Odoo vs a custom ERP for Australian SMBs

Odoo or a custom ERP: which way should an Australian SMB lean?

Lean towards Odoo unless your core operations are genuinely unusual. An ERP has to do a great many ordinary things well: chart of accounts, GST, purchase orders, stock movements, bills of materials, payroll, reporting. Odoo already does them, and paying to rebuild the ordinary parts is rarely good value.

A custom system earns its place in the parts of the business that make you different: a quoting engine, a production scheduling method, a compliance workflow your industry demands. The question is not really Odoo or custom, but how much of Odoo you would have to bend to fit, and what that bending costs over five years.

	Odoo Standard	Odoo Custom	Custom ERP or custom core
Price basis	AU$43.00 per user per month, yearly	AU$80.00 per user per month, yearly	Build cost, then hosting and maintenance
Customisation	Configuration only	Studio, custom modules, external API	Anything you specify
Hosting	Odoo Online	Odoo Online, Odoo.sh or on premise	Your choice of Australian cloud region
Australian accounting	GST, BAS, TPAR via localisation	Same	Usually via Xero or MYOB integration
Upgrade burden	Handled by Odoo	Custom modules must be upgraded	Yours, on your timetable
Best for	Standard processes	Standard core, a few unique needs	Unusual operations at the heart of the business

Prices are from Odoo’s Australian pricing page at the time of writing (November 2026), shown in AUD. Monthly billing costs more, and Odoo offers a discount in the first 12 months for initial users.

Community vs Enterprise: what is free and what is not?

Odoo Community is open source and free to run yourself; Odoo Enterprise is the paid edition that Odoo’s subscriptions include. Odoo’s licence documentation states that Community is licensed under LGPL version 3 and Enterprise under the Odoo Enterprise Edition License.

Odoo’s own pricing has three tiers:

• One App Free: one app, unlimited users, hosted on Odoo Online.
• Standard: all apps, hosted on Odoo Online, with no custom modules.
• Custom: all apps plus Studio, multi company, the external API and custom development, hosted on Odoo Online, Odoo.sh or your own servers. Odoo.sh hosting costs extra.

Odoo counts a paying user as anyone with access to the back end to create, view or edit documents. Customers and suppliers using the portal aren’t paying users, which helps if you want a customer portal. Odoo also offers a Light User licence, listed at AU$12.90, for staff with limited needs.

The practical catch for Australian businesses: Community saves licence fees but leaves you to host, secure, back up and upgrade it yourself, and not every app or feature in Odoo’s subscriptions is part of Community. Check that each Australian localisation and reporting module you need, such as the BAS and TPAR reports, is available before planning a Community deployment.

What does Odoo do for GST, BAS and STP?

Odoo’s Australian localisation covers the core tax and payment requirements most SMBs need. According to Odoo’s version 19 documentation, the Australian fiscal localisation includes:

• GST sales and purchase taxes, including deferred GST.
• BAS and TPAR reports, added by the Australian reports module.
• ABA files for batch payments and remittance advice.
• Peppol for electronic invoicing.
• Two factor authentication, which Odoo says users of the Australian localisation can’t turn off because it is required by the Australian government.

On payroll, Odoo’s Australian payroll documentation describes salary structures, tax rules and leave, and STP and SuperStream reporting through an integration with the Superchoice API. The ATO expanded Single Touch Payroll to Phase 2 from 1 January 2022, and Odoo’s documentation covers Phase 2 reporting and finalisation. Odoo’s documentation also lists an Employment Hero payroll integration as an alternative.

If your awards are complex, test payroll hardest of all. Our guide to award interpretation software explains why pay rules are often the part of an ERP project that goes wrong.

Customising Odoo: modules, Studio and the upgrade cost

Every customisation you add to Odoo is something that must be checked, and often rewritten, when you move to a new Odoo version. That’s the cost most buyers underestimate.

