A Guide to Building an ERP System: Understanding Pricing, Process, and Potential Challenges in 2025

Why Your Business Needs ERP Software

ERP software can transform how your business operates, whether it’s built from scratch or an enhancement of your existing systems. Software providers offer tailored solutions that adapt to your specific needs. Here’s why investing in an ERP system can be a game-changer for your business:.

Everything in one place

ERP systems consolidate all your business data—like sales, inventory, and HR—into a single, integrated platform. While you’ll still interact with different modules or forms for specific functions, they’re all part of the same system and share a single source of truth.

This eliminates the need to dig through scattered spreadsheets or switch between disjointed apps. With everyone accessing the same up-to-date data, collaboration becomes easier and faster.

Work smarter, not harder

Manual data entry and order tracking are slow and error-prone processes. ERP software automates these and other tasks, freeing up time for your team to focus on more important work. It’s like having digital assistants for your business.

Ready to grow with you

Your needs will change as your business grows. A well-designed ERP system is scalable, meaning you can add features and handle more users without starting from scratch.

Make better decisions faster

ERP systems offer real-time insights through dashboards and reports. Want to know your sales numbers or inventory levels right now? It’s all organized for you in easy-to-understand displays, helping you make informed decisions on the spot.

Save money in the long term

Sure, there’s an up-front cost, but ERP systems save money over time by minimizing costly errors, reducing waste, and improving efficiency. It’s an investment that pays off.

Stay compliant and secure

Regulations require many industries to comply with strict privacy and security rules. ERP systems have built-in security features to help ensure you meet those standards and your data stays safe.

Keep customers happy

ERP software often integrates with customer relationship management (CRM) tools so you can track customer interactions, respond quickly, and deliver better service. Happy customers mean repeated business and a golden reputation.

Stay competitive

An ERP system isn’t just to keep you organized—it’s a competitive tool. With streamlined operations and better insights, you can respond quickly to market changes and stay ahead of the competition.

ERP software keeps your business running smoothly by bringing all your data together, boosting efficiency, and supporting growth. It helps you make better decisions and stay competitive, whether you're a small business or a growing company. In today’s market, an ERP system is more than just nice to have—it’s essential.

Let’s address one of the biggest factors that prevents some companies from adopting an ERP system: budgetary concerns.

How much does it cost to develop ERP software in 2025? A quick breakdown

The cost of developing an ERP system varies depending on business requirements, customization needs, and team expertise. Here’s an overview of cost ranges to guide your budget planning..

The final cost is determined by how these factors interact based on the complexity and scope of your specific ERP project. For example:

1. Business scale sets the base cost

• A small business might start with a base cost of $50,000–$150,000 for basic modules.
• Additional factors like customization and integrations, development team rates, and hosting are added.

2. Customization and integrations are variable

• Customization costs can range from $10,000 to $500,000, depending on how tailored the solution needs to be. If only a few integrations are required, a small business might find this at the lower end of the spectrum.

3. Development team costs depend on hours worked

• Local developers charge $120–$200/hour, so the total depends on the project’s complexity and timeframe. For instance, if the project takes 12 months and involves 1,000 development hours, you could estimate $120,000–$200,000 in development costs alone.

Hosting and maintenance are recurring costs

• Cloud hosting is an ongoing monthly expense ($500–$10,000/month), significantly increasing long-term costs.
• Maintenance typically costs 15–20% of the initial development cost annually, so for a $100,000 project, you’d pay $15,000–$20,000 per year.

Applying the costs to your scenario

For a small company wanting customization/integration, offshore developers, and cloud hosting:

1. Start with the base cost: $50,000–$150,000 for small businesses.
2. Add customization/integration costs: Estimate on the lower end ($10,000–$50,000) for moderate customization.
3. Include development team costs: Calculate based on hours required and the $40–$80/hour rate for offshore developers.
• Example: For 500–1,000 hours, you’d pay $20,000–$80,000.
4. Factor in cloud hosting: $500–$2,000/month is typical for small businesses. Over a year, that’s $6,000–$24,000.

