What licenses do I need to run Netsuite cloud ERP? What would the license and implementation cost me? Those are the questions that all of our prospects ask us. At Aarialife we know that you can’t take a cookie cutter approach to these questions, because every customer has different needs and has different user profiles within their organization. While NetSuite has some standard licenses available, as well as the ability to build your own custom solution, there are other ways to choose the right licensing option’s to fit your business needs.
While there are plenty of resources and information regarding Netsuite licensing available on the internet, most of it is dated. In this article, we will attempt to provide a comprehensive overview of the license pricing models, including a few tips along the way to save you a some bucks.
How Oracle NetSuite Pricing Works?
The Oracle NetSuite pricing structure is a little bit complex and involves a few moving parts-so much so that we’ve written an entire article that breaks down the costs of Oracle NetSuite by function and implementation model. (One important note: though the article focuses on Oracle NetSuite‘s pricing model for mid-to-large firms, many of the same principles apply to small businesses.) But, if you’re a small business owner just getting started with Oracle NetSuite, we’ve broken down the basics of the Oracle NetSuite pricing model into a few simple steps that will explain which costs you can expect to pay-even if you’re just using the software for one employee.
For many businesses, choosing an ERP system is like choosing a car. There are so many options, and each has its ups and downs. This is partly because companies are different, and partly because technology is always changing. So, how do you find the right ERP system for you?
First, it’s important to understand the basics of how Oracle NetSuite pricing works, including key terminology and the different options you have.
Oracle NetSuite license fees are very modular and depend on the user count and the specific functions (NetSuite calls them modules) you want to have in the system. This is unlike any other application where you are forced to buy all the features or a particular edition. The modularity of the licensing makes it very easy to start really small and then scale with additional functionality or user licenses.
While you budget the cost for your NetSuite deployment, you should consider the below 4 factors :
- Netsuite License cost: This is the cost you pay directly to Oracle NetSuite to utilize their product. The cost of NetSuite License is subscription model-based yearly recurring and has to be budgeted for each year you plan to use the system. While you renew your licenses at the end of the contract term, there will be a certain price increase which is agreed upon while you sign your subscription contract during the initial term.
- NetSuite implementation cost: This is a cost you will pay to your implementation partner for their professional services to configure the system as per your business processes. Your implementation partner will also do your data migration and train your users on how best the configured system can be utilized. It is important that the partner you work with follows proper implementation methodology and deployment model to achieve higher success for adoption.
- NetSuite customization and integration cost: A lot of times, Oracle Netsuite partners will customize NetSuite system to meet your business needs. This might include creating custom records and automating them using code. You might also need to integrate NetSuite with a few of your 3rd party business systems using API’s. These services need very specialized skills and would cost you additional money.
- NetSuite Post-implementation support cost: Once you implement the system, you would need someone to administer the system and ensure all the processes are running smoothly and your users are aware of how to use each function the correct way. You may decide to train a resource internally or hire a partner to support you for this activity. You might also want to enhance the system to achieve further automation and this adds to your costs.
Break down of Oracle NetSuite ERP License Pricing
Generally, you would find 2 approaches for user pricing of any software-as-a-service(SaaS) application: Named user and concurrent user. When you specifically talk of Oracle NetSuite they work on a named user pricing model.
The cost of a cloud based ERP solution is usually quoted in two ways. The first is the named user price, which is the rate paid per person during the term of the agreement. The second is the concurrent user price, which is the rate paid per user who is accessing the system at the same time.
Named user pricing: Named user pricing is, as the name suggests, a pricing model that bases the monthly price of a software package on the number of users who will be utilizing the software. This is in contrast to the per-seat pricing model, which is based on the number of licenses, or seats, that a company purchases. So in a named user arrangement, you will have to pay a cost per user who accesses the system.
Concurrent user pricing: Concurrent users are how many people, or “concurrent users,” you can have using your cloud solution at a given time.
NetSuite licensing costs can be broken down into three price components. We categorize Netsuite pricing as below:
- NetSuite Suite Cost: The foundation of NetSuite licensing is the cost of the Suite (Also known as the base price) which includes NetSuite Platform, Basic ERP features, Database cost, Desaster recovery cost, and the Infrastructure cost. Regardless of how many users you want to purchase, this licensing component is something you will always have to pay for. The cost of users and additional modules is always in addition to this basic cost you will have to pay.
