Costs & selection criteria for a merchandise management system
Whether eCommerce, stationary retail or wholesale: efficient merchandise management is crucial for the success of many companies. But which is the right system for my budget and my needs?
When making your choice, the cost of the merchandise management system is important. It is just as important that its functions cover current and future requirements. An unsuitable system will quickly become a cost driver, while a well-chosen solution will bring lasting competitive advantages.
This guide provides an overview of the most important cost factors of a merchandise management system and explains various license models. It also highlights differences in the range of functions and customization options. A brief comparison of popular systems also provides an initial orientation.
What are the costs of merchandise management?
The introduction of a merchandise management or ERP system is associated with several cost blocks. A cost calculation should always take the following items into account.
Overview of the main cost drivers
Acquisition or implementation costs
The acquisition costs usually consist of the base price for the software and any installation and set-up fees. If existing product and customer data is transferred to the new system, there are additional costs for data migration. A basic configuration may also be necessary to adapt the merchandise management system to your own processes.
Employee training
A merchandise management system will only be fully effective if employees use it correctly and efficiently. If training programs are neglected, errors and delays can quickly occur.
Maintenance and support
A support agreement is often required for updates, patches and technical support. Depending on the license or operator model, the services are bundled into a monthly or annual maintenance contract. The costs increase if companies require a special service, such as a 24/7 hotline or guaranteed response times.
Adaptations to specific business processes
If a standard WaWi is heavily modified, expenses for programming services and integration tests are added.
It is important to note that customized adaptations can improve operational processes, but increase costs during implementation and ongoing operation. Depending on the customization, they may require regular readjustments when updating software, for example.
Hardware and infrastructure
On-premise solutions often require corresponding server capacities and a stable IT infrastructure in the company. This is accompanied by costs for acquisition, power consumption, air-conditioned server rooms and regular maintenance. These costs are lower with a cloud model. However, there are ongoing hosting and rental fees.
Integration into existing systems
With interfaces to other programs (e.g. financial accounting, CRM, online store), duplicate entries can be avoided and data exchange automated. The development, implementation and maintenance of these interfaces leads to additional expenses.
Long-term updates and upgrades
Markets, processes and technologies are constantly changing. Regular updates and function upgrades are therefore unavoidable. In some cases, new functions can be integrated into a maintenance contract, while other enhancements are listed as fee-based add-on packages.
The underlying license model plays a key role when investing in an ERP system. It plays a decisive role in determining which costs are incurred in the long term and how these are distributed.
One-off costs vs. ongoing costs: license models at a glance
There are basically three central license models for merchandise management systems:
- the classic purchase (on-premise),
- the cloud-based Software-as-a-Service (SaaS) and
- Hybrid models.
Each variant offers advantages and disadvantages.
Purchase/on-premise models
A company usually purchases a perpetual license and installs the software on its own servers. There are high one-off costs for licenses, implementation and possibly hardware. During ongoing operation, there are only expenses for maintenance and support, especially when updates or extensions are added. There is also the risk that updates will be discontinued at some point and a switch to a different system will be necessary. However, control over sensitive data remains largely in-house and companies are not dependent on cloud providers.
- Advantages: high data sovereignty, individual customization options, often low ongoing fees after purchase.
- Disadvantages: high initial investment, ongoing responsibility for servers and infrastructure, additional costs for major updates.
Cloud and software-as-a-service (SaaS) models
With cloud variants, the provider takes care of hosting, maintenance and updates. Users receive services via a subscription. This eliminates the need for high initial investments in servers or databases, and scaling can be flexibly adapted. However, there is a strong dependency on the provider and the availability of the cloud infrastructure.
- Advantages: fast implementation, hardly any hardware required, automatic updates, flexible adaptation to increasing or decreasing user numbers.
- Disadvantages: Data is stored on external servers, regular rental costs, dependence on the availability and pricing of the cloud provider.
Hybrid models
A hybrid model combines on-premise elements with cloud components. The basis of the ERP system – for example core functions or sensitive databases – is operated on the company’s own servers. Additional functions can be booked via cloud services. In this way, high acquisition costs for hardware can be reduced or distributed without giving up full data sovereignty.
- Advantages: flexible use of additional functions from the cloud, combination of data sovereignty and scalability, reduced investment costs for certain functional areas.
- Disadvantages: depending on the system, higher integration and coordination effort between on-premise and cloud components, potential double burden (server maintenance and cloud fees), dependence on two environments for updates and adjustments.
The choice of license model influences the long-term cost structures. On-premise solutions generally require a higher initial investment, but allow more control. Subscription models score points with better predictability of monthly or annual expenditure and hybrid models often combine the Good of both worlds.
