The pricing models you will encounter
Four models dominate the UK mid-market, and they are not equally transparent.
- Per named user per month. Simple to understand. Becomes expensive when occasional users - a warehouse operative scanning twice a day, a director looking at a dashboard - cost the same as a full-time planner.
- Per concurrent user. Cheaper on paper, harder to plan around, and it produces the unpleasant experience of somebody being locked out at the busiest moment.
- Tiered by module. Attractive initially because you only buy what you need. The difficulty is that the modules you need later are frequently the expensive ones, and by then you are not shopping around.
- Flat platform fee with a band by size. Predictable and harder to game, but only if the bands are published rather than negotiated case by case.
Whatever the model, ask for the three-year figure with your realistic user growth included. A supplier unwilling to put that in writing is telling you something.
The costs that are not on the first quote
These are not always concealed deliberately, and some do depend on what you need, but they are consistently underestimated.
- Implementation and configuration. Frequently between one and three times the first year’s licence, depending on complexity.
- Data migration. Cleaning twenty years of part numbers, duplicate customers and half-finished bills of materials is real work and it is normally yours to do.
- Integration connectors. Some suppliers charge per connector, annually, for the privilege of talking to your accounting package or your website.
- Training, including the second round nobody budgets for six months later when people have forgotten and new staff have arrived.
- Hardware: scanners, label printers, shop-floor terminals, tablets for engineers. Modest individually, meaningful in aggregate.
- Internal time. The largest hidden cost by far - your people, doing the project alongside their day jobs.
- Report writing, if the supplier charges for reports or restricts database access.
- Annual uplifts. Ask what the contractual increase mechanism is. "Inflation-linked" is doing a lot of work in some contracts.
Internal time is the cost that sinks projects
Every failed implementation we have looked at had the same root cause: the business assumed the supplier would do the project, and the supplier assumed the business would provide the people. Both were partly right, and the gap between them became a delay.
A realistic figure for a mid-sized manufacturer is one person effectively full-time for the duration, plus meaningful chunks of time from operations, finance and the shop floor. If nobody can be freed up, the right answer is to delay the project rather than start it understaffed.
Building a total figure
- 1Take the licence cost for year one at realistic user numbers, not minimum viable ones.
- 2Add implementation, configuration and training as quoted, then add a contingency - 20% is not pessimistic.
- 3Add your own internal time at a real cost per day, including the work that will not get done while it happens.
- 4Add hardware and any per-connector charges for the integrations you actually need.
- 5Project years two and three with growth and any contractual uplift applied.
- 6Compare that three-year total across suppliers, not the headline monthly figure.
What it should be measured against
A cost figure means nothing without the other side of the equation, and the other side is usually easier to quantify than people assume. Stock accuracy, quote-to-actual variance on jobs, unbilled parts, missed rebates, expedited freight, credit notes from short shipments and days between completion and invoice are all measurable now, before you buy anything.
Measure two or three of them properly. If the annual figure is smaller than the three-year cost of the system, that is useful information and it may mean the answer is not yet.