How to calculate ERP total cost of ownership over 3 and 5 years

The components

Total cost of ownership adds everything you pay to choose, implement and run a system for a period. We use six components: licences or subscriptions, implementation, add-ons, integrations, internal time plus training, and run costs (partner support and hosting). One-time costs fall in year 1; recurring costs repeat every year.

Why the time horizon matters

Year 1 is dominated by implementation. Over five years, recurring licence and support costs carry more weight, so a system with low implementation cost but a high subscription can look cheap at three years and expensive at five. Always compare both horizons, and compare totals rather than per-user prices.

Worked example

Below, the same mid-sized company (25 full and 10 light users, standard project, two connector integrations, partner rate $150/hour) is calculated for two systems from our data. Numbers are generated from the calculator at build time.

Low, expected and high

Each line carries a range. Official list prices have no range; estimates and assumptions do. The low total uses the low end of every range and the high total the high end. Treat the range as the uncertainty of the estimate, not as a forecast of where your project will land.

Steps to build your own

1) Count full and light users honestly. 2) Get the licence price on the right plan, including platform fees and add-ons. 3) Get an implementation estimate in hours and the partner's rate. 4) List integrations and how they will be built. 5) Estimate internal time. 6) Add yearly support and hosting. 7) Sum over 3 and 5 years and add contingency. The calculator does steps 2–7 for you and shows each formula.

FAQ

Should I compare ERPs over 3 or 5 years?

Both. Implementation dominates short horizons; subscriptions dominate long ones.