There’s nothing more frustrating when you ask an honest question and the answer is “Well, how long is a piece of string?”. This is often the case when you ask developers and agencies just “how much does an e-commerce site cost?!”.
I get this all the time and it happens when you just NEED to know.
We wanted to run some social advertising the other day. We were completely ignorant to what was involved. We got the ‘piece of string’ answer.
Turns out it’s not a simple thing to cost for. It’s the same for e-commerce sites too.
So, what we’ll do here is to get out tape measure out and cut that string into manageable bits. You’ll be able to see what you need and what costs are involved.
[notice]Want to get straight to the juice! Scroll down to download the Google Spreadsheet of costs where you can see how we price sites.[/notice]
Rules for string cutting – Determine your Needs
I’m going to start with the most common mistake when it comes to costing. This is most pertinent for those starting from scratch.
If you already have a proven e-commerce site this might be old hat. Even if it is, sometimes it’s good to go over the groundwork, so I’d suggest reading on.
It’s one of the simple items that get ignored easily. Those who ignore it, do so at their peril.
Now, I know that sounds dramatic, but if you want your e-commerce business to succeed you need to think in those terms. It’s an uphill battle even with a killer product and a slick site. If you blow your budget on a crappy site, then you’ll find it hard to get the traction your business needs.
I’m talking about identifying needs over wants.
When you go string shopping, you might spot some rope next to it. You might see some chains. There are even gold chains! Do you see where I’m going with this?
But what do we need the string to do? At the early stages we just want to validate our business. We want to do some light lifting. We need to ask – what are we lifting? What are the requirements for the initial stage of our business.
Break your ambitions into stages. Don’t pronounce that you want to do unlimited business, because the tool you need changes depending on the target.
A phase 1 target is different from phase 2 and phase 3. So on phase 1 we just want to see that the string can lift it and that customers want to buy your product.
Once we have got that string working and reached it’s limit then we can upgrade to the rope, then to the chain..
We certainly should not blow our budget on the shiny gold chain. It will look amazing, but you’ll be surprised to learn that it will actually make the initial light lifting process even harder. You need to master the string first!
In the startup world the term MVP crops up a lot. This means Minimum Viable Product. When you spec up your e-commerce project you should always have this in your mind. This illustration by Henrik Kniberg clearly illustrates how you should develop your MVP.
You can see this as a process and it’s the best way to approach building (and costing!) your e-commerce site.
A MVP is the most bare bones system possible to achieve your goals. With an e-commerce site we have clear and identifiable goals: Sell your product for a profit.
I told you this might sound a bit obvious! But, really focus in on what that means. That means we should only consider functionality that really achieves that ‘goal’.
There’s no need to worry about integrations, basket abandonment tools, on-site instant messaging and any of the other wonderful extensions you can have for your site unless they further the core needs of your site.
Once you have satisfied this need, then you can OPTIMISE. But before that it is seriously important to achieve your main NEED.
Strong foundations to build upon
E-Commerce platforms are all embracing modularity. This means it is easy to phase your development process.
Once you have your MVP and have demonstrated success (eg. Sales!) then you can start to add additional functionality.
So whether you are using Shopify, Magento, WooCommerce or any other of the dozens of platforms, you’ll be able to add and grow your site. This is the best business approach because you:
- Mitigate your risk
- Don’t overwhelm your site with functionality.
- Can prioritise functionality based on what your customers require (rather than what you think they’ll need)
Ignore the hucksters, this is the reality: e-commerce is not quick and easy
We all need to embrace our ignorance when it comes to technology. The landscape is constantly shifting and answers that were correct yesterday can evaporate by today.
Our expectations are probably incorrect. I don’t want to mean, but yours are too! I’ll speak candidly — we’ve been running an e-commerce agency for five years and have created a lot of different specifications over the year. It is a common occurrence for us to shatter expectations.
Whenever I goto web conferences I hear the same stories. The expectations are out of whack.
I’ve recently joined a few Facebook groups about e-commerce growth and other sites aimed at aspiring e-commerce store owners. So many of them push only what we all want to hear.
[notice]Check out YoGrow a marketplace of Growth Experts to increase your revenue Grow my e-commerce store[/notice]
On one of the groups I see posts showing sales of thousands of dollars after a single week of having a Shopify store up and running. Others mention how they bought a store for hundreds of dollars and are now a million dollar business.
This is baloney! We have to be on our guard because there are many sites/people out there profiting from our false dreams. They are telling us what we WANT to hear and not what we NEED to hear.
I sincerely hope that you’ll believe me when I say if it sounds too good to be true, it most probably is. And setting up an e-commerce business is not easy, quick or simple. It is also not cheap.
Ok, now we’ve gotten that out the way, let’s look at the actual costings.
Cutting the string – Working out costs
So, we have set our expectations and we are going to focus on the functionality that we really need. If you are on your second or third phase then you have different expectations, but you still have your functionality list.
