This is a question that I get asked on a regular basis, and often people are (not pleasantly) surprised by the answer.
There are essentially 4 different types of E-commerce website:
1. Ecom Feeds
Feeds are small text files that contain all the product information which is then submitted to a website like Amazon, or eBay. In some cases, like Amazon, the website also handles your payment processing system as well as the product display. Some other systems require you to use a different system such as PayPal or Google Checkout.
This is where the website and payment system is hosted by the ecom, and all you have to do is select a prebuilt template, pay a monthly fee and then put your products on this site. Most hosted solutions have ascending levels of features, and typically the number of products you can put on the website determines which package you will need. Some features might also require higher, more expensive packages. Examples of Hosted E-commerce systems are:
- Magento Go (from $15 per month to $125 per month),
- Miiduu ($free for basic package, up to $199 per month for the full system),
- Volusion (£19.99 for basi 'steel' package to £115/month for full 'platinum' version),
- Big Commerce (from $24/month to $299/month),
- Go Merchant (from $41.67 per month),
- Shopify (from $29 per month to $699 per month),
- 3D cart ($19.99/month to $99.99/month),
- Fortune3 (from $29.95/month to $159.95/month),
- CoreCommerce ($19.99/month beginner package through to $129.99/month for the Pro package),
- Pro Stores ($29.99/month for 250 products to $99.95 for 100,000 products + 0.5% transaction fees)
- ekmPowershop (£19.99/month)
- goEcommerce (15p/day on pay as you go, up to £10/month business package- limited to 1gb disk space)
- Sellro (from £ free /day + £50 setup to £255/year + £1,995 setup)
In addition to the specialised Hosted Ecommerce Providers, many ISPs and Domain registrars are now also getting in on the act with their own hosted ecommerce plans:
- Network Solutions ($26.95 + vat / month to $99.95 + vat for 100,000 products)
- 1and1 (£9.95 - £49.99 per month),
- Fasthosts (Very basic system included with Business premium web hosting package or as an added option for business standard web hosting package)
- 123Reg (£8.99/month for 150 products up to £39.99/month for 10,000 products)
When comparing price plans, you also need to check whether the hosted solution includes a setup fee, account management fee, merchant account fees, transaction fees, dedicated SSL certificate, domain registration, technical support contract and any other hidden costs not included in the monthly fee. The prices listed above only cover the monthly package fees. Another thing to look out for is the bandwidth allowance of each package. Some services like Shopify include unlimited bandwidth for all packages, whereas others, such as 3D Cart, require you to upgrade your package if your website is very busy or has high bandwidth embedded videos (in which case I would advise you use youtube to host videos). Some packages like goEcommerce also have a restriction on the disk space used by your site - mainly on the number of image files. Again, this can sometimes be overcome by using another hosting account for the images.
When deciding on a hosted ecom solution, you should write down exactly the specifications that you require, incuding how many sales you expect to make in the first year, the level of traffic, how many products, what essential features you need and what your budget is. Using this information, you should visit as many hosted systems as you can, and look at the websites that were built using this system. Typically an ecom hosted solution site will have an 'examples' page showing the best websites that were made on this platform.
3. Off the shelf shopping carts and Bespoke Ecommerce Websites
If you want to build or run your own system, there are 3 main components to the costing of an ecom website, these are: hosting , cart and payment system .
The hosting of the website can be more expensive for an ecommerce web site. The reason for this is that often you cannot use cheaper shared hosting services if you require high traffic, secure online transactions - shared hosting means that your website is run from a server which has other websites running on it, so the cost of hosting is also shared between the multiple websites.
For secure ecom websites, you may need to get a dedicated server, and that costs more. Dedicated servers can be leased for as little as £30+VAT per month (nearer £60+VAT per month if you require a decent spec windows based server). On top of that, there is the considerable costs of setting up the server, adding industry grade firewalls and anti-hacking systems, software licences, and the ongoing costs of making sure the server is running 24 hours a day, 7 days a week. In addition, you also need to make sure that there are systems in place to deal with issues like server downtime, software failure and migration. You can lease what is called a 'managed dedicated server' which means that the hosting company takes over the tasks to maintenance, backup and emergency recovery situations. Managed servers usually have a 'service level agreement' (SLA) which guarantees a minimum level of uptime eg 99.9% uptime means that the website will be online for a minimum of 99.9% of the year. (this is the SLA we currently offer with our dedicated servers), The cost for managed dedicated servers can be as high as £1,000 per month, although typically, you should not have to pay more than £100 per month for a linux server and £200 per month for windows based server.
The most complex bit about setting up an E-commerce website is the payment system. For a business to use an online payment system, you may need to set up an Internet Merchant Account (IMA) which is set up specifically to receive online payments. Then you will need to set up a Payment gateway (eg paypoint , SagePay , Worldpay ). The payment gateway acts as a link between your website and your merchant account. It accepts credit card payments, authorises the credit card, performs fraud checks and transfers money from the customers credit card provider to your bank. Some Payment Gateways also offer a merchant account, so you might not need a separate merchant account, for example, the RBS worldpay The work involved with setting these systems up varies between payment gateways. Worldpay has a very complex application procedure and is one of the most expensive to set up. Sometimes the application procedure can take several weeks, so if you are thinking of taking payments online, the first thing you need to do is start the process of setting up your payment provider.
The monthly cost for your payment system depends on what IMA account you are using and what payment provider.
As a guideline, payment systems typically cost about £150 per month for an average volume website. payment gateway Setup fees should be around £100. This does not include the time required for the developer to integrate the payment system into the website and to set up the payment gateway to communicate with the site when payments are authorised or declined. Generally, this will take up about £200 - £300 in setup development.