- NetSuite User cost: Like any other software-as-a-service (SaaS)product Oracle NetSuite charges a per-user cost. This cost is incremental, as you grow and add additional user licenses to the ERP system. NetSuite categories the type of users as follows:
- Full user Access License: This user login license will by default have access to all the functionality of the system. He can be an Administrator or an inventory manager or a project manager. The rights are stripped down to the necessary requirements while user roles are created during the implementation process. You will need to buy at least one full access user to get started with. So if we have to break it down the minimum cost to procure a NetSuite subscription is the base price plus the cost of at least one user license. Rest all is something you can add-on when needed.
- Customer access license: These are licenses that are given by NetSuite for your customers to access your NetSuite system. Generally, Customer logins are free of cost but there is an advanced version of customer login which NetSuite charges for. In the basic version, Customers can access the Oracle Netsuite system to have a basic dashboard reporting and are able to place orders to your company for your product or service, see their account payables, can raise support tickets, or can manage their customer profile information. The advanced version which is paid, allows customers to perform payments from the login itself and provides a much-improvised user experience in terms of dashboard reports and look and feel.
- Vendor access License: NetSuite provides Vendor licenses free of cost. These are generally read-only access where vendors can view the orders placed and the status of their bills raised to your company. They can also see their accounts receivables. In case you purchase “Procurement management cloud services” which is one of NetSuite’s advanced models, the vendor login allows your vendors to bid for the vendor bids opened by your company. Many companies use this login to provide transparency to their vendors.
- Partner access License: Your partners are generally your extended sales arms. Netsuite provides a partner login license where your partners can log in and enter the leads and opportunities they are working on. This helps your company with real-time dashboard reporting, pipeline of your partners and also helps manage partner conflicts. Netsuite’s Partner login becomes a mini CRM for your partners to manage, leaders, deals, estimates, activities, and other marketing campaigns they are working on giving you complete visibility on your sales ecosystem.
- Employee access licenses (ESS): With Netsuite, you also have an option to purchase Employee access licenses. these are non-power users who can perform basic tasks like, entering timesheet data, raise purchase requisitions, create support tickets, and manage their calendar and tasks. These logins cost 25% of the full access licenses.
- NetSuite Module Cost: The final cost which you will have to keep in mind is the addon module cost of NetSuite. This is the price you pay for the additional functionality which you need for your industry-specific requirement. NetSuite module cost is a flat rate and does not increase with the number of users you purchase. Once you have the module it can be used by all the full access user licenses who are using the system.
Now, since we know that the formula to calculate NetSuite license (Base price + User cost + advanced module cost) we should also be aware of the editions that influence NetSuite price levels. Depending on your company size, Netsuite gives you 3 pricing options when it comes to choosing an edition. We have explained them below:
- Netsuite Limited Edition: Used for startups or smaller companies who would not need more than 10 full access users for their operations.
- NetSuite Mid-Market Edition: Used for mid-sized companies who would require more than 10 full access users for their operations.
- NetSuite Enterprise Edition: Used for companies who need more than 1000 full access users for their operations. Generally, these companies will have high transaction volume and utilize more infrastructure resources.
The difference between these 3 editions is very thin apart from a few restrictions on the add-on modules you can purchase. NetSuite allows you to scale/ migrate to the higher edition at any point in time if you feel the need to have those features. So as your business grows you can scale the application functionality without having to switch to a new software.
To give you an idea of how NetSuite categorizes its add-on modules we have listed below a few frequently used modules Industry-wise. In this article, we have not covered all the industries but broadly categorized them into Distribution, Manufacturing, and Services.
NetSuite modules for Wholesale and Distribution Companies
- Inventory management cloud services
- Demand planning cloud services
- Procurement management cloud services
- Financial Management cloud services
- Warehouse Management (WMS)
NetSuite Modules for Manufacturing Companies
- Inventory management cloud services
- Demand planning cloud services
- Procurement management cloud services
- Work order and Assembly cloud services
- WIP and Routing cloud services
- Financial management cloud services
- Warehouse Management (WMS)
NetSuite Modules for Services and Software Companies
- Project management cloud services
- Job costing cloud services
- Resource allocation cloud services
- Financial management cloud services
- NetSuite advanced revenue recognition and revenue management(ARM)
Although NetSuite has plenty of modules, the ones listed above are the ones that are mostly used by companies. Apart from this if you are an enterprise that has multiple subsidiaries (legal entity) you would need the Netsuite OneWorld module which helps you in group-level consolidation of your financials while allowing you to do intercompany transactions and eliminations. having such a system helps you to fuel your company’s growth.
