In the U.S. alone, ecommerce sales are projected to exceed $1.3 trillion by 2025, which is more than triple what they were less than a decade ago. As a result, retailers globally are racing to go digital in hopes of attracting new customers and securing more sales.
If you’re one of those retailers, chances are you’re in search of an ecommerce platform. And there’s probably one question you’re asking yourself:
Do I want an open-source or SaaS ecommerce platform?
Open source is a type of platform that gives the user full access to the source code, meaning anyone can modify and customize the platform to meet their specific needs. Most popular among development- and IT-heavy organizations, open source is a good option for those who want full control of their ecommerce environment.
The other option, SaaS (software-as-a-service), is a subscription-based solution that is built and maintained by a third-party provider so that users can essentially “rent” the software, without the added complexity of building and developing the platform. With a projected market value of $171.9 billion in 2022 — all the way up from $31.4 billion in 2015 — SaaS ecommerce is undoubtedly on the rise.
Whether your goal is to enhance web SEO, offer a wider variety of products or customize your frontend with a CMS, there’s no shortage of platform options to choose from.
To help you narrow the field, this article will cover the pros and cons of both solutions, as well as the top ecommerce platforms on the market, to help you make the decision between open source and SaaS.
Main Differences Between Open Source and SaaS
Looking at one online store built on an open-source platform and another store built on a SaaS platform, you likely won’t see much of a difference. But behind the scenes, there are several fundamental differences between how these two solutions function and what goes into building an online store on each.
Let’s dig into each of these differences to help you decipher which software is a better fit for your business needs.
At first glance, it may seem that open-source software is the less expensive option. However, with more control over your ecommerce environment comes more responsibility and expenses.
While open-source software is free to download and use, you also have to factor in the costs of hosting, development, customizations, security and compliance, integrations and maintenance. Especially for small businesses on a budget, these expenses can add up to a hefty price tag.
On the other hand, SaaS platforms typically operate on a yearly or monthly subscription basis. Like renting a house, you pay a fee for as long as you want to use the platform, and your SaaS provider takes care of all the ecommerce functionality, such as product updates, security, hosting and PCI compliance. This gives non-technical merchants the ability to focus on core business activities rather than worry about the upkeep of their website.
In the following section, we’ll go more in depth about total cost of ownership for open source and SaaS.
A key aspect of building an online store is managing customer data, such as addresses, credit card information and transaction histories, and it should be your top priority to ensure that this information is safe and secure.
If you opt for an open-source platform, keep in mind that it will be your responsibility to meet PCI compliance standards and maintain the security of your site. You’ll need to ensure that your security firewall is bug-free and choose a trustworthy security tool to protect your site from hackers.
Whereas with a SaaS platform, your service provider is responsible for managing the security and PCI compliance of your site. Many SaaS providers will even update your site automatically with new security features when needed.
Luckily, both open-source and SaaS softwares are easy to install, even for beginners.
Open-source software is free to install, but when it comes to setting up and managing your online store, there are several other expenses to account for.
On the other hand, SaaS providers usually offer a free trial that allows users to test out the platform before buying the paid version. And once your site is set up, you won’t have to worry about starting from scratch, since the platform provider takes care of many of the backend processes for you.
Arguably one of the most significant differences between open source and SaaS, customization is a crucial aspect of building your online store.
Since the user has full control over the source code, open-source software allows for complete customization, all the way from product pages to themes to check-out experiences. With no restrictions, the user can completely modify the website to meet their business needs and create a unique customer experience. Unfortunately, open-source platforms are also very complex, and any technical changes are best handled by certified web developers.
On the other hand, SaaS platform customization can be more limited. Since the service provider has control over the source code, the user does not have as much freedom to customize their site as they would with an open-source platform.
However, many SaaS platforms provide access to an array of pre-designed themes, plugins, modules, templates and add-ons that allow users to quickly and easily customize their storefront. While it may not be as customizable as open source, SaaS is a great option for merchants who don’t have coding experience or the resources to fully develop their store.
Maintenance and Support
Similar to security, maintenance and ongoing support are the responsibilities of the open-source user. Since you have full control over the software, you are responsible for the platform’s infrastructure and administration, including any software upgrades and updates. Thus, if any issues arise in your ecommerce environment, then it’s on you to find and resolve the problem.
