How much does ERP development cost in India?
The cost of a custom ERP in India is decided by scope: which modules it has, how many locations hold stock, how much GST work it does, what it connects to, and how much data has to come across. Payroll and production are the two modules most likely to turn a modest ERP into a large one.
- Written by
- Neil Sharma, Lead Architect and CEO
- Published
- Updated
- Reading time
- 7 min read
ERP is the broadest word in business software. A trader who needs stock and GST invoices across two godowns and a manufacturer who needs production, job work and payroll are both buying an ERP, and no range covers both honestly. So this article gives no figure; it sets out what decides your project's size, so you can judge it before anyone quotes.
Whether to build at all is a separate question, covered in custom ERP or SaaS ERP.
Modules: the first thing that sets the size
| Module | A smaller version | A larger version |
|---|---|---|
| Inventory | Stock by item at one location, with reorder levels. | Batches, serial numbers or expiry dates, units that convert between boxes and pieces, several warehouses, and stock reserved against orders. |
| Purchase | Purchase orders, goods received, and what is owed to each supplier. | Indents and approvals before ordering, supplier quote comparison, part deliveries, returns and quality checks. |
| Sales and billing | GST invoices, credit notes and customer balances. | Customer price lists, schemes, credit limits that hold an order, delivery challans, and e-invoices and e-way bills generated from the system. |
| Production and job work | A bill of materials that consumes stock and produces a finished item. | Several stages, work in progress, scrap and by-products, and material sent to job workers and tracked until it returns, with the GST records job work needs. |
| Accounts | Entries passed to Tally or your accountant's software, which keeps the books. | Full accounting inside the ERP, from ledgers to bank reconciliation, replacing the accounts software rather than feeding it. |
| HR and payroll | Staff records and attendance, with payroll run elsewhere from an export. | Payroll inside the ERP: salary structures, overtime, leave, advances, statutory deductions, payslips and filings. |
| Reporting | Fixed reports for sales, stock and outstanding payments. | Dashboards per location and role, margin by product or customer, ageing, and reports across several modules. |
The payroll row deserves a warning. Statutory payroll is a compliance product: provident fund, ESI, professional tax (which differs by state) and income tax deducted at source have to be right for every employee, every month, as the rules change. Many businesses keep attendance and staff records in the ERP and run payroll in dedicated software or through their accountant.
What else moves the number
- Locations
- Going from one stock location to two is a bigger step than going from two to ten, because transfers, stock in transit and per-location permissions all arrive with the second.
- GST work
- GST-compliant invoices and the reports your accountant files from are standard. Generating e-invoices and e-way bills from the ERP adds a connection to the government's systems, usually through an authorised intermediary known as a GST Suvidha Provider, and handling for rejections and cancellations.
- Approvals and workflows
- One approval for purchases above a limit is small. Approvals that vary by department, value and location, with stand-ins when the approver is away, are close to a module of their own.
- Integrations
- Payment gateways, online marketplaces, logistics partners, bank statements. Each is separate work against someone else's system, so each should be named in the quote.
- Barcode and QR scanning
- A phone camera at a few points is the smaller version. Handheld scanners, label printing and a scan at every movement from receipt to dispatch change the screens and add hardware.
- Data migration
- Item masters, customers, suppliers, opening stock and balances. A clean item list comes across quickly; one where a product exists under four names is a clean-up project first.
- Users and roles
- A billing counter, a godown, accounts and the owner each need different screens and permissions. Each role is design and testing work, so roles matter more than the number of users.
The costs people forget
- Hosting and running. Server, database, backups and monitoring, every month, and an ERP holding stock and money is not the place to economise on backups.
- Third-party fees. E-invoicing access through an intermediary can carry its own charges, payment gateways take a fee on each transaction, and SMS and WhatsApp messages are billed by usage.
- Hardware. Barcode scanners, label printers, and phones or tablets for the godown.
- Support and changes. A change in tax rules, a new branch, a report the accountant wants. Agree before go-live how changes are priced and who fixes a fault.
- Training. Every role needs showing, and an ERP has many.
- Migration clean-up. A physical stock count so the opening figures are right, reconciled balances, and decisions about which old records come across.
- Your own people's time. Someone who knows how the business really runs has to answer questions and check each module with real transactions, and staff may run both systems side by side for a while. None of it is invoiced.
Phasing: one module in use before the next
The cheapest way to build an ERP is not all at once. Start with the module whose absence costs the business most every day, usually billing or inventory, put it into real use, and scope the next module from what that use shows.
- You commit to one module's fixed scope and price, so the cost is spread across phases.
- Requirements nobody mentioned, such as a regular customer's credit or stock lent to another branch, surface while the scope is small.
- If the project or the builder is not working out, you find out after one module rather than after the whole budget.
Phasing only works if the first module is designed as part of the whole, with one database and one set of item, customer and supplier records.
How to compare two ERP quotes
| Ask | Why it matters |
|---|---|
| Is it the same written scope, module by module? | A quote without e-invoicing, job work or payroll is not cheaper. It is a quote for a different system. |
| What is excluded? | Data migration, the opening stock count, hardware, intermediary fees, training and hosting are the usual gaps. |
| Who owns the code, the data and the accounts? | The repository, the database, the hosting and any gateway or intermediary accounts should be in your company's name. |
| How are changes handled? | An ERP will change after go-live. How a change is estimated and approved matters as much as the first price. |
| What happens after launch? | Who fixes a fault in billing, how quickly, and on what terms. |
The fuller checklist is in how to choose a software development company.
Do the sum against a packaged ERP
Packaged and SaaS ERPs such as Odoo, ERPNext and SAP Business One are priced in different ways, so ask each for a three-year total for your users and modules. Then use the method in custom CRM or off-the-shelf: per-user monthly price, times the users you will have in three years, times thirty-six, plus integration and admin costs, plus implementation and customisation, which can cost more than the licence. Set that against the build quote plus three years of running costs.
How MyFloww quotes an ERP
Every project is quoted individually, as a fixed price for a fixed scope, once we understand the requirement; for a custom ERP that means mapping how goods, money and work move through the business, then pricing the first module on its own.
Questions
Related questions
Is integrating with Tally cheaper than building accounts into the ERP?
Usually, yes. Keeping Tally as the books and sending it sales, purchase and stock entries is a smaller job than building full accounting, and your accountant keeps the software they know.
The work is in agreeing how ledgers, items and tax classes map between the two, and which system is the master for each kind of record.
Does a custom ERP have to generate e-invoices and e-way bills?
Only if your business is required to issue them, which your accountant can confirm. Generating them from the ERP saves re-keying documents into the government portal, but adds an intermediary connection, error handling and possibly its own fees.
Should payroll be part of a custom ERP?
Often not in the first phase. Statutory payroll has to be right for every employee as the rules change, so many businesses keep attendance in the ERP and run payroll in dedicated software from an export.
Why does an ERP for a manufacturer cost more than one for a trader?
Because of production. A trader's ERP moves finished goods in and out; a manufacturer's also turns materials into products through bills of materials, stages, scrap and job work, all of which must agree with stock and costing.
Can a custom ERP be built in phases and still be one system?
Yes, if it is designed that way from the start: every module shares one database and one set of item, customer and supplier records, so each new module joins the system rather than being integrated with it.
The same applies to a CRM beside it; [what decides the cost of a custom CRM](/resources/crm-development-cost-india) covers the sales side.