Additional modules and extensions: Understanding cost factors
The basic functions of a merchandise management system often cover the most important processes relating to purchasing, warehousing and sales. Software providers also offer extensive additional modules and extensions to adapt the system to specific requirements. These modules can significantly increase the range of functions, but also increase the overall costs.
Typical additional modules in merchandise management systems
Many companies supplement their merchandise management with modules that are tailored to specific processes. The following are common examples:
CRM integration
Extensions for customer relationship management enable companies to maintain customer data centrally and carry out targeted marketing campaigns.
eCommerce integration
Direct interfaces to online stores and marketplaces allow automated data exchange on stocks, items and orders.
Finance and accounting functions
Interfaces to accounting programs and tax consultants, for example, are important for end-to-end financial processing.
Logistics and shipping solutions
The integration of shipping service providers, route optimization or automated shipping label creation ensure smooth delivery processes.
License policy for module extensions
Some providers rely on packages for additional modules in which several functions are bundled, while others pursue a modular pay-per-module concept. This means that a basic fee is payable for each module and is supplemented by ongoing fees for updates and support.
Here too, both models have advantages and disadvantages.
- Package prices offer costing security. However, there is a risk that companies will pay for functions that they do not use.
- Single module licenses make it possible to select individual services in a targeted manner. If companies book several modules, the administrative effort increases.
Individual adaptations vs. standard solutions
Many providers offer companies the option of having customized solutions developed in addition to ready-made modules. Such individual adaptations can be tailored precisely to specific requirements, but involve higher initial investments and follow-up costs. It is also important to ensure that there are no difficulties when updating the system.
Before a decision is made for or against certain additional modules, it makes sense to carry out a systematic cost-benefit review. Companies should check this,
- whether the module supports important business processes or even brings competitive advantages, and
- whether the additional license and maintenance costs are worthwhile in the long term or whether existing standard modules already cover most of the required functions.
Selection of a merchandise management system - important evaluation criteria
Before selecting an ERP system, it is crucial to thoroughly define your own requirementsand compare different solutions on this basis.
In addition to costs and license models, other criteria play a central role.
Industry-specific requirements
Not every system is suitable for every business model. Companies in eCommerce, for example, need powerful interfaces to online stores and marketplaces, while a wholesale business focuses on sophisticated warehouse and logistics management. Specialized solutions often offer industry-specific functions that are missing in standard products or are only available via expensive add-on modules.
Scalability and flexibility
ERP systems are usually in use for several years or even decades. If a company grows, expands internationally or opens new business areas, the software should be easily adaptable to these changes.
Two questions are crucial in this context:
- Does the system provide sufficient capacity, for example for increasing user numbers or a growing range of articles?
- Can companies easily add further modules or interfaces without affecting core processes?
User-friendliness and support
Software can be as comprehensive as you like: If it is complicated to use, employees will find it difficult to work efficiently with it. In addition, the training effort is then high. Reliable support prevents costly and lengthy downtimes.
Security and data protection
A merchandise management system must meet high security and data protection requirements. It must comply with data protection regulations (GDPR) and any industry-specific guidelines. Technical security features such as encryption, regular backups and an authorization system are also important.
Economic efficiency in the overall package
It is worth running through various scenarios – such as future growth plans or possible business expansions – to be able to assess whether the software is still the right one. An inexpensive entry-level model may require expensive upgrades later on. However, small and medium-sized companies usually have different resources at their disposal than large corporations.
The right ERP software is ultimately the result of an individual assessment: Which functions absolutely must be available, which can be purchased as modules and what about the necessary data protection? Careful planning and a transparent evaluation of these criteria create the conditions for a sustainable investment.
Comparison of ERP providers
The market for merchandise management solutions is diverse and constantly evolving. In addition to established players, new providers regularly appear, advertising innovative functions or particularly attractive license models. Nevertheless, no “universal solution” covers all needs equally.
Criteria for comparing providers
When comparing different merchandise management systems, several aspects should be taken into account:
Range of functions
Does the software have the required core and additional functions? Does it bidder useful extensions or industry-specific modules?
Cost structure
What is the breakdown of one-off costs and ongoing fees? What license models are available (e.g. purchase, cloud, hybrid)? Sometimes seemingly inexpensive merchandise management systems are associated with high costs in the long term.
Adaptability
Can the system be flexibly tailored to future requirements or expanded for specific industries?
User friendliness
How intuitive is the operation and how much training is required?
Support and service
What service levels are offered (e.g. 24/7 hotline, guaranteed response times)? Are updates and maintenance included in the price?
References and reliability
Are there already known successful projects at comparable companies? What experiences do Applications describe in forums or review portals?
