Before starting an eCommerce business, the initial thought often is, “How much will it cost to create my dream online store?” Understanding the upfront costs is crucial for resource planning and risk assessment. Moreover, knowing the establishment costs is not enough; it’s equally important to understand the ongoing costs of maintaining the website.

This article aims to provide essential information about building an eCommerce website and its costs. We will cover the expenses related to setting up an online store, as well as the eCommerce website costs necessary for its maintenance.

Quick jump

What is the cost of an eCommerce website?

To begin with, let’s briefly explain the term TCO. TCO stands for “Total Cost of Ownership”, and it is the combined cost of using an eCommerce platform along with its operating costs (usually over 3-5 years). The analysis of TCO is a precise way of optimizing your business by revealing the cost differences between many eCommerce platforms.

The total cost of ownership in eCommerce includes all direct and indirect expenses associated with starting and maintaining the eCommerce website. Examples of direct costs include software expenses, website design, and salaries. Indirect costs, on the other hand, can consist of hosting fees and payment processing charges.

Process of implementation

  • First of all, the main factor that influences the TCO is the project complexity (for instance, the number of integrations or features required)
  • Secondly, consider the business model and size of a company, whether it is, for example, a small local store or a large enterprise. The company’s size already gives a preliminary idea of what should be implemented in the eCommerce website.
  • The third aspect is the importance of an online store from a client’s perspective. Naturally, there will be a difference in goals and requirements when a business relies only on online sales and when it also runs several brick-and-mortar stores with an established customer base, and the online instance is more like an addition to them. The more important an eCommerce store is, the greater the emphasis on its functionalities and performance. This will naturally impact the project’s cost and further expenses.

Gathering requirements before the eCommerce website development

Gathering requirements is a crucial process that allows for more efficient project planning by identifying which features are necessary and which ones are redundant. A detailed project plan leads to better results, saving both time and money. This process is similar to designing an apartment: the more details we know, the better we can execute the project and avoid mistakes—every little detail counts. Pre-launch requirements help narrow the project scope to meet the needs of future users without being overly time-consuming or costly.

Speaking of eCommerce project planning, it is worth mentioning the MoSCoW method, which is great for prioritizing the needs of online businesses. The MoSCoW acronym stands for Must have, Should have, Could have, and Won’t have. It allows you to set priorities by assigning each element of the online store to one of four categories.

  • “Must have” elements are the ones that are essential in the project
  • “Should have” elements are the ones desirable but not necessary
  • “Could have” elements are nice to have but not essential
  • “Won’t have” are the elements that are irrelevant to the project

What are eCommerce workshops?

Once the project requirements and ideas are gathered, the next step is to align the technology with the business needs and core values of the company. It is common for a client to have extensive knowledge about their business operations and the desired look of the eCommerce website but not as much understanding of the technology, which is completely understandable. Conversely, a software house offers the necessary technological expertise and knows how to implement it but may lack in-depth knowledge of the client’s business, such as what drives customers to purchase specific products or how the business differentiates itself from competitors.

This exchange of information takes place in workshops. During these sessions, the client describes their business and the relevant issues. The software house then provides suggestions to match the client’s needs and addresses any concerns. Although workshops are typically paid, remember that statistically, every €1 spent on planning can save up to €100 in development costs.

At this time, it’s also crucial to identify the USP (Unique Selling Proposition), as it will be customized as much as possible. The USP sets a business apart from its competitors and gives customers a reason to choose it, whether it’s a unique product, a more convenient shopping experience, or a better price point.

The final step is an estimation. A good estimation process will take into account the budget, timeline, and scope of the project. With a thorough estimation, an eCommerce site can be created on time and without exceeding the budget.

How is the cost of an eCommerce website calculated?

To calculate the costs of an eCommerce website, an MVP (Minimum Viable Product) version of the project is created. The MVP is the initial version of the website with enough features and eCommerce functionality to enable customers to purchase services or products.

MVP typically includes a basic website design, an online shopping cart, a limited selection of products, and a payment gateway. This version is launched quickly to test the market and gather feedback, allowing clients to see how the website looks and functions.

To launch the MVP, clients share their ideas, requirements, and needs with the software house.

Can I build an eCommerce website for free?

Creating a website for free is theoretically possible using open-source solutions, as other licensing options would require payment. It’s important to note that implementing open-source solutions can be challenging as they require technical expertise. Additionally, some budget is needed for marketing campaigns and purchasing specific systems and plugins. Last but not least, launching an eCommerce store involves hosting and maintenance fees.