Clarifying Interactions

The factors interact, meaning some costs depend on others:

• The scope of customization may increase development time, raising team costs.
• Adding advanced features may necessitate higher hosting and maintenance costs.The key is that these ranges are flexible and heavily project-dependent. Businesses should work closely with developers to assess needs and expectations for an accurate estimate.

By understanding the factors that drive development costs, businesses can plan an ERP investment that aligns with their budget, operational needs, and long-term goals.

What Drives ERP Development Costs?

Building an ERP system is like commissioning a custom-built car. The more features, advanced technology, and tailored options you add, the higher the cost.

Just as choosing premium materials or specialized engineering raises the price of a car, incorporating custom workflows, industry-specific features, or cutting-edge functionalities increases the cost of ERP development. Let’s explore the factors that influence the price tag of your ERP solution:

Scope and complexity

The more business functions you include in your ERP system—finance, HR, inventory, compliance, supply chain, manufacturing, project management, resource allocation, contact management, customer support, sales pipeline management, and so on—the higher the cost.

Customization also drives up expenses because adapting the system to fit specific business processes requires additional time and expertise. Integrating an ERP solution with existing systems, like CRM or third-party tools, adds complexity and requires more resources to create seamless workflows.

Business size

Larger businesses with complex needs might drive up development costs because the ERP system must accommodate intricate workflows, advanced integrations, and scalability. These aspects require more time and expertise during the development phase.

Additionally, customizing platforms for enterprises often means incurring more costs for additional licensing and infrastructure (to accommodate a large number of users).

Development approach

Building ERP software in-house requires investment in developers, computing infrastructure, and management. Outsourcing can reduce initial costs but introduces ongoing licensing and maintenance fees.

A hybrid approach, combining internal resources with external help, offers flexibility but may carry additional management costs.

Specialized technology stack

The development tools and technologies used for your ERP system significantly influence the time, resources, and cost of building it. For example, using a modern framework like React or Angular for the user interface might increase development efficiency but could require hiring skilled developers, raising initial costs.

Similarly, choosing a backend technology like Node.js (cost-efficient and widely supported) versus something like SAP ABAP (specialized and often more expensive) can also impact your budget.

Your choice of platform—cloud or on-premises—affects both upfront and ongoing costs. Cloud-based systems, often built with technologies like AWS, Azure, or Google Cloud, have lower initial development costs but involve recurring subscription fees for hosting and maintenance.

In contrast, on-premises solutions—typically developed using tools like Microsoft SQL Server or Oracle Database—require more significant upfront investment in infrastructure but avoid ongoing cloud fees.

Customization and features

ERP software is always tailored to the client’s needs, but the complexity of customizations can significantly impact development time and cost. Industry-specific features, such as compliance tools for healthcare, job costing for construction, or POS integrations for retail, often require specialized expertise and additional effort.

Similarly, unique workflows—like custom approval processes in manufacturing or route optimization in logistics—may need to be built from scratch, increasing complexity.

Advanced features like AI-powered demand forecasting, machine learning for supply chain optimization, or predictive analytics further drive up costs due to the need for specialized developers and tools.

Additionally, designing an intuitive, feature-rich user interface with interactive dashboards or mobile responsiveness requires more resources than a standard functional UI. The more advanced the features, the greater the investment required.

Labor and market factors

Labor costs vary by region, so development in areas with a lower cost of living can reduce expenses. Market conditions, such as demand for specific features, expertise, or competition among vendors, also influence pricing.

Project management and timeframe

The development timeline directly impacts costs, as longer timelines require more resources and increase expenses. Factors like the scope of features, level of customization, and complexity of workflows influence the project's duration.

If project management is outsourced, costs may vary depending on the expertise and efficiency of the external team. For in-house project management, costs are typically fixed but can rise if delays occur or additional resources are required.

