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How Much Does Dynamics 365 Cost?

We always want to make sure you’re well informed about the buying process and that your costs are transparent to our customers.

We hope this guide helps to explain how much Dynamics will cost you.

There are two main components to Dynamics pricing

  • Implementation and customisation costs – project costs
  • Licence costs

Microsoft’s subscription model

The subscription model, or cloud-based model, means you don’t need to spend lots up front to buy a server and software. You effectively rent access to the software via the cloud.

Microsoft handles all the computing infrastructure within the subscription model. That means Dynamics can be scaled to meet the needs of any sized business from micro to large.

A server rack

Let’s focus on cost factors for small to medium-sized businesses.

What’s included out of the box?

If you have Dynamics 365 Sales, out of the box, your monthly subscription cost will include:

  • lead management
  • account and contact management
  • opportunity management
  • providing quotes in a product catalogue (for product- or service-based businesses)

Do I need customisation?

A lot of functionality already exists in Dynamics. The questions is whether you want to start to tailor that functionality to fit in with your company’s processes. To tailor Dynamics, you’d create custom fields, processes and workflows which can replicate and improve your existing processes.  

For example: before any customisation, the Dynamics lead form includes over 100 fields, capturing first and last name, addresses, job details, etc. As for account and contact records, there are about 200 fields from the start.

So if you want to just use Dynamics 365 as a simple, un-customised contact and account management system, the starting cost would be approximately £2,000.

This would cover provisioning the environment, confirming licencing, and training users. Because Dynamics has excellent core functionality, you could get started right away without paying for additional customisation.

How does customisation increase Dynamics costs?

More customisations will increase the implementation price and make systems more complex to maintain.

Just like when buying a car and adding upgrades, the price increases when adding features.

We have set up systems for prices ranging from £2,000 up to £500,000. However, the typical range for a smaller business, maybe 5-20 users, could cost between £5,000 to £50,000. These costs cover the whole of Dynamics implementation: analysis, design, testing, building, retesting, deployment, change management, project management, and rolling out the final product.

An office - Dynamics 365 costs

Which features will increase costs of implementing Dynamics?

There’s lots of features which don’t come out of the box with Dynamics

  • Document management
  • E-signatures
  • Customisation of plug-ins
  • Integration with other platforms
  • Replicating existing processes exactly

You may want to integrate your finance system, such as Sage, Business Central, or Xero. But if you want to integrate your orders and/or invoices into a finance system, that would be an additional integration.

If you want to automate your lead process, your follow-up process, reassign stale leads, or trigger automated notifications, a workflow development would be necessary.

Because this takes more time, understanding, and testing, the price goes up for these modifications.

You may want to integrate your telephone system. You could have number recognition, automatically showing each caller’s details and recording the call on the system.

All this additional configuration required would also bump up the price. However, the advantage is making your processes much more efficient.

Marketing automation is another additional investment to consider. The software may cost about £500 a month, but the most important factor is content process structure ensuring proper automation.

How can implementation costs be reduced?

We get a lot of customers coming to us saying “we want it to do leads, sales processing, sending and receiving quotes, e-signing, order management and product catalogues”

And whilst Dynamics can do all of this, they want it for £15k. That’s not going to happen.

Why’s it not going to happen?
Because if you think about the amount of time involved to understand the business, to configure the system, to get the plugins to work correctly, to do all the testing, to train users, to deploy it correctly… £15,000 pounds gets eaten up very, very quickly.

That’s only 18 days work for an average £850/day Dynamics partner. So, if you break down those 18 days into what actually has to be done across analysis, design, testing, build, retesting, deployment, change management, project management, rolling out… there’s a huge amount to be done and if you can find someone savvy who can help out in the process, that’s fantastic!

If you want to reduce cost, there are plenty of Dynamics tutorial materials out there that can help. A tech-savvy team member might be able to navigate the Dynamics features on their own. If you trust this person to set up and customise Dynamics for your business, this could reduce the cost of implementation.

But working with a partner who brings cross-industry experience may save costs in the long run.

