The Hidden Fees in ERP That Could Break the Bank

When you’re paying a large amount of money for an ERP system, sometimes the minute details get lost in translation, or lost among the many contract pages. A small fee here or a small fee there may pale in comparison to the large number at the bottom of the page that you will be paying, but it is important to pay attention to every line of costs in the ERP contract. There may be some hidden fees in ERP that you don’t even understand what they mean, and if you did you wouldn’t be happy to be paying them. Below are some common hidden fees in ERP that you should keep your eye out for.

  1. Over Customization
    Customizing your ERP to work more efficiently for you is a good thing, having to customize the entire product is a bad thing. It probably means that the ERP system isn’t a good fit for your company and large customization work means slower processing times. Further, if you have a lot of customization works, updates will not be simply. It will mean a lot of maintenance work and maintenance costs. If you see a lot of customization fees, stop and ask why there are so many and why the system needs so many.
  2. Annual Subscription Hikes
    Everyone knows that it is not a good investment to get a balloon mortgage, with an interest rate that could fluctuate higher every year. So, why would you get a ballooning subscription that could get higher every year? Sometimes you’ll find in the fine print that your costs are able to go up by .25% to .75% each year, which doesn’t sound like much but adds up. Make sure that your vendor locks you in with one annual subscription and no hidden fees in ERP.
  3. Clawback Charges
    A clawback charge typically occurs when you have purchased a subscription seat for the ERP but then decide not to use it and abort the seat. Basically, the vendor is charging you for getting rid of additional user. This is something you want to find very clearly in your contract before signing. If you already have signed, call and check with the vendor before you try and abort that seat.

In any large purchase, it seems like there are hidden fees. It’s no different for ERP. Choose your vendor carefully, because one you can trust won’t throw extra costs on you without explaining the purpose. Read your contract carefully to hash out these hidden fees in ERP before anything is signed. This will save you a lot of headache down the road when your budget is tight.

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