How to compare ERP quotes like for like: normalising currency, GST, scope and terms

ERP proposals rarely arrive in the same shape. One is in Australian dollars including GST, another in US dollars, one bills implementation by the day, another quotes a fixed price that excludes data migration. To compare them, convert every quote to the same currency, the same GST treatment, the same scope and the same time horizon, and add a risk allowance where a quote leaves you carrying the risk. Only then does the ranking mean anything. This guide gives a normalisation method and an illustrative example with three quotes.

This guide is part of the ERP selection checklist series. All figures are invented.

Before quotes arrive: make them comparable

Send every vendor and partner the same request pack:

your ranked requirements list;
a role map showing how many full, light and self-service users you need;
your list of integrations and data to migrate;
the term you want priced (for example three years with renewal terms for years four and five);
a pricing template asking for each cost line separately, in AUD if possible, stating GST.

Even with a template, expect differences. The steps below handle them.

The normalisation steps

Currency. Convert foreign-currency amounts at one base exchange rate, and note the FX risk separately. See USD pricing, FX and GST.
GST. For a GST-registered business, compare amounts excluding GST: divide GST-inclusive Australian prices by 1.1. Overseas suppliers should not charge GST to a registered business that has given its ABN.
Term. Put every quote on the same horizon. If one quotes annual upfront and another monthly, convert both to annual totals.
Scope gaps. Where a quote excludes something another includes (migration, training, a connector), add your estimate of that cost.
Pricing risk. For time-and-materials implementation, add a risk allowance; for fixed price, check the assumptions list and price likely change requests.
Renewal terms. Apply each contract's uplift clause to years beyond the initial term.
Fit gaps. If a product fails a must-have, add the cost of the workaround or exclude it.

Illustrative example: three quotes, three formats

A 20-user business receives these proposals for a three-year term.

Quote	Subscription as quoted	Implementation as quoted	Notes
X	$5,500 a month including GST, all users	Time and materials, estimate 50 days × $1,500 + GST	Uplift capped at 4% after year 3
Y	USD 3,200 a month, invoiced from overseas	Fixed AUD $68,000 + GST, excludes data migration and training	Billed in USD; uplift at then-current list price
Z	$58,000 a year ex GST, paid annually upfront	Fixed $82,000 ex GST including migration and training	Uplift at then-current list price

Normalised to AUD, excluding GST, three years:

Line	X	Y	Z
Subscription per year	$5,500 ÷ 1.1 × 12 = $60,000	USD 38,400 ÷ 0.65 = $59,077	$58,000
Subscription, 3 years	$180,000	$177,231	$174,000
Implementation as quoted (ex GST)	$75,000	$68,000	$82,000
Add scope gaps	–	Migration $10,000 + training $5,000	–
Add risk allowance (20% on time-and-materials)	$15,000	–	–
Normalised 3-year total	$270,000	$260,231	$256,000

The exchange rate of 0.65 US dollars per Australian dollar is an invented planning rate. The 20% allowance on time-and-materials is a judgement, not a statistic.

Reading the result

The three totals are within about 5.5% of each other. That is too close to decide on price alone. The differences that matter more:

Quote X costs most on paper but has the only renewal cap; over five years it may be cheapest. Model years four and five with the renewal uplift worked example.
Quote Y carries currency risk every month. A move from 0.65 to 0.60 would add about USD 38,400 ÷ 0.60 − $59,077 ≈ $4,920 a year.
Quote Z needs $58,000 upfront each year, which affects cash flow, and its fixed implementation price is only as safe as its assumptions.

Then go back to the demo scores and reference checks. A quote that scores well on fit and has a capable partner is usually worth a modest price premium.

Questions that expose hidden costs

What is the price of one additional full user, and one light user, during the term?
Which features in the demo are not in the edition quoted?
How many data migration loads, reports, integrations and training sessions are included?
What are the change request day rates and travel costs?
Who pays for third-party connector subscriptions?
What does exit cost: data extraction, transition help, final invoices?

Record answers in the ERP buying checklist, then put the normalised numbers into the TCO estimator and the full TCO method.

Negotiating once quotes are normalised

With comparable numbers you can negotiate on specifics: ask X to convert part of its estimate to fixed price, ask Y for AUD billing or a currency cap, ask Z for a renewal cap or monthly billing. Vendors often move more on terms than on list price.

Frequently asked questions

Should I always compare excluding GST?

If your business is registered for GST and can claim full input tax credits, yes. If not, compare including GST, because GST is a real cost to you.

How do I compare a fixed price with time and materials?

Add a risk allowance to the time-and-materials estimate, and price likely change requests on the fixed quote using its assumptions list.

What exchange rate should I use?

Use one base rate for all quotes, such as a recent rate from the RBA, and a second, less favourable rate as a stress test.

Is the lowest normalised total the winner?

Not automatically. Fit, partner capability, contract terms and five-year cost all matter.

Sources

Australian Taxation Office — GST credits and imported services
Reserve Bank of Australia — exchange rates
business.gov.au — tendering and getting quotes from suppliers