Another more simple option is to use PayPal . Paypal application process is usually quicker (but still has lots of hoops to jump through) and the ongoing cost is much cheaper and easier to understand. Note for every transaction made on your site, you will be charged by both the bank for the credit card payment and the payment gateway, normally about 3-5% of the total transaction. To use PayPal, your customer does not need a paypal account, they can pay by credit card straight into your paypal account.
There are three types of shopping cart, off-the-shelf , hosted cart and bespoke . (there are a few variations on this, but most fall into the 3 main categories)
Off-the-shelf shopping carts
Examples of these are Cubecart , Actinic , NopCommerce , osCommerce . This is basically a bit of pre-written software that the developer used to build the e-commerce website. Some, like Cubecart and NopCommerce are free. Others such as Actinic cost. Actinic starts from $349 for the basic version to $3,499 for the "Actinic Business Multi User Version 8 Core" which includes multi network, epos and just about everything you will ever need (prices correct at time of writing). Choosing the right shopping cart can be quite difficult and the type of cart you use will affect your hosting options. NopCommerce requires a windows based server, cubecart requires a linux based server (which is cheaper for hosting).
Bespoke shopping carts
Most of the ecom sites that I've worked on have been based on bespoke shopping cart systems. Examples of which are:
ReefRash - cleethorpes based shop selling surfware, wetgear and streetware
Dr Nick Lowe - innovative skincare products
JKS Gift Shop - jewellery, Footwear, glassware and giftware shop
Shoulderdoc Store - Shoulder rehab products
Why use bespoke shopping carts?
There's no doubt that bespoke shopping carts are the most time intensive and expensive option for a developer. Generally, you are looking at about 50-70 hours development time for the bespoke site and up to 20 hours for reskinning an off-the-shelf system (although you can sometimes buy templates or use default ones which fit your requirements and are cheaper). For more complex ecom sites, this can be much higher though. However the costs of going bespoke are often justified by the benefits. There benefits are:
- Fully customisable interface - you are not restricted to using pre-built site templates or layouts
- Flexible cart options - with bespoke sites you can add new features more easily such as prescriptions for glasses, related products, product reviews, integration with other website features like blogs and forums, affiliate networks, PPC conversion tracking, etc
- Simpler admin systems - With bespoke sites, you only have to show the admin options that are really needed by the site admins. In general, the more features your shopping cart has, the more complex it is to update your products and manage orders. Actinic is incredibly difficult to update for the average person and NopCommerce has quite a complicated VAT system.
With bespoke systems, you can strip away everything that is not relevant, which greatly decreases administration and training overheads, thus the bespoke system saves you time and money over the off-the-shelf products.
So how much does and Ecom site cost?
OK, the cost varies depending on your requirements. Below are three examples of what you should pay for a hosted solution, a very basic ecom site and fully featured ecom site:
- up to 100 products,
- 10 categories
- different sizing options for products
- single currency, single language
- slightly modified theme
- costs: about £20 per month
setup: £50 for hosted ecom setup + £150 to modify template
Hosting : included in monthly fee
Maintenance/upgrades: added extra.
Cost for 1 year: £440
Cost for subsequent years: £240/year
Simple ecom site based on off-the-shelf product:
- small, fixed number of products
- standard admin system
- low monthly transactions
- all in one, off the shelf shopping cart and hosted payment system
- shared web hosting
- single currency, single language
- no SEO facilities
setup - £250
build - £800
template modification: £150
hosting - £10/month
domain registration - £10/year
cost for 1st year: £1,330
cost for subsequent years: £130/year
Fully Featured Bespoke Ecom Site:
- unlimited number of products
- full admin system with advanced features
- virtual dedicated server
- unlimited bandwidth and disk space
- complex shopping options
- multi-currency payments + multi language
- SEO facilities built in
setup - including payment system setup - £1,000
build - £8,000
hosting - £30/Month
domain registration and SSL certificate: £100/year
cost for 1st year: £9,460
cost for subsequent years: £460/year
Note: If you are using a web design agency, these costs can be as high as £20,000 or more for the build - always get more than one quote and do background check s on the developer or company before agreeing a price .
These are just rough guidelines on how much ecom websites cost, and each site should be looked at on a case by case basis. In general if you need a simple ecom website, it can work out cheaper if you use a template based hosted ecommerce solution and in many cases its a good idea to start using the cheaper alternatives before you have the capital to invest in upgrading your ecommerce solution.
When presented with these numbers, many potential clients choke on their biscuits. However, now that you know what is needed to set up and build ecom sites, you can probably see why they can be so expensive for the full all-singing, all-dancing system that many potential clients tend to ask for at the first meeting. Sometimes, we advise clients that it would be more cost effective to use Ebay or Amazon for online selling, and then have a very simple, cheaper non ecom website built, rather than have a large, complex integrated ecom website which might not see any return on investment for many years, if ever.
Often, clients already have ecom sites, and they need to improve sales through their site. This can be achieved through SEO - search engine optimisation (or search engine optimization in american english) or improving Conversion Rates, but sometimes may involve a website rebuild or moving to a hosted solution to meet their needs.
For more information on ecommerce website costs, have a look at the following:
http://www.comeupsmiling.com/webdesign/design_main/eguide.html - nice guide which includes PCI compliency information and good information on the different credit card processing options.
http://www.costhelper.com/cost/computers/website-ecommerce.html - american based article aimed at the low cost ecommerce market.
http://answers.guru.com/emp/Guru-Answers/Project-Research-Forum.aspx?forumid=7&threadid=5671 - post discussing various options including DIY off the shelf ecom development.
Ecommerce Cost Calculator - I love this page, its a really simple tick list where you define what features you need in your website, then click on 'calculate' to view the estimated budget to build your requirements.