NetSuite has rapidly been capturing the ERP market share post its acquisition by Oracle and there are more and more people trying to understand what would it cost to implement this system and get live on NetSuite to manage their company operations.
The above graph is based on our own survey considering the service inquiries we get from different parts of the world.
In this article, I will run you through all the costs you would need to consider and budget for if you decide to purchase Oracle NetSuite and run your business operations on this ERP platform.
The 2 most important cost components to get you operational with NetSuite ERP
Like any other ERP system, there are costs involved for your company right from purchasing the NetSuite licenses to implementing the system as per your business processes to performing ongoing support. I divide these costs into three main components:
- Annual Recurring cost
- Yearly License Cost (NetSuite Subscription Fee)
- Ongoing Support Cost
- One time cost
- Implementation Cost
- Customization and integration cost
NetSuite Annual Recurring Cost
Annual recurring cost is the cost you will have to incur every year while you subscribe to Oracle NetSuite and keep the system operational.
Yearly License Cost (NetSuite Subscription Fee)
Oracle NetSuite is a SaaS-based ERP system and you would have to pay a yearly recurring cost for the user licenses and modules you plan to procure.
As I mention in my blog where I discuss NetSuite pricing, your license cost would be calculated as NetSuite Pricing = (Base platform fee + User fee + Add-on modules fee) – Discount
NetSuite License cost is quoted as a monthly fee but the payment terms are annual and we recommend budgeting this as a yearly license cost and not monthly.
You can subscribe to NetSuite Licenses for as low as $99 per month per user and $999 per month for the base platform fee.
If you look at this cost from an annual license fee perspective it will cost you $1,188 per user per year and $11,988 per year for the base platform fee.
Your minimum investment on NetSuite Licenses every year would be $13,176 for one user per year.
Definitely, there are discounts which NetSuite offers and you can write to me directly at ap[@]Aarialfie.com to understand how the discounting works and what you can expect as the best subscription cost to you or simply use our Pricing Calculator to reach out to us with the necessary details. This does not mean that subscribing to two users would cost you $26,352 per year. It is interesting to note that from the second user onwards you only get billed for the additional user and the base platform fee remains the same. So subscribing to 2 uses would cost you $14,364 per year ($11,988 + ($1,188*2)).
In addition to the above fees for the licenses, you might have to buy some Add-on modules to meet your business process requirements. Depending on which industry you belong to you might have to subscribe to different modules.
These NetSuite addon-modules range from $599 per month to $1999 per month depending on which add-on is required for your business.
You should work with a NetSuite partner like Aarialife to discuss your requirements and select the right modules for your business. A NetSuite partner would help you select the right models and optimize your NetSuite License costs.
To give you a general sense of the cost of licenses and to simplify things, we will categorize companies as Services, Distribution, Manufacturing, and General Business. We will further categorize these into small, medium, and large enterprises.
NetSuite Yearly License Cost Across Different Type Of Companies
The Netsuite License pricing table above is based on my personal experience dealing with multiple customers across industries over the past decade.
The table above is not meant to determine the exact cost of your licenses but to give you a general sense of the NetSuite license cost different types of companies pay to use their NetSuite Subscription.
As I mentioned earlier in this article, discounts on the licenses play an important role and will defiantly impact a lot on the total cost you pay NetSuite for your license subscription.
Ongoing Support Cost – Professional Services Provided By NetSuite Partners
The ongoing support cost for NetSuite is incurred post your implementation cycle is over and you are live on the ERP system. This includes support for any issues that arise during the lifetime of the ERP system.
Depending on the size of your company, the number of employees working with NetSuite, and the type of services/products you offer, you may need to hire more than one person to handle all the support needs.
I am sure most of you know about the importance of having good customer service and NetSuite provides excellent self-help support through its knowledgebase portal.
This should be good enough for smaller companies with simple operations on NetSuite.
NetSuite does not charge you any additional fee for accessing their self-help knowledge base.
In case you have a larger operation and there are frequent requirements for new report creation or modification of the existing reports or workflows and NetSuite administration is something you do not want to do in-house, you might want to hire a support partner who can help you with these activities.
The ongoing support cost is largely determined by the fact of how much support you need and which country the partner comes from.
If you hire a partner from India generally the support cost remains lower because of the lower resource rates.