Effective project management—in-house or outsourced—is critical in minimizing delays, optimizing resources, and keeping the project within budget.

As you can see, ERP software development cost depends on many factors, including the system’s scope, customization, and the chosen development approach. Understanding these factors and planning effectively helps manage costs and deliver a solution that meets your business needs.

Depending on your specific needs, you can choose a pricing model that makes an ERP system accessible to your company, regardless of size.

Pricing models for ERP software development

Since ERP systems cater to diverse needs, their development and implementation involve various pricing models tailored to the project scope. We’ll break down the most popular options so you can confidently decide.

Fixed-price model

In this model, the cost for the entire project is agreed upon upfront, covering all aspects of development.

Why it’s great:

• Predictable costs help with budget planning
• Ideal for projects with clearly defined requirements and minimal anticipated changes

Keep in mind:

• Limited flexibility—changes in requirements can lead to renegotiation or additional fees
• May not suit long-term or highly complex projects with evolving needs

Best for: Small to medium-sized businesses with well-defined project scopes

Time and materials (T&M) model

This approach bills based on the actual time and resources spent during the project.

Why it’s great:

• Highly flexible, accommodating changing requirements and iterative development
• Suitable for complex or evolving projects where the initial scope is uncertain

Keep in mind:

• Costs are less predictable and require active oversight
• Demands strong client involvement to manage scope and prevent budget overruns

Best for: Large-scale or evolving projects with dynamic requirements

Custom pricing model

This tailored approach calculates costs based on the client’s specific requirements, customization needs, and project complexity.

Why it’s great:

• Fully tailored solutions to meet unique workflows and business processes
• Offers the highest degree of flexibility and control over system design

Keep in mind:

• Involves higher development costs and longer timelines
• Requires detailed collaboration with the development team to define and refine requirements

Best for: Enterprises with unique operational needs or highly specialized industries

Milestone-based pricing

This hybrid model ties payments to completing specific project stages or deliverables.

Why it’s great:

• Encourages steady progress and accountability throughout the project
• Spreads out costs over time, making it more manageable for businesses

Keep in mind:

• Requires detailed project planning and agreement on milestones upfront
• Changes to project scope after milestones are set can complicate the process

Best for: Projects with clear phases or businesses wanting payment flexibility

Fixed-price, T&M, and custom pricing models are common for ERP development and can overlap depending on project complexity and requirements. Milestone-based pricing blends structure with flexibility, providing a balanced approach for certain projects.

Selecting the right model depends on your project scope, budget, and how much flexibility you need during development.

How Giraffe Software can help you with ERP software development

Giraffe Software offers ERP software development services to help you streamline your operations and enhance productivity. We specialize in building customized solutions, integrating features like project management, accounting, and communication tools.

Our expertise includes automating core processes to improve efficiency and provide a user-friendly experience. We work closely with you to ensure that the ERP system meets your business needs, ultimately driving growth and operational success.

We have a track record of reducing our clients’ software development costs by an average of 50% and delivering projects 30% faster than industry standards. Reach out to learn more about how we can help you achieve your business goals efficiently and cost-effectively."

Here’s one example of how we helped a client:

Aconi, a German IT agency, needed a solution to streamline project management, time tracking, and invoicing. They partnered with Giraffe Software to create a custom ERP system, which helped centralize their processes.

The platform later evolved into a SaaS product called OC (a marketable version of the ERP solution)​​, which Aconi now sells to other businesses.

We developed the ERP system over two years and added mobile versions afterward, increasing operational efficiency and new business opportunities for Aconi.

Conclusion

ERP software can make a huge difference for your business. It streamlines tasks to improve efficiency and helps you make smarter decisions. It simplifies complex processes and provides the insights you need to stay ahead of challenges.

Building and maintaining an ERP system takes some planning, but the benefits—like cost savings, scalability, and increased productivity—are well worth it. With a partner like Giraffe Software and the right pricing model, you can have an ERP solution that helps your business grow.

Contact us Today!