How to Acumatica: Pricing Your ERP - Part 1

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General Ledger

You already know that Acumatica, unlike most ERPs, does not charge on a 'per User, per month' basis. Instead, Acumatica has one of the most forthcoming price structures of any of the ERPs on the market. While Acumatica's price structure essentially boils down to features and the volume of data the subscriber requires, some configuration options (illustrated in the graphic below) streamline the licensing, especially for smaller organizations looking to migrate to their first ERP.

Let's first look at that 'volume of data' component. If you were to license Acumatica today, your license would be based, from a transactional standpoint, on Acuatica's Cloud ERP Consumption-based' Transaction Tiers'. Presently, Acumatica has twenty-two (22) of these transaction tiers (shown in the graphic below) ranging from 1-thousand (or fewer) monthly commercial transactions to 20-million (or more) monthly commercial transactions.

Based on these tiers, a subscriber's monthly Acumatica ERP transaction volume (monthly ERP transaction volume) is determined. For example, the entry-level tier (S1) with a monthly commercial transaction volume of 1-thousand (or fewer) corresponds to a monthly ERP transaction volume of 20-thousand. The ERP transaction volume is based on typical user patterns of access to a transaction for creation or modification.

Tier determination is not a 'strict volume' limitation; it represents a pricing point; however, this volume is tracked, and should a subscriber's actual transaction volumes exceed the tier levels more than three times in any twelve months, a tier upgrade becomes necessary. On the other hand, if a subscriber's transactional history reflects that they are consistently less than their tier volume, a tier downgrade is possible.

Consumer Monthly Transaction Volume

This figure is equal to the single highest volume of transactions among all transaction types. This might be the number of sales (production or project) orders for some users. For other users, it might be the number of purchase orders. In many cases, the number of Invoices might be applicable, especially where sales (production or projects) are billed on an incremental basis, as in the case of project completion phases. It might be the number of 'Vendor Bills' processed or 'A/P payments.'

Estimating Your Transaction Volume using QuickBooks

I recently undertook an experiment to determine consumer monthly transaction volumes for a couple of QuickBooks company files I work with. To do this, I decided to look at both Customer Invoice and Vendor Bill volumes.

Let's look at the steps to accomplish this:

Customer Invoice Volumes

  1. In QuickBooks, go to Reports (menu) > Custom Reports > Transaction Detail
  2. When the Report Opens, select Customize Report,
  3. Under Customize report, change the Dates to "Last Fiscal Year" on the Display tab,
  4. Switch to the Filters tab of Customize Report,
  5. On the Filters Tab, scroll to Transaction Type in the Filter Scroll box and select it,
  6. Click the drop-down arrow next to "All" in the Transaction Type field.
  7. Scroll down the list and select "Invoice", then select OK at the bottom of the Filters tab.
  8. The Custom Transaction Detail Report, which shows only invoice transactions, should be compiled and displayed. (Note: This could take a few seconds or several minutes.)
  9. When the report is displayed, ensure the total amounts are displayed at the bottom.
  10. At the top of the Report Window, select the Excel drop-down.
  11. Choose Create New Worksheet.
  12. The Send Report to Excel window should open with the "Create New Worksheet" option selected and the "New Workbook" option already marked, then click "Export".
  13. When Excel finishes displaying the report, scroll down to ensure that the totals appear at the bottom of the right-hand columns.
  14. We must determine the total number of transactions reported, not the dollar values.
  15. Write down the Excel row number on the left-hand side of the spreadsheet that records the last transaction (excluding the totals).
  16. Return to the report's top and verify that Rows One and Two are report headers.
  17. Subtract the number of row headers from the row number for the last transaction reported.
  18. This number represents the 'annual transaction volume of Invoices'.
  19. Divide the annual transaction volume of Invoices by twelve (12) to determine the monthly average volume of Invoices.  
  20. Then, close the Excel Spreadsheet (without saving it), but do not close the Transaction Detail Report. We will modify it below to determine the Vendor Bill volumes.

Example: If the last row of transactions in the Excel spreadsheet is 11,115, and both Row One and Row Two are headers, then the total annual transaction volume is 11,113 (11,115 – 2 = 11,113). If the total annual transaction volume is 11,113, then the monthly average volume is 926 (11,113 / 12 = 926).

Vendor Bill Volumes

We will use the same Transaction Detail report (steps listed above) to determine the volume of Vendor Bills. If you didn't close the report, the steps are simple; if you did close the report, start as you did above, then make the changes below concerning 'Transaction Type.' Switching the Transaction Type (shown in step 7 above) is straightforward:

  • On the Filters, click once to highlight the "Invoice" Transaction type filter in the Right Hand Current Filter box
  • Click the drop-down next to "Invoice" in the Transaction Type box and
  • Scroll to and select "Bill" (these are the Vendor Bills).
  • Repeat the same process above from this point.

Example: If the last row of the transactions in this new 'Vendor Bills' spreadsheet is 26,075, and both Row One and Row Two are headers, then the total annual volume of Vendor Bills is 26,073 (26075 – 2 = 26,073). If the total annual transaction volume of Vendor Bills is 26,073, then the monthly average volume of Vendor Bills is 2,173 (26,073 / 12 = 2,173).

Determining Transaction Tier Consumption Licensing

If we went through the same process for Customer Payments, Vendor Payments, or Sales Orders and found that none of those transactions exceeded the monthly average volumes for Invoices and Vendor Bills we calculated, we can estimate the appropriate Acumatica Tier licensing requirements.