Why work with a Microsoft Dynamics partner?

  • Experience: in-depth knowledge of the platform and its unique configuration options.
  • Sustainability: understanding the interaction between businesses, data models, and software development to create sustainable solutions for your business.
  • Shortcuts: building in layers of functionality specifically for certain industries and certain sectors.

In the end, you can decide if you want to do the implementation yourself or seek a partner-led implementation. We have covered many of the associated costs, and when working with a partner who understands your business and the functionality of Dynamics, they can help you get the best out of Dynamics for your business.

The key is to understand what you want your system to do and be realistic about what you can manage as a business.

We get asked these questions a lot about Pricing

What’s the lifetime cost of Dynamics?

When you are calculating the cost of Dynamics, you need to consider the costs over the lifetime of the system. A system lifetime can easily be 10 years.

Initial costs

  • Implementation

Ongoing Costs

  • Annual licencing
  • Integrations
  • Support
  • Storage
  • Training
  • Ongoing customisations and improvements

Cost savings

These are hard to calculate and differ, depending on many factors – the complexity of your business, comparison to previous system and more

  • Efficiencies?
  • A faster workflow. Less duplication of effort and more automation
  • Faster reporting
  • Less admin
  • Fewer manual interventions
  • Reported efficiencies can easily be 10-20% of staff time. Calculate that over a year, and even for a small team, the savings add up quickly.

Why do Microsoft increase licence prices?

  • The cost of innovation – Microsoft invest lots in new development and these costs can be passed on through licencing
  • Improved product – Microsoft judge that the product has improved its features significantly since the last price rise
  • Perceived value – as demand increases and competitors increase prices, Microsoft may follow suit.
  • Cost of support – employing people to support products is costly. Microsoft may reflect these increased costs in their prices

Why are some Dynamics vendors expensive?

  • Expertise – companies with specialist, niche knowledge of an industry may charge more
  • Reputation – companies with a strong brand reputation may charge more, knowing that customers will pay for a good track record
  • Service – some vendors will offer after- sales service which is comprehensive and pricey
  • Extras – some companies may offer more as part of their implementation packages. Things like training, regular consultations and improvements, insights etc.

Why are some Dynamics vendors cheap?

  • Experience – new companies with little experience will have to price their service cheaply to attract business
  • Limited offer – some companies will offer a very simple install of Dynamics with few customisations
  • Cost cutting – vendors cut their costs to pass on the savings to customers. For instance, outsourcing development or virtualising offices
  • Loss leading – some vendors may offer a low implementation cost, knowing that over a longer period they can recoup costs from upgrades, support and licencing income. The hope is that the customer stays loyal to them for a long time.
  • Location – vendors in countries with low labour costs can offer implementations from qualified professionals at a low cost

Why could prices for Dynamics decrease?

  • Competition could lead to lower pricing
  • New licencing models – sometimes licences change their scope, and you could save money by using a cheaper licence, but not losing functionality
  • Economies of scale – as companies grow and acquire more experience and customers they will develop faster and cheaper ways of rolling out a Dynamics installation, things like
  • Ready-to-go customisation packages to save development time on common tasks
  • Discounts with their suppliers of goods and services
  • Pre-written training materials
  • Lower fixed costs – companies with a larger customer base can share costs of a greater number of customers which could mean lower prices
  • New technology – larger companies with more customers can save money by investing in time-saving technology which may be costly for smaller companies
  • Customer loyalty – companies may choose to lower support and licencing prices to reward loyal customers

Why might Implementation costs increase?

  • Your Dynamics partner’s labour costs are increasing
  • Licencing fees for software which your Dynamics partner uses may increase
  • Training and certification costs increase
  • Equipment and infrastructure costs increase
  • Insurance and compliance requirements are costly for partners
  • Some companies in a niche may increase costs because demand is high
  • As some companies develop more experience and sophisticated solutions, they may put their prices up
  • Some companies develop and maintain add-on software which works on top of a standard Dynamics install. This will undoubtably improve your experience working with Dynamics, but will likely put costs up
📆 Last update: July 19, 2024

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