However, for ecommerce store owners who don’t want to devote time, energy and resources to maintenance, SaaS platforms are a much better option. Just as you would rent a house and rely on the landlord to fix a leaky faucet or broken air conditioner, renting a SaaS platform puts all the maintenance responsibilities on the service provider.
Total Cost of Ownership: Open Source vs. SaaS
The cost to build and operate your business is always going to be a major factor in the choices you make around your platform. You need a platform that can both support your site and do it for a price that works with your budget.
As mentioned before, the cost of open source can be deceiving, since the software itself is free to use. Unlike SaaS platforms, which typically include costs such as security, licensing fees and maintenance fees in the monthly subscription rate, open-source solutions often leave those responsibilities up to the user.
Here we’ll identify what expenses to be aware of when using each type of ecommerce platform and how they contribute to the total cost of ownership.
Open-source ecommerce software.
The ethos of open-source ecommerce solutions is that it is open to anyone to modify the source code. Open-source software is often free to download and use. However, actually using the software to create a viable ecommerce website does have some costs associated with it.
**Licensing fees:**Not all open-source software is free. For example, Magento has an open-source version as well as a licensed Magento Commerce version that requires the user to pay licensing fees. Pricing for Magento Commerce (on-prem) starts at $22,000, while Magento Commerce Cloud (which includes hosting) starts around $40,000. However, not all open-source platforms have a free and paid version.
**Hosting provider fees:**The cost difference between the on-premise and cloud versions of Magento above draw attention to another cost of open-source software: hosting. If you download the software yourself, you need to find a way to host it. That can be done by paying a third-party provider, hosting on your own servers or paying the platform provider to handle hosting. Usage and traffic spikes can impact pricing. When choosing a third-party provider to handle hosting, make sure to find one that meets your needs for traffic volume and potential spikes. The cheapest option may lead to more costs and lost business if your site experiences outages at key times.
**Web developer or agency fees:**Your site is not going to build and design itself. Open source can be great for achieving the exact customization you need, but it’s also very complex. You will need web development and design resources — whether those resources are internal or from external agencies — to help you achieve the site you’re looking for. These costs can be steep, depending on your needs. For example, building an enterprise-level store on Magento Commerce can easily cost six figures with costs that scale with the complexity of the build, design, extensions and additional integrations required.
**Maintenance fees:**After you’ve built your store, you will still need developer resources to help you maintain it. Make sure to install security patches and updates to further secure your platform.
**PCI compliance costs:**Open-source platforms will typically not come with PCI compliance. You can still be PCI compliant on an open-source platform, but the responsibility falls on the merchant. PCI compliance standards must be met to accept payments or you may risk being charged fines, termination of ability to accept payments, loss of customer confidence and other fraud-related financial consequences.
Security: Not only do you need to be PCI compliant, but you also need to maintain the general security of your site. With ecommerce heavily relying on online payments, it’s your responsibility to ensure that your customers’ personal information, such as credit card info and home addresses, is safe and secure. Thus, there may be additional costs when it comes to installing security updates and maintaining the security firewall.
**Apps or extensions:**Your platform will likely be the foundation of your tech stack, but not the sole part. You will likely use other software and apps to get the full functionality and features you need. Consider the cost of your total tech stack, not just your open-source platform.
Integration into other systems: You will need to integrate your platform with the extensions mentioned above (or be custom built), which will take additional development resources. You will need to make sure systems like your OMS or ERP can share data with your ecommerce platform.
Unlike open source, with SaaS, there is a subscription fee attached to using the software. This fee includes the use of the software, hosting, automatic updates that give you immediate access to new features and no-hassle security patching.
Additionally, it may be easier to estimate your total operating costs, because so many of them are included in the regular monthly fee. However, keep in mind you will still have the following costs to consider.
Agency fees, if used: Much like with an open-source website, you may choose design and development resources to get the look, feel and functionality you’re going for. This can be achieved through internal teams or external agencies.
**Apps or extensions:**To get all of the features you need, you will likely need to extend the platform. This is where choosing the right SaaS platform can make a big difference. Make sure to choose one that has many of the built-in features you need in order to avoid too many add-on costs. For example, the out-of-the-box functionality of BigCommerce can save merchants roughly $5,800 – $30,000-plus per year in app subscription costs, compared to Shopify.
