5 ERP pricing definitions you need to understand

Acronyms and financial jargon are common in tech. Today’s ERP platforms are moving away from legacy, on-premise setups to SaaS and cloud-based solutions. Instead of being owned, these systems are often rented.

Over the past decade, this shift has accelerated, with vendors offering subscription, usage-based, and hybrid pricing models. New AI-driven features are also influencing how compute-intensive services are priced.

Here are five practical definitions that reflect current market models and buyer questions.

1. EULA (end user license agreement)

EULA typically applies to an overarching software systems agreement, more usually applied to an ‘owned’ software purchase; although given the hybridizing nature of current ERP platforms, the acronym should be understood as much more than that.

The essential legal definition of the word EULA is: “A legal contract between a seller and an end-user of a software application.”

However, this definition is simplistic to a fault, as today, everything related to the ‘how, where, who, what, and how much’ between an ERP vendor and its customer is typically embedded somewhere within the' business understanding' fine print.

Modern EULAs (and related Master Services Agreements or Subscription Agreements) also explicitly cover data ownership, data portability, SLAs, security responsibilities, upgrade schedules, and AI usage rules, clauses that materially affect total cost and operational risk.

Recommended Reading: ERP Software Pricing Guide - Get the complete guide to ERP pricing

As a relevant and subordinate component of a EULA, ERP pricing usually operates on the basis of one of two term types that guide the formal business relationship between customer and vendor:

1a. Term license

In the first instance, a customer executes a limited agreement, usually managed on the basis of a specific time period.

Consequently, this arrangement is referred to as a ‘Term License’, meaning the formal business understanding only exists within a series of milestones established by a particular schedule of payments. These usually extend to anything from one to three years. At that point, the agreement must be renewed for a similar term, or operational ownership of the license becomes null and void.

1b. Perpetual license

In the second instance, referred to as a ‘Perpetual License’, an agreed-upon business relationship extends from its initial purchase payment, supported by regularly recurrent ‘maintenance’ fees extending forward into the future.

As long as the system’s periodic fee requirements are completed, the license maintains its legal viability, without the need for a regulated renewal process. Perpetual licensing is still offered by some vendors, but is much less common for new cloud ERP deployments; where it exists, expect higher upfront costs, separate maintenance (support) fees, and often an additional hosting/operation charge if you want cloud convenience.

2. Subscription-based

This ERP pricing model is mostly applied in the case of SaaS or ‘cloud-based’ ERP systems. Rather than involving the customer and vendor in a detailed license agreement, ERP vendors allow user access to hosted systems through regular monthly subscription payments.

The advantage here is primarily speed of deployment and operational implementation. Subscription plans are commonly priced by seat (per-user), by tier (feature bundles), or by module. You can also see mixed approaches that combine seats + modules.

What buyers should check: look at exactly what the subscription includes (backups, support, upgrades), whether there are transaction or API call limits, and what the renewal and price-increase terms are.

3. Managed service provider (MSP)/Managed application services

This purchase model offers the advantages of SaaS integrated with all of the necessary low, mid, and high-level utility network elements that create a stable cloud-based ERP environment.

Typically, MSPs, sometimes referred to as ‘applications managed’ licensing, utilize the same recurrent vendor-to-customer model as the subscription model, wherein technical services are paid on the basis of a regular monthly or quarterly payment schedule.

Note: MSPs can price as a fixed monthly fee, per-user, or on a consumption basis; they may bundle hosting, patching, monitoring, and a degree of customization.

Because MSPs take on operational responsibility, confirm service levels (uptime, response times), and exactly which integration and upgrade tasks are included vs charged as extras.

4. Consumption / Usage-based pricing

Many ERP vendors (especially those adding AI or heavy automation) offer consumption or pay-for-what-you-use models.

Under this model, you pay for transactions, API calls, compute time, storage, or units of business activity (for example: invoices processed, messages handled). This model aligns vendor cost with customer usage and can be more economical for variable workloads, but it introduces billing variability.

The rise of AI and cloud computing costs has accelerated the move toward usage-based pricing in software more broadly.

What buyers should check: ask for realistic usage estimates, define caps or alerts, and insist on transparent metering and invoicing. Negotiate a hybrid model (base subscription + usage layer) if you need predictability.

5. Per-user, Per-module, Per-feature, and Outcome/Value-based pricing

ERP pricing frequently mixes dimensions: per-user (full vs limited users), per-module (finance, manufacturing, HR), per-feature (advanced analytics, AI assistants), and increasingly, outcome-based or value-based models where pricing ties to business outcomes (e.g., cost savings, revenue uplift, FTE reduction).

Per-user and per-module models remain common because they map directly to who uses the system and what capabilities they need.

Outcome-based pricing appears more often in niche, high-value implementations or when vendors and customers agree on measurable KPIs.

What buyers should check: map users precisely (who needs full access vs occasional/limited access), define which modules you genuinely require at launch, and be wary of add-on fees for integrations, APIs, or advanced analytics.

Final note - choose based on value, not just headline price

ERP license fees rarely represent the full cost. Expect implementation services, data migration, integrations, customizations, training, testing, support, and periodic upgrade projects. These items often exceed the license fee over a 3–5 year horizon. 

Use a Total Cost of Ownership (TCO) model to compare options, and ask vendors for customer references who will share real run rates.

Focus on the business value and the realistic TCO for your specific processes and transaction volumes, and remember that the cheapest license can become the most expensive option after implementation, integration, and years of unexpected usage fees.