Ecommerce Costs: How to Afford an Online Store
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U.S. ecommerce sales are anticipated to rise above $6 billion by 2023. According to Statista, global ecommerce numbers were expected to almost double between 2019 and 2022 — and that’s before the COVID-19 pandemic pushed the envelope on growth in an industry that has always seen impressive year-over-year gains.
Yet, depending on what survey data you look at, about 50% or more of small businesses have a website. An even smaller number of SMBs run ecommerce sites to sell products and services to consumers online. Fear or lack of knowledge of technology is one reason businesses avoid creating online stores. Still, another major factor is that people believe ecommerce website costs may be too expensive for them.
Years ago, that might have been the case. The cost of an ecommerce website was often something only large enterprises could absorb, limiting SMBs to in-store and phone sales or requiring them to sell through third-party marketplaces with large providers like Amazon.
Today, the total cost of an ecommerce website varies widely, depending on the type of platform you want, store expectations, and other factors. But there are plenty of options, making it possible for businesses of almost any size to afford ecommerce stores.
Things to Consider Before You Create an Ecommerce Website
While the price is obviously a major consideration when deciding which ecommerce platform to choose, you also have to ensure your online presence supports your overall business goals and brand.
Answer the following questions before you start searching or pricing ecommerce website options. Weigh the answers cautiously to weed out platforms and services that don’t really suit your needs.
1. What type of online store are you expecting to have?
The type of goods or services you’re selling play a significant role in what kind of ecommerce services you need and how you might build the site. First, decide if your store is B2C or B2B — business to consumer or business to business. Selling to the general public or other companies factors into everything about your store and how it’s marketed.
Then, make a list of what you’re going to sell. Is it apparel, food, furniture, or other types of goods? Or, are you selling services, like online consulting or in-home HVAC installations? What you’re selling defines your ecommerce website design needs. It lets you know whether your ecommerce functionality should include features like inventory management and shipping, for example.
2. Do you plan to sell your products online only? Or, do you already have a brick-and-mortar store?
Adding ecommerce to your brick-and-mortar business can be a great way to expand your reach and prepare your business to weather events that reduce foot traffic — from seasonal slow-downs to regional or global emergencies. But running a physical store and an online store requires integration and cooperation. At a minimum, for example, you must be able to easily track inventory as it sells via both channels, so you don’t leave online shoppers wanting if your physical inventory was already sold.
Your existing POS might integrate with existing ecommerce platforms, or you might find ecommerce platforms have their own POS. Make sure you make the choice that works best for your business.
3. What is your ecommerce development budget?
With so many options to choose from as you design your ecommerce business, it’s critical to have a guiding measurement. Know how much you can spend before you get started so you don’t get caught up in the excitement of ecommerce bells and whistles, which can blow your budget.
4. What are your shipping options?
What type of options do you want to offer your customers when it comes to shipping? Not all ecommerce software supports the same opportunities, so it’s important to know your preferences before you start looking. The same is true for payment options.
How do You Calculate How Much Ecommerce Costs?
Costs for an ecommerce site depends on a variety of factors, like whether you want a custom ecommerce website or can meet business needs with an out-of-the-box SaaS subscription. Total costs could range from the modest — a few hundred dollars — to the extravagant — hundreds of thousands or even millions of dollars.
Whatever your budget is, you do have to pay for certain types of things as you work up to your own ecommerce site. Costs are typically categorized as infrastructure or design and include:
- Ecommerce software.
- Domain name.
- Ecommerce hosting.
- SSL certificate.
- Payment processing costs.
- Store theme and designs.
- Add ons and extensions.
Infrastructure refers to the foundational tools upon which your ecommerce site rests. This is the technology that enables your website to function and creates your customer’s user experience. Some of the most common infrastructure costs are discussed below.
1. Ecommerce software cost.
If you’re embarking on an ecommerce project, you have two choices: build the software from scratch or purchase an ecommerce platform. Building from scratch is excessively expensive and requires a lot of knowledge and resources. Instead, most people start with a predesigned platform with plenty of customization options.
Ecommerce platforms vary in cost
You can choose from numerous platforms. A few of the top choices are summarized below, along with some information about costs.
- BigCommerce. BigCommerce is a cloud-based SaaS product that supports a wide range of functionality and business needs. You can purchase monthly subscriptions between $29.99 and $299.95 for essentials packages that support SMBs with online stores. Custom enterprise solutions are also available to help further growth.
- Magento. While you can choose from cloud-based, third-party, or on-site hosting and benefit from feature-rich options, Magento is pricey. According to Magento partners, building even a basic site can cost $25,000, and custom sites with a few extensions can cost well over $100,000 annually, depending on business needs. This option tends to be more appropriate for large enterprises.