**Integrations into other systems:**As with open-source software, you will need to consider how you will integrate the platform with your other systems, such as your POS, ERP or inventory management system.
**Paid themes:**While many SaaS platforms offer an abundance of free themes and fonts that are easy to edit with built-in tools, you may be required to pay for advanced themes or larger customizations that require a developer to modify the frontend source code.
**Upgraded plans:**As your business grows, you may find that your current platform plan is no longer suitable. Perhaps you need space for more products, or you require additional file storage or bandwidth. Luckily, many SaaS providers offer multiple business plans to help you grow and scale, but keep in mind that these upgrades will often cost more per month.
Pros and Cons of Open-Source and SaaS Ecommerce
There is no one ecommerce platform that is right for every business. The choice between open source and SaaS — and, from there, the choice between the myriad of options that fall into these two categories — will depend on your budget, specific business needs and challenges. Consider the advantages and disadvantages of each before deciding which one might be the best fit for your business.
Open-Source Ecommerce Advantages and Disadvantages
Open-source solutions have some big selling points. Who wouldn’t want the ultimate power of customization? However, it also has some major drawbacks that might make the price of admission too steep.
Advantages of open source.
With the open-source service market expected to be a 30-billion-dollar industry in 2022, it’s clear that many online business owners see major advantages to this kind of software. Here are the three biggest pros that open-source ecommerce can offer.
The biggest pro to open-source software is the flexibility it provides, considering you have control over the source code. So if you’re looking to make big changes and have very niche needs, open source might be the way to get what you need. You’re limited only by your imagination and the abilities of your team of developers.
Widespread community support
Open-source platforms are built and monitored by the community that forms around them. Developers that specialize in the platform contribute ideas and additions that you can take advantage of. You can visit blogs, community forums related to the platform and Github to plug into the knowledge base around your platform. However, it’s important to note that how much community support you get will probably vary depending on if you have paid or free licensing.
Avoiding vendor lock-in
According to a 2020 survey by Statista, 65% of tech-focused companies said that avoiding vendor lock-in was one of the main reasons for considering open source. While some SaaS platforms may hinder users from making necessary changes and customizations to meet business requirements, open-source software frees users from these limitations.
As long as your business has the IT and development experience to handle the source code, open-source software may be just what you need to scale your business the way you want to.
Disadvantages to open-source ecommerce.
Needless to say, one of the greatest advantages of open-source ecommerce is the power to control and customize your online store the way you want.
But with great power comes great responsibility. Here are some downsides to beware of when using open-source software.
The more you modify the source code, the more complex you make your system. This can mean it’s more expensive and difficult to make updates. You may find the software itself has a bit of a learning curve.
Not only are open-source platforms costly and complex to set up, but they also require a lot of maintenance to keep them up and running correctly. You will need a developer, an in-house IT team and/or an agency to manage this maintenance. This can make it harder to make quick changes to the site to stay current, because your marketing team will need developer support to make updates.
We talked about the costs of open-source ecommerce above, so we won’t belabor the point too much here. But suffice it to say open-source platforms come with a laundry list of costs to consider. Do the math to determine if both the initial build costs and operating costs will work out in your favor long term.
The source code for open-source software is open to anyone to download and modify. That’s both a plus for the community of developers who work to make it better and also a minus when it comes to the bad actors who look for vulnerabilities to exploit. Ecommerce sites are treasure troves of financial data, so hackers are always looking for a way in, making security breaches a real concern. Your open-source platform may provide patches for known issues, but it is on your team to be proactive about installing them.
When to use open-source ecommerce?
So, do the pros outweigh the cons?
That depends on your business. If your business has a big budget to handle the associated tech debt from setting up and maintaining the open-source infrastructure and your business needs are extremely complex, open source may be the best option for you.
Examples of Open-Source Ecommerce Platforms
If you’re leaning toward open source, you still have a lot of choices to make. Here are some of the major open-source players in the market today.
Adobe Commerce (Magento).