We at Aarialife offer an annual support package for maintaining your NetSuite instance.
NetSuite Yearly Support Cost
Generally, the support packages offered by us are good enough for a small to medium NetSuite deployment. But in case you are looking for a larger support option, we will work with you closely to have a custom package developed.
In case you do not have an in-house resource who can manage your instance from an administration perspective you can also hire a dedicated resource from an Indian partner. This is ideally much cheaper than hiring employees on payroll if you are from North America, Canada, the United Kingdom, or Australia.
One Time Professional Services Cost
While you pay for NetSuite licenses and Support services on a yearly basis. There are some costs that are incurred while you deploy the system to align the ERP software to your business processes and integrate your business workflow with other software you use.
NetSuite Implementation Fee
NetSuite implementation fee is one time professional service charge by a partner to implement NetSuite ERP.
The cost is determined by the partner based on your business process needs and the scope of implementation.
As a general guideline and to make your life simple, you should pay between 1.5 times to 2 times the license cost (Post Discount) for the implementation services.
So if NetSuite licenses cost you $20,000 per year, generally you can budget for $30,000 to $40,000 for implementation services.
This is a very general guideline so you can have some reference for your budgeting exercise but to put the fact right, we have done implementations for the same price it costs you to subscribe to the licenses and we have also done implementations that cost 3 times the license price.
This all depends on how simple or complex the implementation is going to be and what amount of effort is expected to go into the implementation.
NetSuite Customization And Integration Cost
While the implementation process might be over, customization of NetSuite still continues. You may require additional reporting functionality or integration with third party systems. In that case, you would need to engage the services of a NetSuite developer to customize your NetSuite instance according to your specific business needs.
You can expect to spend anywhere between $5,000 to $50,000 depending upon the complexity of the customization or integration required and the number of resources needed to complete the project.
I always recommend to first go-live with the standard features and get comfortable with the system before moving towards good to have customizations or integrations. Obviously, you have no choice but to get it done, if you have identified must have customizations or integrations.
Generally, the cost of customization is determined based on the effort needed to execute the scope. Most of the NetSuite partners who provide customization and integration services would prefer to propose a time and material engagement as it is really difficult to determine the effort beforehand of such activities.
Most North American, United Kingdom, or Australia partners would charge you somewhere between $100 per hour to $200 per hour.
We at Aarialife charge between $40 per hour to $50 per hour depending on the complexity of the scope.
NetSuite Cost of Total Ownership – Simulation
To help you understand your total cost to run on NetSuite, I have created a small simulation. You can replace the cost to match the cost you have received from NetSuite subscription pricing, Implementation cost, and Support cost.
| First Year – Cost Of Ownership for NetSuite | ||
| Component | Component type | Cost of Component |
| NetSuite License Pricing | Every Year | $20,000 |
| NetSuite Support Cost | Every Year | $4,500 |
| Yearly Recurring Cost | $24,500 | |
| NetSuite Implementation Cost | First Year | $30,000 |
| NetSuite Customization and Integration Cost | First Year | – |
| NetSuite Sandbox Pricing | First Year* | $2,000 |
| One Time Cost | $32,000 | |
| First Year – Cost Of Ownership | $56,500 | |
| From 2nd Year – Cost Of Ownership for NetSuite | ||
| Component | Component type | Cost of Component |
| NetSuite License Pricing | Every Year | $20,000 |
| NetSuite Support Cost | Every Year | $4,500 |
| Yearly Recurring Cost | $24,500 | |
| From 2nd Year – Cost Of Ownership | $24,500 | |
While I have tried to simulate the yearly cost of ownership in a very simplistic way there are other factors that influence the cost.
The cost of NetSuite Sandbox (Test environment) is normally 10% – 20% of the license fee. Although this is a yearly license, you do not need a sandbox from year 2 onwards as its main role is at the time of implementation. Generally, most of the customers drop sandbox licenses from their subscription while the licenses are getting renewed.
Having said that, in case you feel the need to get a sandbox while you are in the mid of your subscription period you can subscribe on a quarterly basis.
Hope this article helped you get an idea of the NetSuite pricing and the cost of ownership to run your business on NetSuite. In case you feel the need to get any answers to your questions you can reach out to me on ap[@]aarialife.com or contact me on our website.
