The maths nobody talks about
Let us start with a simple calculation that most ERP sales decks conveniently skip.
A mid-size manufacturing plant has 200 employees. That includes 30 office staff, 120 shop-floor operators, 20 warehouse workers, 15 quality inspectors, 10 maintenance technicians, and 5 security personnel. Under a typical per-user SaaS ERP, every one of them needs a login.
At $37 per user per month — a common mid-market rate — that is $88,800 per year. Just for the right to log in. Before you add implementation costs, customisation fees, training, or the inevitable "premium modules" that cost extra.
Now scale that to a 500-person plant: $222,000 per year in licensing alone. For a 1,000-person operation across multiple sites: nearly half a million dollars, annually, in perpetuity.
Why factories are hit hardest
Per-user pricing was designed for knowledge workers — people who sit at desks, use the software eight hours a day, and generate revenue through the system. It makes intuitive sense to charge per desk.
But factories are not offices. In a manufacturing environment:
- Shop-floor operators use the system for 10 minutes per shift — to scan a job card, log production quantities, or report a quality issue. They need access, but they are not "users" in the traditional sense.
- Warehouse workers scan barcodes and confirm receipts. Their interaction is transactional and brief.
- Security guards need gate pass management. Visitor logs. Vehicle entry records. They do not need — and will never use — a full ERP seat.
- Contractors and temporary workers cycle in and out. Each one needs provisioning, licensing, and de-provisioning. The administrative overhead alone costs more than the license.
- Maintenance technicians log work orders and spare part consumption. They need mobile access on the shop floor, not a desktop ERP session.
The per-user model forces you to pay full-seat prices for people who touch the system for minutes a day.
The "partial access" trap
ERP vendors are aware of this objection, so many offer "limited" or "read-only" licenses at a lower price point — typically 60-70% of a full seat. On paper, this sounds like a solution. In practice, it creates a different set of problems.
Read-only users cannot submit production data, cannot approve leave requests, cannot log quality defects. They can look at the system, but they cannot participate in it. This is not access — it is a window.
What happens next is predictable: the shop-floor supervisor becomes a bottleneck, entering data on behalf of 15 operators who have read-only licenses. Or worse, operators stop using the system entirely and revert to paper-based processes that someone has to manually transcribe later.
The "limited license" does not reduce cost. It shifts cost from licensing to labour — and introduces data entry delays that defeat the purpose of having a real-time system.
The hidden costs beyond licensing
Per-user pricing creates a cascade of hidden costs that rarely appear in the vendor's TCO calculator:
| Hidden Cost | Impact |
|---|---|
| User audit penalties | Vendors periodically audit active users. If you have more logins than licenses — common in shift-based operations where workers share devices — you face true-up charges, sometimes retroactive. |
| Integration fees | Connecting IoT devices, barcode scanners, or biometric systems often requires "API user" licenses at $50-100/month each. |
| Per-module add-ons | Quality management, manufacturing execution, advanced analytics — each is an additional per-user charge on top of the base license. |
| Growth penalty | Every new hire increases your software cost. Hiring 20 seasonal workers for a three-month production surge costs $2,220/month in licensing — for temporary staff. |
| Shadow IT | Teams that cannot justify the per-user cost build workarounds in spreadsheets, WhatsApp groups, and paper logs. Data silos multiply. |
The alternative: per-workspace pricing
The composable alternative is per-workspace pricing: you pay for the capabilities you use, not the number of people who use them. A workspace includes unlimited users across all modules in that workspace.
Under this model, the same 200-person factory pays a flat rate for "Manufacturing Operations" — which includes ERP, MES, quality, inventory, and HRMS — regardless of whether 50 or 500 people log in. The security guard, the shop-floor operator, and the CFO all access the same platform without generating incremental license costs.
The economics are transformative. Instead of restricting access to control costs, you can give every employee — permanent, temporary, or contractual — full access to the modules relevant to their role. Data quality improves because the people closest to the process are entering the data, in real time, at the point of activity.
A real-world comparison
Consider a mid-size auto component manufacturer with 300 employees across two plants. Here is what their ERP licensing looks like under both models:
| Model | Annual Cost | Users Covered |
|---|---|---|
| Per-user ($37/user/mo) | $133,200 | 300 (capped) |
| Per-user + limited licenses | $98,400 | 80 full + 220 read-only |
| Per-workspace (flat) | $36,000 | Unlimited |
The workspace model costs 73% less than per-user — and includes unlimited users, meaning the manufacturer can onboard contractors, seasonal workers, and new hires without touching the software budget. One mid-market manufacturer saved over $60,000 per year by making exactly this switch, and more importantly, achieved 95% shop-floor adoption because there was no reason to restrict access.
Five questions to ask your ERP vendor
Before you sign a contract — or when your renewal comes up — ask these questions:
- What is the total cost for 100% of my workforce? Not just office staff. Every operator, every guard, every contractor. Get the real number.
- What happens when I add 50 seasonal workers for three months? Do I pay per-user for the full year? Can I scale down without penalty?
- What does a "limited" license actually include? Can limited users submit data, approve workflows, log quality defects? Or can they only read?
- Are IoT devices and API integrations counted as users? If each barcode scanner or MQTT broker needs a license, your IoT project just got 10x more expensive.
- What is the true-up policy? If I have 210 logins but 200 licenses, what happens at audit time?
Per-user pricing made sense when enterprise software was used by a handful of knowledge workers. In a factory where every person and every machine needs to interact with the system, it is a tax on operational scale. The sooner you move to a model that rewards adoption instead of penalising it, the sooner your factory's digital transformation stops bleeding money.