You can’t write about open-source ecommerce platforms without talking about Magento. Now owned by Adobe, Magento has three distinct versions: Magento Open Source (formerly Magento Community Edition), Adobe Commerce (formerly Magento Enterprise Edition) and Magento Commerce Cloud. Magento Open Source is free to download but does lack some features you may want later, such as B2B functionality like price lists or an easy-to-use page builder.
Also written in PHP, WooCommerce is a free, open-source plugin that can be added to a frontend WordPress site to give it backend ecommerce functionality. WooCommerce may be a good choice if you’re looking to quickly monetize an existing WordPress site; however, it may be difficult to scale as adding additional payment, catalog management and marketing features becomes costly and time-consuming on WooCommerce.
PrestaShop is another open-source platform that is free, but you can pay for add-ons and plugins to make it work for your business. PrestaShop is written in the PHP programming language with support for the MySQL database management system. PrestaShop currently supports 300,000 merchants globally.
OpenCart is another open-source online store management system. It uses a MySQL database and HTML components and integrates with over 20 payment gateways and eight shipping methods. There are approximately 400,000 live websites using OpenCart. OpenCart is free to download and use, but you can pay for additional themes, plugins and dedicated support.
A free, user-friendly, open-source ecommerce platform, Zen Cart was made with users in mind who may not have extensive computer skills. Rather than investing in outside web developers, you can install and set up your Zen Cart store with even the most basic website-building knowledge.
With several built-in payment gateways, users can begin accepting payments right off the bat, or if you already have an existing payment system, you can choose from hundreds of community-contributed payment modules or build your own.
Advantages and Disadvantages to SaaS (Software-as-a-Service)
If, as suggested in the introduction, we think of SaaS as like renting a house, then the pros and cons are fairly similar. You trade the freedom of knocking out walls and doing a complete overhaul, and, in turn, you get a more reliable monthly outlay and can rest assured that if the plumbing breaks, it’s not your problem.
Let’s take a look at some of the pros and cons of choosing SaaS.
Advantages of SaaS.
With the SaaS market estimated to be worth approximately 145.5 billion U.S. dollars in 2022, it’s no wonder that many ecommerce business owners see a clear advantage in SaaS technology. Here are some of the reasons SaaS solutions might be the right choice for your business.
SaaS platforms can help brands get to market quickly. However, some SaaS platforms have more included functionality than others, so if speed of launch is a priority, make sure to choose the platform that can manage that. SaaS platforms also typically have user-friendly interfaces and pre-built themes that can get you up and running at speed.
Ease of use
Not only are SaaS platforms often easier to implement, but they are also user-friendly and simple to maintain. You don’t have to make your own software updates or deal with hosting challenges yourself.
Maintaining security is incredibly important for ecommerce sites to keep the credit card and personal data of customers safe. SaaS platforms not only provide security patches to solve vulnerabilities, but they also apply them for you, so it’s one less thing to worry about. Most SaaS platforms will also provide PCI compliance, so it’s a lot easier for the merchant to manage.
Of course, there are many benefits to modern SaaS that extend far beyond our housing analogy above. A rental house (or any house) is a finite thing, but your SaaS platform can grow and scale with your business growth. Functionality can be added with new apps, and some SaaS platforms, like BigCommerce, include unlimited bandwidth and the ability to add new sales channels (like selling on Instagram or Amazon) when you need them.
While open-source ecommerce platforms have a strong community, many SaaS platforms do, too. But for those who want more direct, dedicated support, you’ll need to spring for either the managed version of the open-source platform or go with SaaS. SaaS platforms generally include support as part of the package. For example, BigCommerce offers 24/7 live agent support, and most merchants are connected to a live support specialist in under two minutes.
One of the arguments against SaaS ecommerce is that it doesn't offer the flexibility to customize your website to meet business needs or scale your business down the road.
Luckily, some SaaS platforms, like BigCommerce, offer headless capabilities, which allow online business owners to create differentiated shopping experiences on the frontend, while the platform runs the commerce engine on the backend.
For example, merchants can integrate their preferred CMS, DXP, application, device or custom frontend solution, or you can simultaneously run multiple stores across various frontend solutions, all from one BigCommerce account.
Disadvantages to SaaS.
The main difference between SaaS and open source is that, with SaaS, you won’t have complete control. Not all SaaS platforms are created equal, so to avoid these disadvantages, you need to pick the right one.