While the monthly average of Invoices is less than 1-thousand and would align with transaction tier S1 of 1-thousand or less per month, the monthly average volume of Vendor Bills is 2,173. That volume requires licensing at the M1 transaction tier level, with a monthly transaction volume of 3,000 or fewer. The S3 licensing tier has a maximum of 2-thousand or fewer monthly transactions, which doesn't meet the requirements for the Vendor Bills. Remember, licensing is based on the single highest volume of transactions.

Since the customer's monthly transaction volume has reached the M1 transaction tier, this customer is now aligned with the 'Select' configuration size rather than the 'Essentials' size. Let's examine the differences between the 'Essentials' and 'Select' configurations.

Benefits of 'Select' over 'Essentials'

There are several aspects of the Select vs. Essentials licensing level we should look at in order to identify the benefits of the upgrade for our "imaginary customer."

Recommended System Maximums

Before looking at these benefit differences, we should first discuss system recommendation maximums for consumption-based subscriptions. When Acumatica is licensed based on consumption, there are recommended limits that impact system performance.

If customers exceed these limits, they may experience degraded performance. Other system operation factors can also contribute to performance slowdowns.

The table below reflects the system recommendations by transaction tiers.

Boosting Workload Limitations

One of the benefits of the 'select' licensing level over 'essentials' comes in the form of providing our "imaginary customer" with an option for boosted workloads, when their daily transaction volume exceeds the average (based on the monthly volume) by twice the daily average. For example, perhaps they only process vendor bills every five days rather than every day. While the daily average of their 2173 volume is 73 invoices per day, the five-day approach would result in an average of 365 vendor bills being processed daily. The boosted transaction workload option ensures that there will be no slowdown in processing response due to a heavier-than-average workload.

Of course, suppose they use the automated feature of Acumatica for Vendor Bills, including direct submission via email upload from their vendors. In that case, the vast majority of their Vendor Bills will be processed via AI categorization, PO matching, and automatic workflow approvals, so when they finally want to pay those vendor bills, it's hardly more than the click of the mouse.

User Access

Another benefit of our customer being tiered to the "select" level of licensing is User licensing levels. While Acumatica doesn't charge per User, they license the number of users based on product levels (Essentials, Select, Prime, and Enterprise). Note that Acumatica doesn't limit the number of users that can be created; the limits (shown in the table below) only apply to the number of users actively using the system. In addition to users, the number of API connections also varies by the licensing level.

As you can see, there are substantial differences in the number of users based on the various product levels. So, our 'imaginary customer' gained significant user access by the upgrade from Essentials to Select.

Recommended Maximums

There is one more area I want to discuss, which relates to the difference between the entry-level Essentials product and the Select level. It doesn't matter what ERP solution you are looking at; just like the legacy system(s) from which you may be considering migration, every database has physical limitations. Those recommended maximums may, or may not, be flexible depending on many factors. Data storage and computing are the two most common variables impacting capacity.

The table below shows a portion of the recommended maximums for three 'lists' within Acumatica: Inventory Items, Fixed assets (active), and Customers (with open balances).

As a result, you must verify that the numbers within your current (legacy system) for each of these three 'lists' do not exceed the recommended maximums for the licensing level you are considering. In our 'imaginary' customer example, where QuickBooks Desktop was the system we were potentially migrating from, the 'F2' Product Information window can quickly provide the list numbers you need to verify.

Part 1 Conclusion

We've given you a lot of 'process' in this feature. Pricing based on multiple tiers and licensing levels, with options for performance boosting and limitations on active users, processing behavior, and maximum recommended list sizes.

We want to give you some time to contemplate all of this before we begin looking at additional licensing levels, like Prime and Enterprise, as well as the various Acumatica editions and their related feature sets.

So, you are most likely to see our Part 2 installment of "How to Acumatica: Pricing your ERP" in two or three weeks from now.

Special Thanks

I want to give a call out and say 'thank you' to Christian Lindberg, VP of Partner Solutions at Acumatica, for giving me the opportunity to learn more about Acumatica's pricing options and alternatives. I also want to say 'thanks' to Megan Nielson of CommuniquePR for making my meet-up with Christian happen, you stayed on top of my request and "made it a reality."

Disclosures:

Product-related content (including graphics) within this feature have been derived from Acumatica media source content including Acumatica Licensing Guides. Content derived from Acumatica sources is published by Insightful Accountant for informational and educational purposes only.

Acumatica, as used herein, refers to one or more registered trademarks of Acumatica, Inc., a privately held, multi-national corporation headquartered in Kirkland, WA (USA). Since 2019, Acumatica has been held by the private equity firm EQT of Stockholm, Stockholms Lan, Sweden.  Acumatica Cloud ERP is a comprehensive business management solution that was born in the cloud and built for more connected, collaborative ways of working. Designed explicitly to enable small and mid-market companies to thrive in today’s digital economy, Acumatica’s flexible solution, customer-friendly business practices, and industry-specific functionality help growing businesses adapt to fast-moving markets and take control of their future.

As used herein, QuickBooks®, and QuickBooks Desktop refer to one or more registered trademarks of Intuit® Inc., a publicly-traded corporation headquartered in Mountain View, California. They are referenced herein for informational and education purposes only.

Any other trade names used herein, refer to products that may be registered, trademarked, or otherwise held by their respective owners; they are referenced for informational and educational purposes only.

This is an editorial feature, not sponsored content. No company or other person mentioned in this article has paid Insightful Accountant any remuneration to be the subject of this feature. The article is provided solely for informational and educational purposes.

The publication of this article should not be interpreted as an endorsement by either the author or Insightful Accountant.