Breaking Down the Cost of Dynamics 365 for Manufacturing

If you’re a manufacturer exploring the cost of Dynamics 365, it’s important to understand the full spectrum of costs involved. You will have a one time implementation fee and an ongoing monthly fee for licenses, training, and support.

First, there are a few questions that you should ask yourself. Do you need essential or premium licenses? How many full users/ licenses do you need? How much will the implementation cost? Does your implementation partner charge for time and material or do they use a fixed fee?

Read more about Microsoft Dynamics 365 Business Central with manufacturing implementation cost by manufacturing experts at Sabre Limited.

We will break down the cost of Dynamics 365 for manufacturers into four principal elements:

Essential vs. Premium Licenses
License Quantity
Billing Method – Fixed Fee vs. Time and Material
Implementation Costs

In this article, we’ll explain everything above in even more detail to give you a breakdown of the average costs. We’ll also show some examples of costs for manufacturing with Dynamics 365 BC.

Essential vs. Premium Licenses for Manufacturing with Dynamics 365

As previously highlighted, one critical decision in your Dynamics 365 setup is choosing between an essential or premium license.

Essentials License: Priced at $70 per full user per month.
Premium License: Priced at $100 per full user per month.

For manufacturers, we strongly recommend opting for the premium license for Dynamics 365. While the essential license includes features like Assembly Management and Standard Cost Worksheets, it lacks several key functionalities crucial for most manufacturing operations:

Production bill of materials
Basic capacity planning
Machine centers
Version management
Production orders
Finite loading

Additionally, opting for the essential license means missing out on the service management module, a valuable tool for managing after-sales services and maintenance. For a detailed comparison of what’s included in the essential versus premium licenses, we suggest consulting Microsoft’s official comparison page for these license options.

You can also read our comprehensive guide on Business Central Pricing that breaks down all of the factors that play into the cost of Business Central.

How Many Dynamics 365 Licenses Do You Need?

Identifying the precise count of full user licenses for Dynamics 365 that your business requires is largely influenced by your specific operational needs, including the scale of your business and the duties of your workforce. To provide a ballpark figure:

Small Manufacturers (Annual Sales: Below $5 million, or Up to 50 Employees): Generally, small manufacturing enterprises may require between 5 to 15 full user licenses. These are essential for employees engaged in pivotal functions such as finance, supply chain management, and production planning.

Medium Manufacturers (Annual Sales: $10 million to $50 million, or 50 to 250 Employees): For medium-sized operations, the need could range from 15 to 50 full user licenses. This adjustment accounts for the greater complexity of the business processes and the increased number of staff requiring comprehensive system access for assorted roles.

These estimations serve as broad guidelines. Therefore, for a more detailed evaluation, consider analyzing which roles in your organization need full access as opposed to those that could operate effectively with a Team Member license, offering read and limited write access. Engaging with a Microsoft Partner, such as Sabre Limited, can provide a tailored analysis to ensure you purchase the right number and mix of licenses for your needs.

Additional Licenses for Dynamics 365

In addition to full user licenses, your Dynamics 365 deployment may benefit from Team Members licenses, attach licenses, and Sales Professional licenses. These licenses are cost-effective and furnish your team with essential, albeit limited, capabilities crucial for their roles. We will later present comprehensive examples incorporating full user, team member, Sales Pro, and attach licenses. For the moment, let’s explore the specifics of each license type.

Team Members Licenses: Priced at $8 per month per license, Team Members licenses offer the ability to:
- Create, read, update, and delete contacts, activities, and notes
- Update personal employee information
- Log time, materials, and expenses
- Approve time sheets, expenses, materials, and invoices
- Utilize user reporting and dashboards

Team members licenses are low cost and essential for giving your team the insights that they need to complete their tasks. These are your employees that don’t need full access to Dynamics 365, but need limited access for their role.

Attach Licenses: At $20 per month, attach licenses can be added to any Premium license to enhance a user’s capabilities with advanced functions. Examples of attach licenses include Dynamics 365 Sales and Dynamics 365 Customer Service, which extend the platform’s functionality for those particular users.

Sales Professional Licenses: Costing $65 per month, Sales Professional licenses cater to organizations with straightforward sales processes by providing sales force automation (SFA) capabilities. This license is designed for sales teams needing streamlined tools without the complexity of the full Dynamics 365 suite.

These additional license options present flexible and budget-friendly solutions to expand your Dynamics 365 system’s utility across different roles within your organization.