The price for one full access user of NetSuite is USD 99/ month and the base module pricing starts at USD 999/ month. Each additional module is priced independently and I would suggest you reach out to one of the NetSuite partners to get the exact details of the module you would need and the pricing for those modules in your country. NetSuite also provides a handsome discount on its list price and you can reach out to us to understand how best we can optimize cost for your operations.
While you can reach out to NetSuite direct sales team for the purchase of license subscription, we recommend closely working with partners as they are the ones who would implement the system and would recommend the right modules required to run your operations on Netsuite’s business management software.
Break down of NetSuite Professional Services Pricing
As we mentioned earlier there are 3 components (Implementation, Customisation/integration, and support) to professional services which you would need to consume from a partner. Buying licenses is one part of your ERP journey. Implementing Netsuite with the right processes in place that suit your company is very important.
Partners generally charge you based on the modules you want to implement and the customizations or integrations which are needed to be in place. It is important that you and your management team understand that implementing an ERP is a joint effort between your organization and the partner company.
A Netsuite partner will be specialized in configuring and customizing NetSuite while they would need your team to support understand your business processes. The more you are in sync with the implementation partner you will be able to achieve a higher return on investment and lower total cost of ownership. It is important you select the right partner for your NetSuite implementation with who you feel comfortable.
Let’s now look at how the partner calculates the cost for their services.
Whether it is Implementation cost or cost for integration or customization, for a partner it is always the cost of resources plus his profit margins. Sometimes there are situations where the cost for certain services is higher (generally integration services cost more) as the risk of failure is high and you would need a senior resource to perform the activity.
This is the reason many companies prefer sourcing their projects to an Indian Netsuite Partner. Doing so helps them reduce their overall implementation cost by still maintaining a high quality of implementation.
How can you save on your NetSuite purchase costs?
There are many ways you can optimize your Netsuite’s total cost of ownership (TCO). This can be on the licensing side as well as the implementation side. Let us understand how this can be done.
Optimizing your cost on NetSuite Licence pricing:
Purchase industry-specific edition: As we know NetSuite is modular in nature and you can add modules based on the functionality you need. NetSuite pricing strategy also allows you to select specific industry editions which helps you to reduce the cost of purchasing individual modules.
Let us look at it with an example.
Suppose you are from a distribution industry. Your NetSuite ERP‘s license configuration would look like the this if you choose the independent modules.
You will pay for the base cost + additional modules fees + User license fees :
- NetSuite Mid-Market Edition (Base fee for the generic suite)
- This will include Sales force automation with quota and order management, Marketing Automation with campaigns with 12,000 campaign emails per year, Customer service management, Basic procurement management, Accounting and basic budgeting, Basic inventory management, Expense reporting, Advance, shipping, Business Intelligence with Real-time dashboards with key business metrics, Productivity tools including contacts/calendar/events 5 self-service users, 100 GB of file storage and platform to perform necessary customizations and integrations. You also get basic NetSuite Support as default but if you want NetSuite premium support you will have to pay an additional fee.
- NetSuite Inventory management cloud services (Add-on Module)
- This Inventory management add-on module gives you additional features to your basic inventory management where you can use Barcode, Serial numbers, Batch numbers with expiry, Manage landed cost, and perform warranty management.
- NetSuite Demand planning cloud services (Add-on Module)
- The Demand planning module helps you manage your inventory demand and supply plans and gives you the ability to perform Just In Time (JIT) operations.
- 1 Learning Cloud support pass (Optional self-learning pass)
- This is a learning pass where you have pre-recorded videos of how to use NetSuite. Depending on your business size you can use these videos to learn NetSuite features and how the administration can be done.
- NetSuite Full Access users (Users you want to purchase)
- These are simply the users you need who will access the system.
Instead of the above configuration if you go ahead with an industry-specific edition which is “NetSuite Wholesale Distribution Cloud Services” in this example, you would get the same configuration but at a lower cost.