- Shopify. Shopify offers a proven, fast way to get your shop online, though some features and customizations might be limited. Packages cost between $29 and $299 per month, depending on how many accounts and locations you want to support and what shipping and payment options you choose. Shopify has a proprietary payment provider and charges additional transaction fees — on top of the percentage you already pay to your payment gateway provider — up to 2% of each sale for not using this provider.
- WooCommerce. WooCommerce is an open-source ecommerce solution designed to help you turn a WordPress site into an ecommerce site. Woocommerce doesn’t charge a setup fee or monthly subscription fee, but you do have to pay in a variety of other ways, including hosting. You’ll also have to pay for domain names, SSL certifications, and any customization development, including extensions for added functionality.
2. Domain name costs.
Domain name costs are typically incurred every year, as you must renew them. You might also be able to save money by purchasing a domain name for multiple years. According to Domain.com, the average cost for a domain name is $10 to $15 per year. However, if you want to purchase a domain name with a very general term (as opposed to your specific business name or something regionally specific), you might find yourself shelling out much more.
3. Ecommerce web hosting.
Once you have a domain name, you need a server to host it on. Hosting costs vary greatly depending on what type of ecommerce site you have. Some SaaS platforms, like BigCommerce and Shopify, offer cloud-hosting built into the price of the subscription.
In the case of a self-hosted ecommerce website, the cost of hosting is an additional expense. Secure, dedicated hosting can cost $80 to $730 or more a month. In general, hosting costs will be related to how much traffic your store gets. There are some very inexpensive options out there, but be careful — you want to make sure you have a solid hosting provider and don’t just take the cheap way out.
4. SSL certificate costs.
SSL certificates are a must for ecommerce sites. This is the encryption certificate that helps your customers know it’s relatively safe to enter payment data and personal information in a shopping cart for your ecommerce store. In many cases, if your site isn’t secured with an SSL certificate, people will refuse to shop on it. It may also impact how well your site ranks in search engine results.
In most cases, the cost of an SSL certificate is baked into another fee, such as your ecommerce SaaS or hosting service. If you end up paying for the certificate yourself, costs can range from around $10 a month to more than $100 a month, depending on your hosting provider and site needs.
5. Payment processing costs.
Understanding payment processing costs is critical to successfully building an ecommerce site. You will pay a percentage of each sale to the payment processor (the credit card company, PayPal, Stripe, or other entity). Let’s look at the numbers:
$100 transaction, less your payment gateway’s fees of 2.9% + $0.30 = $3.10 in fees.
But Shopify has its own proprietary payment gateway, and you’ll be charged extra if and when you use other gateways. In that case, the numbers look like this.
$100 transaction, less your payment gateway’s fees of 2.9% + $0.30, less your Shopify transaction fee of 2% (as per their Basic plan) = $5.10 in fees.
It’s important to forecast your sales and how much these fees might be to ensure you understand the true cost of your ecommerce platform — as well as how to price your inventory.
Payment processing fees tend to be around 2.9% per transaction plus a small fee, like 30 cents. You might also need to pay a monthly service fee to certain payment processors.
In reviewing the overall costs for payment processing, WooCommerce and BigCommerce offer the lowest prices in general. They also provide some of the most flexible options for accepting payments.
Ecommerce website development costs also include the work and products required to support great user experiences, ensure your brand shines in your online store, and streamline processes so customers can easily purchase your items. Here are a few standard design costs.
1. Store theme and design costs
You can choose from a wide variety of options when it comes to setting up how your ecommerce store will look, including templates, theme frameworks, and from-scratch designs. Check out the pros, cons, and potential costs of each below.
- Template themes. These are predesigned options that include the basic functionality you need to design a site. Pros include — free alternatives from your SaaS ecommerce provider that are easy to customize, sometimes even without development experience. You can decide which fonts, colors, and images you want to include in your shop, for example. The cons — your competition also has easy access to these templates, and customization options are limited. That means your store could look a lot like everyone else’s. You can usually find free templates, but custom templates by freelancers typically come with a purchase price.
- Theme frameworks. Frameworks allow for more customization, often via drag-and-drop page builders that let you decide what goes where. Pros — frameworks often provide options for more in-depth ecommerce web design from a web designer, so you can be sure that your site doesn’t look like everyone else’s. Also, frameworks get automatic updates to help them stay secure. You may be able to select from basic theme frameworks for free or purchase custom or advanced frameworks for your site. Cons — you’re still somewhat limited, though most SMBs can find a framework that lets them do everything they want.
- BigCommerce’s Page Builder works on all pages, while Shopify’s drag-and-drop editing functionality only works on the homepage. Magento’s Page Builder is only available to merchants on their Enterprise version.
- Designing the site yourself. Pro — the sky is the limit in what you can do if you’re willing to put the time and money resources into your site. But the disadvantages are plenty — starting from scratch means high costs, a lengthy time to market, the need for qualified designers and developers, and the potential for making the same mistakes the experts have already figured out how to avoid.