Comparing Fixed Fee and Time and Material Billing for Dynamics 365 Implementation and Support

When it comes to the financial aspects of implementing Dynamics 365, businesses typically encounter two billing models:

Fixed Fee
Time and Material Billing

Time and Material Billing operates based on the actual time invested and resources utilized during the implementation process. This model covers the consultancy hours, customization of your Dynamics 365 Business Central environment, training sessions for your team, and any other required services. A significant consideration with this approach is the cost associated with consultants learning about your company’s business model, operations, and processes, which is billed on an hourly basis.

On the flip side, Fixed Fee Implementations offer a comprehensive quote that encompasses licensing, training, and support, maintaining this price throughout the project. Fixed fee partners are harder to come by but prefer this model. Typically, they specialize in a particular industry, leveraging their in-depth knowledge to streamline the implementation process.

The advantage of working with fixed fee consultants lies in their expertise with Dynamics 365 within a specific sector. They bring a wealth of experience from previous projects, allowing them to understand your business needs quickly and implement solutions effectively, based on a wealth of similar experiences.

Cost of Implementing Dynamics 365 for a Manufacturing Company

The cost of implementation will depend on the size of your business, your needs, and the billing method of your partner. Let’s look at the table below that provides a rough cost comparison between fixed fee and time and material billing.

Size of Operations	Fixed Fee Consultants	Time and Material Consultants
10 to 30 employees	$30,000 to $45,000	$30,000 to $100,000
30 to 80 employees	$50,000 to $70,000	$50,000 to $140,000
80 to 250 employees	$70,000 to $100,000	$72,000 to $240,000

It’s important to note that the cost from consultants that charge time and material billing will vary drastically. The best they can do is give you an estimate based on how long they think it will take them. That being said, they usually charge $150 to $250 per hour.

For an implementation of Dynamics 365 for a manufacturer, the initial setup and heavy configuration phase might require 100-200 hours per month from a consultant. As the project progresses, this could reduce to 40-80 hours per month for fine-tuning, training, and support. Keep in mind, these are rough estimates; actual needs could vary significantly based on project specifics.

Now, let’s check out a few examples using fixed fee billing.

Example 1: A Small Manufacturer with 3 Full Users

Monthly User Costs: For the 3 main users, it’s $70 each per month. If you also have 3 more people who only need to peek in now and then (we call them Team Members), that’s an extra $8 each. Total every month? $280.
Monthly Support: $300 per month.
Implementation: To get Dynamics 365 up and running it’s a one-off $33,000 for implementation.

In short, Business Central for SMBs doesn’t have to break the bank. With three full users, there’s a one-time setup cost of $33,000, and then it’s $580 monthly for keeping everyone connected and supported.

Example 2: A Medium-Sized Manufacturer with 15 Full Users

Monthly User Costs: For your 15 main users, it’s $100 each per month for the premium experience. Got 10 more team members who need access but not all the bells and whistles? That’s just $8 for each of them. So, your monthly total comes to $1,580.
Monthly Support: A support package might cost around $900 a month. Plus, set aside around $500 a month for any extra Addons. Totaling $1400 per month.
Implementation: To get Dynamics 365 Business Central up and running, custom-fit to your needs, the one-time implementation cost would be between $60,000 and $85,000.

In simple terms: There’s a one-time setup cost in the $60,000 to $85,000 range to get you fully equipped. After that, your monthly investment is about $2,980 to keep your team at the top of their game with all the support and extras included.

Example 3: A Medium-Sized Manufacturer with 30 Full Users

Monthly User Costs: With 30 full users it’s $3000 per month, you might want 20 more team members, 15 attach licenses, and 10 sales professional licenses. That brings your monthly user cost to $4110.

Monthly Support: $1800 for monthly support and about a $1000 budget for addons, totaling $2800 per month.
Implementation: $105,000+

For a medium sized manufacturing company wanting Dynamics 365 Business Central, plan for a $105,000 initial investment. After that, monthly costs total around $6,910 per month. This setup ensures a robust foundation and ongoing support for your team’s needs.

Closing Thoughts

At Sabre Limited, we are experts in manufacturing. We stand among the best Microsoft Dynamics manufacturing partners across North America. What sets us apart from our competitors is that we use fixed fees instead of time and material billing and we always put the customer first.

Our areas of expertise include:

If you’re interested in learning more about what Sabre Limited can offer, we’ve been dedicated to helping small to medium-sized manufacturers learn and adopt Dynamics 365. Reach out, and let’s explore how we can contribute to the success of your manufacturing journey. Contact us at info@sabrelimited.com or call (519) 585-7524. We look forward to hearing from you.