Factors to consider when evaluating the eCommerce website cost

Firstly, it is certainly beneficial to consider the eCommerce platforms proposed by the software house. Go through the agency’s portfolio and look for similar projects to ensure they have enough experience in this field.  Next, evaluate whether these solutions are genuinely useful or simply hype-driven and unsuitable for the business case. To do so, do the research online, ask another web development agency for an opinion, or talk with the community around the solution.

Assess each eCommerce platform individually to determine its value and avoid spending money on unnecessary features (e.g., adopting something just because other online stores have it). A good approach is to start with the essential functionalities and gradually develop and implement new ones over time. As mentioned above, remember to include the costs of hosting and website maintenance.

Below are thoroughly described aspects of what constitutes the total eCommerce website costs to shed more light on this subject.

Cost of eCommerce website design

The design of a website significantly impacts the customer’s experience and behavior. Even a memorable logo can make a substantial difference. The cost of a website’s design largely depends on whether you choose to create it on your own using built-in themes and images or hire a professional web designer for a custom design project. The key question to ask is, “How much do customers value design?” For some, a basic design is sufficient if they are primarily focused on purchasing a necessary product, like electronics. In other cases, a sophisticated interface and themes are essential to satisfy even the most demanding customers, such as in the fashion industry.

Consequently, costs can be higher if you need custom development and designs. Nonetheless, having a functional, visually appealing eCommerce website or app encourages customers to choose your products and services, regardless of the industry. Balancing your design needs with your budget is crucial to creating a cost-effective and successful eCommerce website.

Payment processing costs

If you’re starting an eCommerce website project, one of the most important decisions you’ll need to make is which payment service provider to choose. While it’s technically possible to run an eCommerce site without payment gateways, this is not advisable as most online stores have them, and customers now expect this feature from the start. The cost of payment processing depends on the chosen PSP (payment service provider) and factors such as the countries where you are selling your products and the currencies available on your website. This cost can vary based on website traffic or be negotiated to a fixed monthly rate. Additionally, a payment processing fee must be paid for every transaction.

What is a payment processing fee?

Every time a transaction is made with a credit or debit card on the website, a business must pay a processing fee, which is divided into three types:

  • Interchange fee – this fee goes to the banks that issued the credit cards to consumers, such as PKO Bank Polski and Bank of America.
  • Assessment fee – this fee goes to the card networks, like Mastercard and American Express.
  • Payment processor fee – this fee goes to the company responsible for processing card payments for your business, such as PayPal transactions on the website.
https://bitbag.io/pl/blog/payment-process-in-e-commerce

Hosting

As previously mentioned, web hosting costs are unavoidable. It is one of the crucial parts of an eCommerce website, providing the necessary infrastructure and technology to operate the site and store data. Various hosting options are available for eCommerce sites, including shared hosting, VPS, dedicated server, self-hosted eCommerce websites, public and private cloud hosting, and PaaS hosting. Each option has its own pros and cons, and the best choice for your eCommerce website will depend on factors such as budget, website traffic, and performance requirements. 

Hosting costs can differ based on factors like the type of server used (e.g., shared or dedicated), bandwidth requirements, storage space, and more. Additionally, eCommerce stores must ensure their hosting provider is reliable and secure to keep customers’ information safe. Hosting providers also offer technical support for any issues that arise with the website or its associated applications. Overall, investing in a quality hosting service is essential for any business looking to launch and grow an eCommerce website.

Now, let’s go through the available hosting options and see what the differences are.

Shared hosting

Shared hosting is a relatively cheap solution for small to medium-sized eCommerce sites, with costs of around 10 € due to sharing a single server and its resources among multiple websites. However, this can lead to slow performance during periods of high traffic.

VPS and dedicated server

VPS (Virtual Private Server) offers better performance and more customization options compared to shared hosting, though you still share a physical server with other customers, which may affect the website’s performance.

A dedicated server, on the other hand, is a single physical server dedicated solely to one customer, providing superior performance, security, and control but at a higher cost.

PaaS

PaaS (Platform as a Service) is a model that provides a platform to develop, run, and manage applications and services without investing in the underlying infrastructure and its management. This hosting platform is highly automated and provides everything needed to establish your website. However, one machine is shared among many users, which can impact performance. The main difference between PaaS and shared web hosting is the level of automation in processes.

