NetSuite: Is It Really That Expensive For Small Businesses?
NetSuite is a cloud-based ERP software solution designed specifically for Small and mid sized companies. The company offers a suite of solutions that include accounting, CRM, ecommerce, human resources, inventory management, marketing automation, project management, sales force automation, supply chain management, and web commerce.
NetSuite was founded in 1998 and has since grown into a global leader in enterprise applications. NetSuite was later acquired by Oracle in 2016 and became a business unit inside the Oracle application stack.
Definition Of Small companies Differ Across Economies
In emerging regions the definition of small companies is different than that of the developed nations. A company between USD 0.5 million to USD 8 million is termed a small business in emerging economies, whereas the definition of small business in developed economy is a revenue bracket of USD 1 million to USD 40 million.
Ref.:
Definition of small business in emerging economy
Definition of Small business in developed economy
Your Region And Spending Power On Software Matters
The definition of small business changes from geography to geography. A small business in North America, Australia and Europe can easily spend USD 10,000/ year on a business application and accounting ERP like NetSuite while system small companies in Asia and South Africa spend in the range of USD 1000 to USD 3000 for a business application system.
Practically speaking, NetSuite is not that expensive if you are from Europe or North America region considering there is considerable amount of spending power and the scalability of features provided by NetSuite ERP. But small companies from Asia and South Africa and have to settle down for a smaller accounting package like Xero, Zoho Books, Tally or QuickBooks.
How Much Does A Small Business Have To Spend On NetSuite?
A small business can expect to spend yearly USD 10,000 on NetSuite licenses and a one time implementation fee of USD 15,000 for the initial configuration.
NetSuite price varies depending on the modules you select and the number of users you have.
Why Is NetSuite So Expensive?
Any ERP system you buy feels expensive. You talk to a small company using Xero, they call that expensive, while you talk to companies using Systems like NetSuite or SAP or Microsoft they would call them expensive as well.
If you look at the license cost directly, Yes NetSuite looks expensive but if you look at the underlying infrastructure you get, the cost of NetSuite seems reasonable.
You cannot compare the cost of NetSuite ERP with an accounting package, of course that would not be a faire comparison.
I think NetSuite’s biggest strength is that it’s designed for small businesses. The fact that you don’t have to deal with servers, databases, etc., just gives you the flexibility to focus on what matters most – running your business. It is all managed by Oracle NetSuite for the same license fee. Also there is no separate maintenance charges as it is a part of the subscription price you pay.
NetSuite is built on multi-tenant architecture which means the hardware resources are shared between many companies using NetSuite while the data remains separate and private to each organization.
NetSuite pricing is derived from the number of modules you select and the number of users using the system.
NetSuite pricing = Module cost + per user user cost
The modules define the features and functionality available in your instance and the cost is fixed regardless of the number of users using the system or any specific module.
Initially NetSuite pricing might seem expensive but the average per user cost drastically reduces as you grow and get more user logins.
In short NetSuite provides you with enterprise grade infrastructure at a very affordable cost which otherwise small and mid sized companies cannot afford.
Conclusion:
NetSuite is a complete ERP which provides you with enterprise grade infrastructure and platform to manage your business operations at a really low subscription cost. As a small business you get access to all features which only big companies can afford. Considering the features and scalability NetSuite provides , its pricing structure makes sense.