What’s the average cost of an inventory management system?

Inventory management software is a specialised tool for tracking inventory within a business, from the point of purchase all the way through manufacturing, warehousing, sales, and shipping. It automates key aspects of the product lifecycle, improves accuracy, and helps business owners manage costs by giving a live view of the landed cost of products and components within the business.

Common features of inventory management software include:

• Purchase management and reordering
• Supplier management
• Batch and serial number tracking
• Warehouse management
• Manufacturing inventory management – including assemblies/disassembles and bills of materials
• Sales order management
• Pick, pack and dispatch functionality

Inventory management systems vs ERP systems

For the purposes of this inventory management software cost comparison we haven’t included costs for Enterprise Resource Planning software, or ERP. This is because ERP is a much broader software suite, of which inventory management is commonly a component.

ERPs are big systems, even when they’re small. They are more suited to larger, more complex organisations which need software to cover, essentially, their entire business. SMEs often find ERP too large, unwieldy or expensive, although lower-cost ERPs do exist.

• Learn more: What does ERP cost? An SME’s guide

The main ongoing cost of an inventory management system will come from user licenses

Using data from Capterra, we crunched the licensing costs for inventory management software products to find the average. Overall we compared 70+ brands, leaving out those with fewer than 20 reviews to filter for the most commonly used products on the market.

Remember that user licenses are base costs only. We’ll look at other components of the cost of inventory management systems late in the article.

It’s also worth noting that Software as a Service (SaaS) vendors typically price user licences in different ways, either with monthly subscriptions, annual subscriptions, or one-time fees. Extra features beyond the base functionality will also incur a cost, so it’s worth looking closely at what’s included and what’s not. Finally, as mentioned above, onboarding and training will likely be priced outside of the user licence fee.

Here are the average license fees, per user, for 70+ inventory management brands on the market:

• Average monthly cost: $175
• Average annual cost: $2,768
• Average one-time cost: $1,098

Minor additional costs of an inventory management system will include hardware such a barcode scanners – which are bought separately from the software.

1. Whether or not you need an accounting add-on
2. Optional pay-to-use modules not included in the base software package
3. The number of users you will need
4. The currency you can pay in
5. Average volume of inventory – some systems charge extra for higher usage, or additional API calls to other systems
6. Average number of orders received – as above
7. Level and sophistication of reporting requirements.
8. Third-party API or hardware integrations.
9. Level of customer support required.
10. Business readiness costs, such as:
    a. Whether your internal processes are optimised for new software.
    b. Training (existing staff comfort with SaaS products).
    c. Internal system configurations.

It’s important to identify which currency you’re going to be charged in. If you’re paying in a currency other than your own then your costs will change with the global economic tides. However if you’re paying in the same currency that you operate in, then your costs won’t be affected by exchange rate fluctuations.

Most software prices are quoted in US dollars, but many vendors accept other currencies. For example, Unleashed accepts GBP, NZD, AUD and USD – with USD the default for those outside of the first three currencies.

According to one technology consulting service, the implementation process for inventory management software can take around 12 to 16 weeks. At Unleashed the 2022 average go-live time for new users was 52 days across all regions – or just over seven weeks.

There are generally fees for this stage of the rollout – and they vary greatly depending on whether you need the services of an implementation partner or go live with support from the vendor itself.

• Vendor onboarding: For many firms – especially smaller and more agile companies – onboarding with the vendor is very achievable, and doing so will keep prices down. As an example, Unleashed’s recommended most popular onboarding – known as a FlightPath – comes with a one-off fee of $789.
• Third-party onboarding: However the larger or older your enterprise, the more likely it is you’ll benefit from the services of a third party implementation partner. This is also a good option if you are going live with multiple interlinked systems all at once. Implementation partner costs range from about USD$85 per hour and up. Generally, reputable businesses charge between USD$10,000 to USD$40,000 for a 12-16 week rollout. You can find a searchable database of implementation partners who work with Unleashed here.

Whether you use a software implementation partner will make a big difference to your start-up costs.

Support is not always included in the base package of inventory management. Things like customer service, technical help, data storage and the cost of upgrading in future may all come as separate charges.

These costs vary wildly between vendors, so it’s hard to specify an average. You may also see support included in a base licensing fee but decide to upgrade to access a level that suits your needs.

For context, Unleashed offers a degree of customer support with the base package, but adding $79 per month upgrades you to extended customer service hours, additional service channels, task-based guidance, faster response times, support webinars and resources, and more.

Contemporary inventory management systems cover a broad spectrum of business functions. But it’s still a specialty piece of software – so it won’t cover everything.

It’s common for SMEs in particular to purchase inventory management software in addition to other SaaS packages that help them cover most of their business requirements with a cloud-based system.

As you choose your inventory management system, it’s therefore worth considering what other platforms or functions you’ll use with it – and how this affects your overall costs. For example

• Finance and accounting software
• Customer relationship management (CRM)
• eCommerce
• HR

A combination of multiple software products is sometimes known as a ‘best-of-breed’ software stack, as opposed to a ‘single-vendor’ solution, which is a much larger ERP suite discussed above.

• Learn more: Best of Breed vs Single Vendor: Which Software Approach is Best?

With cloud-based inventory management software your equipment costs can be as simple as ensuring you have good wifi.

To get started with a new inventory management system you’ll want to get a few things in order. Here are some of things you’ll want to consider:

• How many users will need logins for the system
• What other software platforms must integrate with the system
• Whether you have the right hardware already, or need to buy more (i.e. barcode scanners, which average at about $100 each, or laptops and mobile devices)
• Whether you have the in-house expertise to manage implementation yourself, or whether you require a third-party consultant’s help

You can also easily book in a free consultation with an inventory management expert, and get their advice. To talk to an Unleashed expert, simply make a reservation here.

• Learn more: Inventory Management Requirements: What It Takes To Get Set Up