As you’ll see, the disadvantages to SaaS are few and far between, but it’s still a good idea to keep them in mind as you search for the ideal platform provider.
Although you can’t alter the source code of a SaaS platform, some SaaS platforms still provide openness through APIs that can give you much of the customization potential of open source — other SaaS platforms do not. If flexibility and creating an innovative customer experience is important to your business, make sure the platform you choose — whether that’s open source or SaaS — can get you where you need to go.
Lack of Choice
Some SaaS platforms can lock you into using certain apps or features and make it difficult to choose the ecommerce solution that’s best for your business.
For example, Shopify has a proprietary payment provider. They charge additional transaction fees up to 2% of each sale for using other payment gateways and you lose access to certain features like multi-currency.
If having freedom of choice is important to your ecommerce business, you will need to choose a SaaS platform that is open to easy integrations with the solutions you want.
When to use SaaS?
SaaS is a good choice for businesses of all sizes who want to focus their resources on building their businesses and not on infrastructure, maintenance and security. SaaS can support B2C, B2B and hybrid businesses across industries, even those with specific business needs requiring some customization.
Examples of SaaS Ecommerce Platforms
If SaaS sounds like the right fit for your business, keep reading to learn about some of the major SaaS players in the business.
BigCommerce is one of the leading Open SaaS ecommerce platforms for mid-market and enterprise brands. It has all the benefits associated with multi-tenant SaaS — being hosted on behalf of businesses, lower total cost of ownership and faster go-to-market time — coupled with platform-wide APIs that enable businesses to customize their sites and integrate with external applications and services. The platform’s drag-and-drop PageBuilder makes it user-friendly to edit without coding, and both B2B and B2C companies across 150 countries and numerous industries use BigCommerce to create beautiful, engaging ecommerce stores.
Shopify offers a number of themes and can make it easy to get a simple store off the ground quickly. There are over one million merchants using the platform, however those with large catalogs may want to avoid it, as Shopify and Shopify Plus (the Enterprise version) both have a strict option and variant caps per product. By comparison, BigCommerce is built for big catalogs. You can add up to 600 SKUs per product compared to the 100 SKUs per product cap of Shopify and Shopify Plus.
Salesforce Commerce Cloud.
Salesforce Commerce Cloud allows merchants to manage their sales in digital and physical channels with one unified solution. It is a scalable SaaS option, however an implementation can easily cost $250K+ on Salesforce Commerce Cloud. While the platform provides a suite of related services that can complement the ecommerce offering, it may require previous programming and web development expertise.
With a simple onboarding process and affordable pricing plans, Volusion is a great option for small businesses and beginners in the ecommerce space. Starting at $29 per month, Volusion offers native SEO features to help increase your ranking and get more eyes on your website.
Unfortunately for those who want to share more long-form content, Volusion doesn’t offer its own blogging platform. Moreover, if you’re looking to expand internationally or sell overseas, keep in mind that Volusion Payments are currently unavailable to merchants outside the US.
Used largely by the creative community, Squarespace offers various templates to showcase art, video or music products. At its core, SquareSpace is a content management system, but for those who wish to sell physical or digital products, SquareSpace Commerce offers more specialized features such as professional templates and automated emails. From professional templates to automated emails to integration with social media channels, Squarespace is a great option for beginner merchants and smaller businesses.
However, keep in mind that while SquareSpace does have an app marketplace, called “Squarespace Extensions,” it only offers a limited number of apps, and its payment methods are limited (only Stripe, PayPal and Square).
The Final Word
Deciding between open-source or SaaS ecommerce is a big decision. You want to choose the right all-in-one platform now — and one that will grow with you — so you don’t have to make a risky migration later. Comparing the two options side-by-side only works when you consider your individual business needs, budget and resources.
As you can see, both SaaS and open-source software hold significant, but different, advantages. And if you’re just beginning to launch your business, it may be too soon to tell which solution would best suit your needs.
Luckily, BigCommerce’s open API gives you the best of both worlds. With all the pros of a SaaS platform — such as being hosted on behalf of a provider, lower costs and faster time-to-market — as well as the flexibility to create custom integrations and functionality, BigCommerce is a win-win for any business.