How Much Does Microsoft Dynamics 365 Cost for Small to Mid Sized Organizations? | The TM Group

October 31, 2022 Ken Jacobsen

How Much Does Microsoft Dynamics 365 Cost for Small to Mid Sized Organizations? | The TM Group

Dynamics 365 Cost

So you’re pretty sure you’ve got your mind made up about the software that will improve the productivity, efficiency and management of your business — you’re going with Microsoft Dynamics 365. You have determined that this suite of automated enterprise resource planning (ERP) and customer relationship management (CRM) applications will address the specific needs of your small to midsize organization. The core Dynamics 365 applications for small to medium sized businesses (SMB) include Dynamics 365 Business Central, Sales, Service, and Marketing. 

There are other Microsoft Dynamics 365 applications, but most are designed for enterprise organizations and are part of the Finance and Operations a la carte solution. This solution is built for organizations with more than 20 ERP users and more than $150 million in revenue. Microsoft Dynamics 365 Business Central is the all-in-one solution that more professionals trust to help them manage the daily aspects of running a successful small to mid-sized organization. When something needs to get accomplished — and done well — Microsoft Dynamics 365 helps to make it possible in a cost and labor-efficient manner.

All these things you know. But what you may still be a bit unclear about is the cost to license Microsoft Dynamics 365 for your organization. Here at The TM Group, we get it. We’ve been in the implementation business for Microsoft software since the 1980s, before Microsoft Dynamics 365 was even available for purchase. Ever since it was introduced, many of our clients have expressed their bemusement about the cost structure. We have written a free eBook (download here) that explains in more detail the licensing for SMB organizations and we would be happy to schedule a consultation to discuss licensing and implementation costs for your organization.

Our overarching objective here is to cut through the minutiae and cost confusion so you can decide on the package that’s right for your business and your budget. But before we get into the specifics of the cost of these applications, it’s important to gain an understanding of licensing, which is ultimately what affects pricing.

What is Microsoft’s Cloud Solution Provider (CSP) licensing program?

When you’re buying a Business Central software system for your business and the people you expect to be using it, you do it through a Microsoft CSP partner, like The TM Group. A software license is a software company’s way of granting permission to use their solution for however many employees will be operating it or their devices and for however long the term of the license covers. Microsoft does this with Dynamics 365 Business Central and their Sales, Service and Marketing solutions for mid-sized organizations by selling these licenses through Microsoft CSP Partners to small to midsize organizations that want to take advantage of Dynamics 365 and the smart applications that come along with it, which go far beyond Microsoft Business Central. 

Microsoft’s CSP program provides a real advantage to customers. Microsoft is much too large to be very involved in directly helping you improve and grow your organization. Consequently, they introduced the CSP program, which enables partners to establish deeper relationships with their customers. These partners are supposed to meet regularly with customers and develop an understanding of their organization and their needs. Many CSP partners also offer customers industry-specific solutions bundled with the Dynamics 365 solutions. 

All sales and support goes through the CSP partner who will then escalate issues they can’t resolve independently to Microsoft. So, your partner is always your first line of communication. They will provide you with billing and technical support you need to keep your Dynamics 365 Business Central running most efficiently. Microsoft itself will not offer billing or technical support to Dynamics 365 CSP customers. 

The CSP partner manages customers’ Dynamics 365 subscriptions for them, which gives the partner more control over their customer experience and how they are billed for use of the Dynamics solution. For customers, not much changes from the licensee’s point of view with CSP versus other Microsoft licensing programs. Customers must still sign a licensing agreement with Microsoft — which the CSP partner will facilitate — as well as agreements with the CSP partner for support and services. The Microsoft Customer Agreement (MCA) gives customers licenses and services from Microsoft through the CSP partner responsible for billing and support. Signing the MCA creates a licensing relationship between your organization and Microsoft.

There are some significant differences to note between CSP and other traditional Microsoft licensing channels that you should be aware of, including differences in how they operate, that not all Microsoft products and services are available through CSP, and that licensing terms and conditions are also different with CSP. From the customer perspective, with CSP, you have more flexibility over how you’re billed — you can be invoiced monthly or annually, for example, regardless of the chosen subscription period. You also get one point of contact for support and billing, which can be helpful.

How much does Microsoft Dynamics 365 Business Central cost?

Microsoft Business Central is the app most people think of when it comes to a Dynamics 365 accounting and ERP solution for a midsize organization. Frequently, it’s the application that draws them to Microsoft for their ERP needs. Business Central Essentials sells for $70 per user per month or there is a more advanced version, Business Central Premium, that costs $100 per user per month.