Similar industry-specific editions of Netsuite are available for nearly every industry out there. You can reach out to the partner you are dealing with to optimize your license bill of material or simply connect with us and we would be happy to help.
The most popular Industry-specific editions are:
- NetSuite Wholesale Distribution Edition
- NetSuite Services Edition / Service resource planning (NetSuite SRP)
- NetSuite Manufacturing Edition
- NetSuite Retail Edition
Involve an Oracle NetSuite Partner: We strongly recommend working with a NetSuite partner to understanding which modules you need and which NetSuite modules you can purchase later. Sometimes NetSuite partners also negotiate with NetSuite on your behalf to get you the best discounts possible. Their earlier experience dealing with NetSuite defiantly helps get you the best discounts possible.
You should also be aware that you should only work with one partner and working with multiple partners puts your credibility at risk. NetSuite will not give you discounts or refrain from negotiating if you are dealing with multiple partners. So be sure to do your research well before you engage with any partner and stick to them throughout your procurement journey.
Optimizing your cost on NetSuite Professional services
The SuiteSuccess approach: The other option which can save you money is to go with NetSuite SuiteSuccess. This is the near preconfigured edition where processes and pre built dashboards are readily available based on industry experience NetSuite has. You will find built-in Business Intelligence and financial reports which might be enough to monitor your financial performance. This can save you some money in NetSuite Softwares development efforts.
The challenge with SuiteSuccess is that you will have to adapt to NetSuite defined processes and larger change management is required internally.
If you are a startup or a young company and you want to streamline your processes based on industry standards, SuiteSuccess might be a great option. But if you are a large company or have a complex business model, you should prefer the standard approach towards NetSuite Enterprise Resource Planning.
Prefer a Stairway approach: If your company is deploying an ERP for the first time you might want to consider a stairway approach for your initial implementation. A stairway approach allows you to implement the basics and then slowly adopt additional features around the system as your users get comfortable using the system.
You can start with one department and then buy additional user licenses and modules to cover other departments of your organization. This ensures that there is better adoption of NetSuite ERP across the organization and you see a reduced cost and higher utilization.
Prefer remote NetSuite implementation: Oracle NetSuite ERP is a cloud based system and can be implemented remotely. You do not need consultants in your office who get billed to you. You can go with a cost saving approach by preferring a remote implementation. The price of implementation is really reduced with this approach.
The best way to achieve this is to find a reliable partner in India having experienced ERP consultants (The resource cost are lower with good quality) even if you are in other parts of the world and get the implementation executed.
How NetSuite License Discounting work?
While you plan to purchase NetSuite licenses, it is your expectation that you get some discounts on the licenses you buy. NetSuite partners and NetSuite direct sales organization works closely with you to understand your expectations and provide a detailed pricing plan to reach a mutually agreeable discount.
You must note here that the NetSuite list price is global and there are discounts given region-wise. So if you are in an emerging market, the discount levels might be a bit higher than if you purchase NetSuite from a matured market.
The best thing about Netsuite discounting is that the discounts and payment terms that are agreed upon while you do your first license agreement are honored while you renew your subscription, purchase additional users or new modules to meet your growing needs.
Aarialife’s Partnership with Netsuite
Aarialife is a digital transformation and technology service company focused on providing NetSuite ERP solutions to its customers. With offices in multiple countries, Aarialife is an alliance partner to NetSuite in the United Arab Emirates (UAE) and a NetSuite solution provider partner in India, North America, and Canada. Aarialife’s professional services team helps customers like you to deploy NetSuite with the right project management practices, consulting services, and real-time project monitoring. Aarialife has done multiple successful implementations across the globe and has a pool of human resources with specialized skills.
About Oracle NetSuite
Oracle NetSuite is a cloud-based ERP for Fast-growing companies that was acquired by Oracle Corporation.
NetSuite is a single platform that combines functions, such as financials, Professional Services Automation (PSA), human capital management (HCM), enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and business intelligence (BI) to provide real-time visibility in a single, integrated package. While there are a number of applications that NetSuite Platform can fulfill on its own, it is also designed to work with other, third-party tools.
Oracle NetSuite works with solution providers and business application experts to provide expert advice in various industry verticals to its customers.