If you want to see what themes have to offer, check out some of these popular BigCommerce themes, which all come in a variety of styles:
- Cornerstone: light, bold, and warm.
- Fortune: minimal, bright, contrast, and highlight.
- Vault: cool, bright, and natural.
- Scales: chic, pop, modern, and minimal.
- Parts warehouse: classic, light, dark, and champion.
- Lookbook: standard, organic, dark, and colorful.
2. Add-on, plugin, and extension costs.
Add-ons and extensions are how you add custom features to your site. From forums and galleries to chat service, PPC marketing, and newsletters, extensions can streamline a variety of customer-facing or business-facing processes. How much you pay for extensions and add-ons varies.
- BigCommerce. BigCommerce’s app marketplace offers a wide variety of both free and paid apps. Many merchants have found that the native functionality that comes with BigCommerce has reduced their need to use apps for core features. That’s also a benefit for your site speed — too many apps can slow you down.
- Magento. Magento add-ons tend to require custom development, which can be pricey.
- Shopify. Shopify offers both free and paid add-ons. Paid add-on options are usually billed as a monthly subscription cost. Most paid Shopify apps offer free trials, so you can be sure they’re what you need.
- WooCommerce. You can select from free or paid extensions, and since WooCommerce supports WordPress, you can also use WordPress extensions. WooCommerce paid extension costs start at $19 and can be as high as a couple of hundred dollars.
In most cases, you can also pay developers to customize apps specifically for your company. The cost of custom apps varies widely but usually starts around $1,000.
How Much Does It Cost to Have Someone Build an Ecommerce Site?
Now that you know what types of things you have to pay for when setting up your ecommerce site, consider whether you want to hire out all or part of the process or keep it in-house. An ecommerce development agency can help you set up everything you need to provide a seamless customer experience, including displaying your products online, processing online orders, and managing inventory, shipping, and payments. That includes:
- Back-end web development.
- Front-end web design.
- UI/UX design.
- Ecommerce services.
- Mobile app design.
- Digital strategy.
- Custom software development.
The cost of working with an agency varies depending on how much work you need. Typically, the agency consults with you to understand your needs and provides a package estimate, so you know the costs. Working with an agency might be the right choice if:
- You don’t have in-house developers or designers.
- You do have in-house tech resources, but you need them to concentrate on other priorities or they don’t have ecommerce experience.
- You want to get your online store open as quickly as possible. Agencies have ready resources, knowledge, and proven methods that quicken the process.
- Your budget is tight. While it might seem like you’ll pay less if you go in-house, setting up an ecommerce store via experienced professionals is often the best way to get the most from your budget.
Ongoing Ecommerce Costs to Consider
Remember that once you pay the upfront costs to set up your ecommerce site, there are ongoing fees to consider. Hosting and domain name costs may have to be reconsidered annually, and some monthly expenses should be added to your budget.
First, there’s the subscription for your ecommerce platform if you choose a SaaS option. As noted above, typical costs for these products range from $29 to $300 a month.
Next, you may need to pay for other services, labor costs for your employees, or marketing costs to help make your online store a success in the future. Some standard expenses associated with ecommerce include:
- Data backups. Your ecommerce site relies on a great deal of inventory, including customer databases, product inventories, and the content on the site itself. Paying for data to be backed up in a secure, redundant manner provides great peace of mind and can help you move forward with business during times of emergency or disaster.
- Inventory management. Whether you’re housing your goods in a third-party warehouse and handling everything via drop-shipping or you’re sending goods out directly from your store, you’ll have costs associated with managing your inventory and shipping procedures.
- Security. A basic SSL certificate is essential, but it’s not the only way you should secure your site, data, and any relevant network. Security software or other services to keep your business, employees, and customers safe may involve a monthly expense.
- Email marketing. Newsletters are a great way to drive consumers back to your store, and if someone abandons the cart during checkout, a drip campaign can help bring them back. At a minimum, you may need to pay for email marketing services, such as MailChimp, though some email functionality may be included on some ecommerce platforms. You can start with a free service and expand to paid packages as your email marketing needs grow. You’ll also need a professional business email account to do this right.
- Product marketing. Unique marketing content to support strong SEO for your product pages, payments to influencers, and PPC ad bidding fees are just some of the expenses associated with marketing your goods online. Make sure you’ve put aside an online marketing budget to show up in the search engines so you can stay connected to your target audience.
Depending on your needs, you can launch a complete ecommerce site for less than $1,000. In some cases, you can get started with an investment of around $100, especially if you’re willing to rely on free resources to get your business online.
You’ll also need to cover ongoing expenses that might range from $100 to $1,000s every month, depending on your business size and needs. But one great thing about ecommerce website design and development is that you can easily customize it to fit your budget. No matter where you are in business growth, chances are you can easily afford to bring your products online.
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