Business Central Essentials is a great value for all that’s included. The operational and management capabilities found within the basic package are:

  • Financial Management
  • Sales and Purchasing Management
  • Inventory, Warehouse and Assembly Management
  • Project Management
  • Forecasting (optimized by AI)

The artificial intelligence functionalities (with an Azure Machine Learning subscription or Intelligent Edge) range from cash flow forecasting, sales forecasting, image recognition, inventory forecasting and late payment prediction.  

Business Central Premium has all of the advanced features and capabilities as Essentials, but it is also paired with Service Order Management and Manufacturing. Planning, dispatching and service contract management are some of the tasks that are made more effortless through Service Order Management, while Manufacturing offers MRP, scheduling, production orders, basic capacity planning, sales and inventory forecasting and much more. The wealth of advanced features affects Business Central pricing for the Premium product.  

How much does the Microsoft Dynamics 365 CRM apps cost?

The different licensing variations are what contribute to the Dynamics 365 pricing confusion of Microsoft apps. Because there are so many options from which to choose, there isn’t a single price that you can point to as being the one price for a Dynamics 365 plan. Each individual business application also has cost differences from the others and some of the applications have options within them, such as Premium versus Essentials, Sales Professional and Business Edition. We’ll offer some example scenarios to provide some clarity. For a more detailed explanation, you can go to Microsoft’s webpage and download the licensing guide.  

Let’s say you’re interested in the traditional, out-of-the-box Microsoft Dynamics 365 package, which includes Business Central as well as the CRM Sales and Field Service modules, among others. Business Central Essentials is $70 per user per month. If Field Service is the first Dynamics 365 CRM app you’re interested in and want to be implemented, the cost is $95 per user per month. Any additional CRM apps like Sales Enterprise that a specific user would need is an additional $20 per user per month. So, a CRM user that needed sales and field service would be $115 per user per month, for example.

There is also a basic version of Sales called Professional that Business Central customers can license at a discounted cost of $20 per user per month.  The price for Sales Professional is usually $65 per user per month, which includes features like sales force automation. But if you’re looking for an app that is more robust and has more capabilities, the Sales Enterprise edition costs $95 per user per month, with any subsequent Dynamics 365 app running at $20 per user per month. The Sales Enterprise edition is $30 more than Professional because it’s a more comprehensive app. In addition to the features found within Professional, Enterprise includes capabilities such as sales forecasting, embedded intelligence, extensibility and customization.

The Microsoft Dynamics 365 CRM modules like Sales, Service and Marketing come in many different configurations. There are Sales Professional, Sales Enterprise, Customer Services, Field Service, Marketing, Team Members, device licenses and add-on licenses, just to name a few.  If you would like to understand the possible licensing costs for running Microsoft Dynamics 365 solutions for your organization, you can download our pricing ebook, but even more importantly, you should work with a CSP partner like The TM Group. We can quote the system properly.  Microsoft’s licensing is just too confusing if you don’t deal with it every day, so working with a Microsoft Partner can save you time and frustration.

How do you decide between Essentials/Premium and Professional/Enterprise?

Generally speaking, Premium or Enterprise Dynamics 365 licenses are enhanced versions of the basic systems, which are Essentials or Professional. For Dynamics 365 Business Central, the differences between Essentials and Premium are fairly straightforward. If you have manufacturing requirements that go beyond basic assembly management needs, then you’ll need the professional version.  However, the CRM apps are not so straightforward. Professional and Enterprise have very similar functionality relative to the other in terms of what they include that the other does not and it will be best to work with a partner to understand which version you need. 

However, it is said that enterprise licenses are best for people who are in industries like sales, supply chain management, customer service, human resources, retail and other occupations that have more complex sales and service processes with many different players and interactions. Professional licenses, on the other hand, are for work environments that are more unidimensional than multidisciplinary. In short, if your typical workday involves minimal correspondence or coordination, a professional license makes more sense. The features included are ready to use practically out of the box.

Whether you’re looking for a solution that can help you with a specific need — like customer engagement — or you already know the application that makes sense for your organization, The TM Group can help you with the implementation. Contact us today to learn more about our experience in a variety of industries and other Microsoft products, including Microsoft Power BI. Microsoft Power BI is the perfect platform for connecting unrelated data sources so you can make sense of the information you have and put it to its best use. 

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