Public and private cloud hosting

Cloud hosting is a pretty new option that offers scalable resources on demand, making it ideal for eCommerce websites with fluctuating traffic. Public cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform offer a range of services, including databases, computing, and storage, for building and hosting eCommerce websites. Private clouds can be built on-premise or hosted by a third-party provider, offering dedicated disk space and resources for one customer, resulting in enhanced performance and security. However, private clouds are typically more expensive than public clouds.

Wrapping up, the hosting option for thee eCommerce website will significantly impact its performance, security, and scalability, so it’s important to choose carefully and do research to avoid a mistake. 

https://bitbag.io/pl/blog/choose-the-optimal-hosting-for-your-platform

Marketing – increase your visibility

Marketing is another crucial aspect of running an eCommerce store. Without marketing, even the best implementation won’t attract customers to a new or not well-recognized business. Simply put, no one will make purchases if they don’t know about your website. Therefore, it’s essential to invest in search engine optimization (SEO) to reach high in search engine results and increase visibility to potential customers.

Additionally, spending on advertising, such as a social media campaign, is certainly worthwhile. Even if a company already has some brand recognition, advertising can help attract more customers and boost sales.

What is marketing automation?

Marketing automation involves using technology to streamline and simplify digital marketing tasks and processes. It includes software tools that automate repetitive tasks such as sending emails, lead generation, customer segmentation, and social media management. The goal of marketing automation is to increase efficiency, boost productivity, and enhance the customer experience.

For example, SALESmanago is a marketing tool designed for email marketing. It is user-friendly software used to send newsletters and advertisements to a specific customer base, increasing reach and saving valuable time.

The most effective marketing strategies and tools for eCommerce

Maintenance – looking after your store

Proper maintenance ensures your online store runs smoothly, quickly, and securely. Regular maintenance tasks, such as software updates, backups, and security checks, help prevent downtime and ensure a positive user experience. Maintenance also addresses potential problems like website crashes or security breaches, preventing them from becoming major issues.

There are four types of maintenance strategies:

  • Corrective maintenance – detecting and correcting any errors.
  • Preventive maintenance – performing regularly scheduled maintenance activities.
  • Risk-based maintenance – addressing risk-sensitive elements.
  • Condition-based maintenance – maintaining high performance by monitoring the website’s conditions.

Maintenance can be compared to regularly visiting a doctor, as it helps detect and address potential issues early, ensuring the overall health of the website. Investing in regular maintenance for your eCommerce website helps to make sure that your store runs smoothly and functions well for your customers. The best way to ensure the success of your eCommerce store is to establish a maintenance plan that incorporates these different strategies and meets your business’s specific needs. Taking the time to regularly maintain your website will certainly pay off in the long run.

What is SLA?

SLA, or Service Level Agreement, is a formal contract between a service provider and a customer, specifying the service quality the provider will ensure. In the context of eCommerce, this agreement is a legally binding agreement between an eCommerce site and its hosting provider, detailing expected performance, reliability, and uptime standards.

Typically, an SLA includes definite promises, such as a specific uptime rate (for example, 99.99%), response times for support inquiries, and compensation for any lapses in service. This contract also outlines the duties of both the hosting provider and the customer, and it clarifies the service level the customer should expect from the provider.

Third-party integrations

Third-party tools are external software applications or services that can be integrated with an eCommerce website to enhance its functionality and the overall user experience, as well as add new features. These tools cover various areas of business operations, including accounting, logistics, customer service, and marketing. The choice of which tools to use depends on the specific needs, size, and budget of the store. By utilizing them, eCommerce businesses can offer better service to their customers by adding functionalities not available in the eCommerce platform itself.

For instance, a PIM (Product Information Management) system is a popular integration that helps organize and categorize product information within a system and enrich website content, improving productivity and data management as a result. Another example is CRM (Customer Relationship Management), a software that maintains a database of customer information, aiding in personalized marketing efforts.

Pricing models

While talking about the costs of setting up an eCommerce platform, it’s essential to consider the different payment models available, primarily Time and Material and Fixed Price.

The Time and Material (T&M) model is based on the time spent and materials used on the project. This method is flexible, allowing for modifications in the project’s scope, features, and functionalities as it develops, which helps ensure the final product aligns with the client’s requirements. Clients receive regular updates about progress and expenses, offering transparency and budget control. This model is best suited for projects with evolving or undefined requirements.

