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.

Rates based on location

Due to economic differences between countries, location can lower or raise the cost of hiring a web developer. Here are a few countries from different parts of the world for comparison.

Don't forget to assess the price-to-quality ratio when choosing a country for your web developer search.

Project-based vs. Hourly rates

Some web developers work on an hourly basis, while others prefer payment for the whole project. Both options are acceptable, and the choice entirely depends on your project's nature and budget.

For instance, the project-based model is the way to go if you clearly understand what functionality you need and a fixed budget. However, hourly payment will suit you better if you don’t have a predefined scope and want to build an MVP before turning it into a full-fledged product.

We know how confusing all these cost-related questions might be. So, if you need more insights on how to reach high web development quality that won’t stretch your budget, reach out to us for a custom quote tailored to your needs.

Why is outsourcing the best way to hire web app developers?

It’s common practice to leave finding the right web app development talent to a specialized vendor. In fact, 79% of respondents in a Deloitte survey reported having their app or software development outsourced. Here’s why it’s such a good idea.

Benefits of outsourcing web developers

Here are some key advantages if you decide to hire dedicated web developers:

• Outsourcing is often cheaper than hiring in-house because you don’t have to pay operational costs, benefits, and overhead.
• Companies like Giraffe Software offer teams of engineers with varying skills from different locations, ensuring your project has the right talent tailored to its needs.
• Since outsourcing companies have well-set processes and pools of resources, custom web development is often faster than building an in-house team.
• Outsourcing allows businesses to scale their development resources up or down as needed for project success.
• Established outsourcing companies, like Giraffe Software, offer additional services, like quality assurance, UI/UX design, DevOps, or business analysis.

“But can you get the same benefits with freelancers or in-house engineers?” We predicted this question and prepared a comparison table to show you the differences.

Freelancers vs. Outsourcing vendors vs. In-house web developers

How to overcome team integration and security challenges of outsourcing

Successfully integrating outsourced web developers into your team goes beyond using the right tools.

While setting clear goals and maintaining open communication are vital, a real connection can be hampered by language barriers or misalignment between client management and the outsourced team. It's essential to address these challenges head-on.

Encourage regular video check-ins to build rapport and ensure everyone feels connected. Additionally, consider organizing occasional visits to the outsourcing team.

Many companies have shifted away from this practice after the pandemic, but face-to-face meetings can significantly strengthen relationships and enhance understanding.

Don’t forget to keep your vendor’s engineers’ time zones in mind. Aligning working hours can make communication smoother and allow quicker feedback.

Security is just as important in outsourcing, so you should partner with vendors who prioritize their reputation and maintain high security standards. Reputable outsourcing companies know that a security breach can seriously damage their credibility.

That's why they often employ stringent security measures that can even exceed those of in-house teams.

While standard measures such as secure communication channels and access restrictions are essential, the focus should be on the vendor's overall security culture and proactive approach to identifying and mitigating risks.

Regular security assessments and protocol updates show that the company is committed to providing a secure environment for your sensitive data.

Web development outsourcing models

Different vendors can follow different outsourcing models: they can stick to a single one or mix them up, depending on the project. At Giraffe Software, we offer three models to accommodate our clients’ needs: time & material, fixed price, and cost plus.

Time & material

When we’re contracted for web app and website development, we often work on an hourly basis, which lets us adjust easily as your project evolves. This model works well for smaller projects or ongoing support, allowing you to kick things off quickly.

Keep in mind that larger projects can lead to higher costs without clear limits. Choose this approach when you need flexibility and want to grow your project gradually.

Fixed price

If you're looking for predictability, the fixed price model might just be what you need. This option helps you stick to a budget while ensuring that deadlines and results are clear from the beginning—an excellent choice for startups.

Cost plus

This pricing structure is based on the developers’ salaries plus a markup. With no recruitment headaches and complete control over project management, it's particularly well-suited for larger enterprises that require more flexibility.

How to outsource custom web development to Giraffe Software

Outsourcing web developers is an excellent opportunity to access top talent with reasonable time and money investments. We know this because Giraffe Software has been offering software outsourcing services for eight years now. Allow us to show you how we approach web development outsourcing.

Our process is simple and ensures high-quality results along with comfortable collaboration. Here’s how it works:

At Giraffe Software, we help our clients grow and stand out from the competition with our custom web app development services. With 120+ successful projects across industries like eCommerce, FinTech, and eLearning, we’ve built web solutions that serve people and bring revenue, like AUDENTES, MEGAMARKET, and OCAM.

So, why choose Giraffe Software for your web application development? Well, we can name at least four reasons:

1. Exceptional quality. Our team consists of experienced experts, with 80% at the middle or senior level, ensuring top-notch results backed by a perfect 5/5 rating on Clutch and GoodFirms.
2. Time savings. Our efficient processes can reduce development time by up to 30%, allowing you to launch your product faster.
3. 100% job success rate. We have a proven track record, ensuring you receive expert services that meet your expectations on time and within budget.
4. Advanced applications. We develop SEO-friendly single-page apps and progressive web apps that provide seamless, fast experiences across all devices.

Whether you’re launching a new project or enhancing an existing one, we’re here to turn your ideas into impactful, polished web products.

Ready to get started? Let’s build your web solution together!