Have you been trying to make sense of an ERP bill or proposal that feels like you’re reading the fine print on a phone contract?
Knowing how ERP projects are billed can provide the clarity you need to protect yourself from hidden fees and surprises.
We’ve written hundreds of ERP invoices and proposals for Acumatica (and other leading ERP providers before forming Stellar One).
In this article, we will break down the four main ways ERP projects are billed so you can decide which method works best for your business (and your sanity).
Fixed-fee ERP projects sound like a safe option
Fixed-fee billing feels like an all-inclusive vacation package; you know the cost upfront, and it’s supposed to cover everything. If you like certainty, this seems like the best option.
But there’s a catch. Just like finding out your “ocean view” is a view of the parking lot near the ocean, the reality of fixed-fee projects can sometimes be less than dreamy. And just like that hotel room view, upgrade options are available, but they’ll cost you.
Pros
- Predictable costs: No surprise fees. You get a number, and that’s what you pay. Simple, right?
- Clear expectations: Scope, timeline, and deliverables are all spelled out from the start.
Cons
- Change = pain: You’ll need to get out your wallet each time you want something outside of the original plan. Not fun.
- Quality sacrifices: Your ERP provider or partner may cut corners to stay on budget and on time. The result could be an ERP system that’s “okay” instead of “amazing.”
Time and materials ERP projects are the "play it by ear" approach
Time and materials billing, often shortened to T&M, is where flexibility rules. Charges are calculated using the actual hours and resources involved. This model allows service providers to adjust as their needs evolve. Think of it as ordering à la carte instead of a full meal.
Pros
- Flexibility: Time and materials billing easily adjusts as things are added or changed throughout the project.
- Transparency: You know exactly where your money’s going, with a clear breakdown of hours and costs.
Cons
- Budget black hole: Costs can spiral if the project drags on, like that home renovation that never seems to finish.
- Timeline troubles: Without clear deadlines, things can slip, leaving you paying for extra hours with no end in sight.
Cost-plus ERP billing projects play the middle ground
Cost-plus ERP billing is like paying the final tab for a reserved party room at a restaurant. You pay for the food and drinks served and a pre-agreed fee for the room. In the case of an ERP project, you pay the actual costs of the materials, labor, and other line items, plus the service provider’s profit. The cost-plus billing option works well for projects likely to change, but some control over costs is needed.
Pros
- Flexibility: Like time and materials billing, you can adjust as the project progresses.
- Shared risk: Both you and the service provider have skin in the game, which can encourage smarter spending.
Cons
- Cost control issues: There’s still the risk of overspending. You’ve got to keep a close eye on the tab to avoid sticker shock at the end.
- Trust problems: Things can get messy if the service provider isn’t transparent about costs.
Subscription-based projects are the "ERP but make it like Netflix" idea
Subscription pricing for ERP solutions is the new kid on the block. It works just like your favorite streaming service. You pay a recurring fee and get continuous access to ERP support, upgrades, and services. It’s a great option if you prefer long-term relationships over short-term engagements. And who doesn’t like a little stability?
Pros
- Consistent costs: Budgeting is easier with predictable monthly or annual fees.
- Ongoing improvements: You get the latest updates and features without paying for upgrades.
Cons
- Commitment issues: Signing up before knowing if the ERP solution or partner is a good fit might not be ideal.
- Defined deliverables: If both sides aren't clear on expectations, it can get awkward.
How do you want to pay for your ERP project?
Most providers use a set billing model. If you have a preferred approach, ask that question when selecting an ERP solution or ERP partner. Aligning the billing method with your business needs, project goals, and budget is key.
With Stellar One, you don’t have to sweat the small stuff. Our subscription pricing includes unlimited support, predictable costs, and no surprise fees. See a complete list of subscription benefits and calculate what you can expect to pay with us.