Conversely, the Fixed Price model sets a specific price for the entire project upfront. This model is appropriate for projects with clear scopes, deadlines, and deliverables, as it offers stable budget required for a project and, as a result,  minimizes financial risk for the client. The client pays a fixed amount, regardless of the actual time and resources spent by the service provider, which ensures budget stability but limits flexibility for changes unless planned thoroughly from the start.

Choosing the right model depends on specific project needs, but the T&M model provides unmatched flexibility, accommodating changes easily without needing to renegotiate the entire contract. This fosters a collaborative relationship between the client and service provider and adapts to the project’s natural progression, ensuring the outcomes more closely meet the client’s expectations. Additionally, cost transparency helps clients make informed decisions about the project’s direction and budget.

Time and Material, czy Fixed Price – który model jest lepszy dla klienta software house?

What eCommerce platform is the best choice?

Unfortunately, there is no straightforward answer to this question. It all depends on your priorities. Additionally, the decision often varies based on the size of the business. For smaller companies, options with extensive pre-built features (like Shopify or Presta) may be preferable, as they offer low implementation costs and facilitate rapid website deployment. On the other hand, larger enterprises might favor custom, sophisticated solutions that ensure an optimal digital experience regardless of expense. It’s important to evaluate the features and functionality available, user-friendliness, scalability, and cost. The best eCommerce solution for your business is the one that most effectively fulfills your eCommerce requirements.

The best eCommerce platforms for small, medium, and enterprise businesses

Common mistakes regarding eCommerce implementation costs

  • Going for an advanced, feature-rich store on a limited budget

This mistake is often made by people new to eCommerce who are attempting to develop their first platform without understanding the actual costs involved in creating systems and applications. A practical solution to this issue is to educate oneself and research the available technologies and functionalities beforehand. This approach enables you to choose solutions that align with your budget.

  • Choosing an agency with limited experience for a key project, primarily guided by a low hourly rate

Typically, this scenario affects businesses that depend on revenue from brick-and-mortar stores and are transitioning into eCommerce. When the decision is made to deploy a platform, the cost often heavily influences the executive team’s choices. This can lead to choices such as adopting unsuitable technology because it is cheaper to maintain and implement, but this comes with its own set of limitations and a high risk of accumulating technological debt, potentially resulting in a migration after a few years. Alternatively, the company might select an agency offering lower rates, which does not guarantee a well-managed project, often leading to the need to switch agencies, thereby wasting both time and money. Ultimately, these decisions can prove to be much more expensive.

  • Choosing out-of-the-box eCommerce platforms of closed technology because they are cheaper when implementing MVP

In certain situations, this approach can be beneficial, for instance, when an online business is simply testing a business idea or operates with a limited budget. However, it can be a significant mistake when managing a development project. While an out-of-the-box solution might appear financially favorable at the beginning, over time, it could end up being more costly, particularly if there’s a need to expand and scale the business.

  • Estimating the platform costs based only on MVP

As previously mentioned, numerous factors affect the cost of an eCommerce platform, and it’s important to consider all of them to prevent any unexpected expenses concerning the overall cost of implementing an eCommerce platform.

  •  Devoting too little time for research on available technologies and their benefits

We frequently overlook the reasons why some solutions have higher implementation costs and what contributes to these increased expenses. Often, we dismiss these more costly options in favor of more budget-friendly ones. However, to make a well-informed decision that isn’t solely based on price, it’s also worth thoroughly examining the more expensive solutions. Despite their average or high initial costs, these options might offer long-term benefits such as greater customization possibilities, reduced maintenance costs, enhanced developer experience, improved performance, the ability for unlimited scaling, ease of learning the solution, and simplicity in building new components.

Summary

The cost of developing an eCommerce website can vary significantly depending on factors such as its size, the features and eCommerce functionalities it includes, business-specific requirements (like custom features), and the customer base. Basic eCommerce websites might cost from a few thousand to tens of thousands of euros, while more advanced eCommerce platforms could range from hundreds of thousands to even millions.

The final price is influenced by the choice of platform and the complexity of the store. When determining the overall pricing of an eCommerce website, it’s also important to consider the costs associated with ongoing maintenance and updates. Additionally, expenses related to digital marketing, web design, and advertising should also be included in the complete budget.

It is vital for eCommerce businesses to clearly understand their budget and needs before starting the development process.

If you are looking to discuss your eCommerce objectives and needs, feel free to contact us. Our team of experienced developers is ready to assist you in creating the ideal eCommerce store for your business. Through our eCommerce workshops, we ensure that you have the necessary knowledge and tools to succeed in the dynamic eCommerce world.