Five selected ERP systems at a glance
To help you get started and make an initial assessment, we present 5 popular merchandise management systems below:
1. lexware merchandise management
Brief description:
Lexware is known for its simple finance and accounting solutions. Lexware ERP is suitable as an entry-level or intermediate solution for small businesses.
License model:
Usually as a subscription (annual fee), includes regular updates and online functions such as data exchange with tax advisors or banks.
Target group:
Smaller companies, craft businesses and freelancers looking for a solid basic solution with a focus on German legislation.
Special features:
Known for its ease of use and integration into the Lexware software ecosystem (accounting, payroll). Limited scalability compared to larger ERP systems.
2. JTL-Wawi
Brief description:
JTL-Wawi is a powerful merchandise management system with a focus on the eCommerce sector and is one of the leading merchandise management systems in Germany. It offers a central platform for managing all business processes – from purchasing, warehousing and shipping to sales via online stores and marketplaces. The software can be adapted, expanded and optimized step by step.
License model:
The basic version of the software is free of charge – additional modules, services and order volumes can be added on a fee-based basis.
Target group:
Small to large companies that are active in online retail and also want to offer their products on numerous marketplaces or in brick-and-mortar stores.
Special features:
Extensive community, regular updates, good scalability for growing online retailers, numerous automation solutions.
3. weclapp
Brief description:
weclapp is a cloud ERP software with an integrated ERP module.
License model:
Purely cloud-based (SaaS), with monthly or annual billing. Various package prices for different modules (CRM, financial accounting, etc.).
Target group:
Small and medium-sized companies that want a quick implementation and do not want to operate their own server infrastructure.
Special features:
Simple user interface, modular structure and fast support. Industry-neutral orientation with a focus on service and automation.
4. sage 100
Brief description:
Sage 100 is an established solution with a strong focus on German SMEs. In addition to the classic enterprise resource planning core, financial accounting, payroll accounting and CRM features are also available.
License model:
Both on-premise and cloud versions are possible. With on-premises, there are one-off license costs and maintenance fees; with the cloud solution, there is a subscription fee.
Target group:
Medium-sized companies from various sectors looking for a comprehensive ERP and ERP package.
Special features:
High level of adaptability, good support from German branches, long-standing market presence.
5. pixi
Brief description:
Pixi (from Descartes) is specially designed for eCommerce and fulfillment processes. In addition to classic ERP functions, it offers extensive automation for warehousing, shipping and returns.
License model:
Usually cloud-based model with monthly fees; individual extensions can be added.
Target group:
Primarily online retailers and fulfillment service providers who want to automate complex warehouse and shipping structures.
Special features:
Strong focus on high-volume shipping processes and warehouse automation. Wide range of connection options to common store systems (e.g. Shopify, Magento) and marketplaces.
1. practical reports
Experience reports from other companies or case studies provide valuable insights into the actual performance of an ERP solution. They help to estimate how implementation, support and costs will be in practice. In many cases, such empirical values are available on the websites of the providers themselves or in relevant specialist portals.
2. test access and demo versions
Most providers offer test accounts (primarily for cloud solutions) or demo versions (often for on-premise versions). This makes it possible to clarify in advance whether the software is convincing both technically and functionally. In this phase, important processes (e.g. item creation, order processing, warehouse bookings) can also be tested under real conditions.
3. pilot projects
A pilot project is particularly recommended for more complex requirements or larger companies. This involves implementing the software in a defined area (e.g. an individual department or a subsidiary). In this way, processes can be tested, the need for adjustments identified and the training concept optimized – without immediately transferring the risk to the entire business operations.
A direct comparison of functions, costs and references provides the necessary transparency to make an informed decision about the merchandise management system. The extent to which the system is future-proof, whether it fulfills the required security and data protection aspects and how flexibly it reacts to growing functional requirements must always be weighed up.
Whether an ERP system is the right one for your needs depends on many factors. A mere price comparison of merchandise management systems is not enough. The overall assessment must include cost aspects, functional requirements, security and scalability.
To make the right choice, companies should first define their own requirements: What is the planned budget? What functions are needed in the short and long term? How much control over the data is required and how important is it to be able to react flexibly to market changes?
A careful selection process, which evaluates aspects such as support quality and data security in addition to costs and functional scope, forms the basis for a sustainable investment. Pilot projects, test versions and testimonials from other users are valuable tools for avoiding mistakes and finding the software that meets both current and future requirements.
After all, developments in the field of merchandise management remain dynamic. Innovative technologies such as artificial intelligence and automation solutions are opening up new opportunities. Those who monitor the market and plan ahead can benefit from these trends and strategically align their merchandise management in such a way that it secures competitive advantages in the long term.