There are three levels:

1. Configuration. Settings, workflows, approval rules, reports. Safe, and survives upgrades.
2. Studio. Odoo’s visual tool for adding fields, screens and automations. Quick, and fine for small changes, but heavy Studio work becomes hard to manage and still needs checking on upgrade.
3. Custom modules in Python. Real code written by a partner or developer. Powerful, and the main source of upgrade debt. Odoo publishes guidance on upgrading a customised database because it isn’t automatic.

A sensible rule is to keep custom modules few, small and well documented, and to ask any partner how they will handle the next two version upgrades and what that will cost. If the list of custom modules keeps growing, that’s a signal the core of your business may not fit Odoo, and a custom core for those processes, connected to Odoo or to your accounting system, could be cheaper over time.

Where does a custom ERP make more sense?

A custom system makes sense when the way you operate is your advantage, and an off the shelf ERP would force you to change it. Common examples:

• Make to order manufacturing with configurable products, unusual costing or scheduling that standard modules can’t express. See our manufacturing industry page.
• Service businesses with complex job costing, compliance records or field workflows that go well beyond standard projects.
• Businesses whose ERP is also a customer product, such as a portal or marketplace that must perform and look like your brand.

Even then, building an entire ERP is rarely wise. The usual approach is a custom core for the distinctive processes, with standard accounting in Xero or MYOB and integrations between them. For replacing an old system piece by piece, the strangler fig pattern explains how to do it without a big bang cutover.

Running Odoo alongside Xero or MYOB

You don’t have to replace your accounting system to use Odoo or a custom operations system. If your bookkeeper and accountant are happy with Xero or MYOB, keep it, and run inventory, manufacturing or jobs in the operations system, syncing invoices, bills and payments across. That reduces risk and avoids retraining the finance team. Our Xero and MYOB integration service covers how those syncs are built.

Hosting, partners and where your data lives

Odoo Online lets you choose a hosting region, including Oceania, but backups leave the region. Odoo’s Cloud Hosting SLA lists Europe, Americas, Asia Pacific, Middle East and Northern Asia, and Oceania as hosting regions. The same SLA says backups are replicated on at least three machines in data centres in Europe and Canada, and that it isn’t possible to choose or restrict backup regions.

For a business holding personal information under the Privacy Act, that matters for your APP 8 assessment. If backups must stay onshore, Odoo.sh or self hosting through a partner on Australian infrastructure are the routes to look at. Our data residency guide explains the distinction between storage and processing location.

Choose an implementation partner as carefully as the software. Ask for Australian references in your industry, who will do the payroll and tax setup, and how they handle upgrades.

Three year cost comparison

Licences are the smallest part of an Odoo budget; implementation and customisation are the largest. Licence cost alone at Odoo’s yearly list prices, before the first year discount:

Users	Standard, three years	Custom, three years
10	AU$15,480	AU$28,800
25	AU$38,700	AU$72,000
60	AU$92,880	AU$172,800

Add implementation partner fees, data migration, training, Odoo.sh or other hosting for custom code, and the upgrade work on custom modules. For a custom core, the costs are mostly the build plus hosting and maintenance; our enterprise software cost guide gives typical ranges, and our build vs buy guide shows how to compare over five years.

Decision table by business type

Business	Likely best fit
Wholesale or distribution with standard processes	Odoo Standard, possibly alongside Xero
Light manufacturing with standard bills of materials	Odoo Custom with few modules
Make to order manufacturer with unusual costing	Custom core plus Xero or MYOB, or Odoo with a custom module set kept small
Service business with complex job and compliance records	Custom core plus accounting system
Business needing all data and backups onshore	Odoo on Australian hosting via Odoo.sh or a partner, or custom

How AWLabs approaches ERP decisions

We’ll say so if Odoo or another ERP is the better fit. Where a custom core or integration is the right answer, we start with a 15 minute Development Consult, then a paid Discovery Audit that maps your processes and systems, with the fee credited in full against the build. You get a fixed price Schedule of Work with three options: The Minimum, The Recommended and The Complete. Senior engineers lead every build. See enterprise software development.