We now need to work out the costs of our site. There are three groups of site:
Marketplaces are fantastic for phase 1 e-commerce startups. They can help validate your business and your product. They are a great MVP.
However they do no scale as well because of the high commission cost. Marketplaces are not good for developing a strong brand because the point of contact the customer has is with the marketplace. You do not get access to the marketable details of the client such as email.
Ultimately it is harder to build brand loyalty and re-market. Products that are successful here are competing on novelty (they are the only one in their niche) or they are competing on price.
Initial Costs: Labour to setup the site. Can be done by yourself as not hard.
Ongoing Costs: The marketplaces charge a commission on sales. This varies from 10 – 20% depending on marketplace and your product.
Examples: Amazon, EBay, Etsy
Hosted platforms let you focus on your business. You will not have to worry about updating your plugins or concern yourself with how the site is hosted. This is the responsibility of the company you are using. This let’s you focus on your business rather than the infrastructure to support it. A solid foundation to develop your MVP.
Initial Costs: You can either use an off-the-peg theme or develop your own (scroll down for more info on this)
Costs: $9 / month and upwards. Some also take a commission of total sales.
Examples: Shopify, Wix, Create
Initial Costs: You can either use an off-the-peg theme or develop your own (scroll down for more info on this)
Costs: $30 / month for hosting. Additional costs for upkeep.
Examples: WooCommerce, Magento, OpenCart
Which type of platform are you looking at or using?
Off-the-peg Vs custom theme development
The look, feel and functionality of your site is found in your theme and plugins. They may go by other names. Shopify calls plugins Apps for example.
It’s important to remember that off-the-peg and one-click plugins are ambitiously named. It’s easy to fall into the trap of assuming that these are going to be added simply. Everything is easy once you know how, but it is highly recommended to get an expert to add these plugins. You might miss a critical setting and sabotage your business before you even get going.
‘Off-the-peg’ should be seen as one side of a sliding spectrum that reaches across to custom development.
The skills to create an off-the-peg are different from custom development. I think the best name for someone who can build a site without touching code is a ‘configurator’.
It’s an impressive skill to know the control panels of an e-commerce platform inside out and set it up so it can sell, but it’s also very different from the coding skills required to build something bespoke. It’s important to choose the right person for the job.
With ‘off-the-peg’ you first need to find a theme. The platform you are using will likely have a repository or theme store. Look through these and find the style you are after.
The configurator you hire can then customise this for your requirements.
If you choose to self-host there are on-going costs to concern yourself with. These include:
- Security Auditing
- SSL Certificates
- Plugin Updating (and bug fixing!)
As you can see there are a range of options. Here is our breakdown of options:
Marketplace – Free
Off the peg – 3 or 4 days of an Expert ($1000 – $2000)
Custom Development – 10 to 20 days of an Expert ($3000 – $15,000)
How we Cost – A guide
That’s a big range. So we’re releasing how we cost our projects. We’ve previously talked about this when we did our WooCommerce Costs post. Now we’re sharing our Google Spreadsheet. We’re sharing how we cost.
We build using WooCommerce and WordPress but it should mirror e-commerce sites built with other platforms.
Our breakdown helps everyone see where the costs are. If you are a developer we suggest a breakdown like this. If you are looking to get a specification build, then the specifications we create at YoSpec are broken down like this too.
We have the following:
- Design Process
- Project Build (Broken down by no. Template files we need to create)
- Responsive Build
- Essential Setup
We have the following options as recommended extras. Sometimes the client can fulfil these items in-house, but they are still requirements.
Our day rate is £450 per day. Day rates vary a lot. So does quality. You can use the below spreadsheet as a guide. If you change the day rate on the spreadsheet you can see how project costs vary.
Extensions and Integration Costs
If you need additional functionality there are many places you can purchase existing solutions. These solutions are priced many ways. The more sustainable businesses have a recurring fee which allows them to monetise on-going development (which is great for you!).
It’s important to factor in these on-going costs because they are on-going. 12 months can go very quickly, so if you have a few thousand pounds in extension and hosting fee’s, it’s good to be prepared for this in advance.
A final note on Costs
So above gives you a guide for ecommerce site costs. When you get a specification for your project you’ll likely be asked about your budget.
This is a sensitive subject but we highly recomend that you are honest about your budget. We’ve written a whole article about why you should talk about your site budget and highly recomend you read it.
Getting a cost for your project and finding an Expert
We’ve launched a service called YoSpec that builds you a specification. We identify your needs as per this article. We look at your market and outline which phase you are in and how you can achieve your goals.
We also have a list of design and developer’s. Along with your project specification we also make suggestions about which freelancers or agencies to use. These experts are hand-picked and have their own page for reviews, so you can be sure you get a goodun’!
We’d love your feedback about site costs.