-term success.
Don’t just ask how much the ERP costs. Ask what it will cost to run it, support it, and grow with it over the next 5–10 years.
