Compare ERP ownership costs over the same period, scope and operating assumptions. Include implementation, migration, internal staff time, recurring services, support, integrations and eventual exit costs alongside development or subscription fees. Custom software is not automatically cheaper, and a subscription price is not the total cost of using a product.
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Set a comparison boundary
Write down users, locations, modules, transaction volume, integrations and support coverage. Use the same boundary for every option. If one proposal includes production planning and another only inventory, a price comparison needs a scope correction before it needs a spreadsheet formula.
Choose the evaluation period with your finance team. Three years can be a useful planning window, but it is not a universal standard. Record whether you are comparing undiscounted cash outlays or a financial model that also considers timing and financing assumptions.
Build a worksheet with inspectable inputs
| Cost category | Upfront input | Recurring input | Evidence to collect |
|---|---|---|---|
| Software | Build or setup fee | Licence or subscription terms | Written proposal and scope |
| Implementation | Configuration and process work | Later rollouts | Responsibility and milestone plan |
| Data | Cleanup and migration | Ongoing reconciliation | Record volumes and ownership |
| Integrations | Initial connection and testing | Support and provider changes | Interfaces and failure handling |
| Operations | Environment setup | Hosting, backups and monitoring | Operating plan and usage assumptions |
| People | Training and launch effort | Administration and support | Named roles and capacity |
| Exit | Export and transition planning | Applicable termination obligations | Contract and sample exports |
Record whether each item is included, excluded or unknown. Unknown is more useful than an unexplained zero.
Work through an illustrative comparison
Suppose option A has INR 600,000 in upfront costs, INR 300,000 in annual recurring costs and INR 150,000 in identified changes over three years. Its simple total is 600,000 + 3 × 300,000 + 150,000 = INR 1,650,000.
Suppose option B has INR 1,100,000 upfront, INR 120,000 annually and INR 250,000 in identified changes. Its corresponding total is 1,100,000 + 3 × 120,000 + 250,000 = INR 1,710,000.
These invented inputs demonstrate arithmetic only. They are not Drema prices, vendor quotes or Indian market averages. The INR 60,000 difference says little if the scopes differ, a major integration is unpriced or the operating assumptions are unrealistic.
Test the assumptions that can reverse the result
Vary user count, transaction volume, support coverage and expected change effort. Replace one assumption at a time so the decision-maker can see what caused the difference.
Check whether subscription charges apply to named users, active users, modules, entities, usage or another unit. For a custom system, ask who maintains dependencies, infrastructure and backups. Source-code ownership does not operate the service by itself.
Keep speculative productivity savings outside the confirmed cost subtotal. If you include benefits, identify the measurement, owner and uncertainty. Avoid treating every hour apparently saved as an immediate cash saving.
Questions finance teams ask
Should we include internal staff time?
Yes, when the comparison is about the full organisational commitment. Show it separately from external cash costs so the categories remain interpretable.
How do we budget unknown changes?
Identify likely change types and compare scenarios. A contingency can make uncertainty visible, but it does not replace investigation of an unknown migration or critical integration.
Prepare for a cost review
Bring comparable proposals, exclusions and operating assumptions. Use the custom ERP development budget guide to scope initial delivery, then discuss ERP development using this wider ownership worksheet.
