Calculating e-commerce costs: 5 expenses that could push you over budget
The e-commerce costs associated with launching and maintaining a web store are deterring many brands from embracing digital. We’ve addressed the top 5 concerns B2B and B2C businesses have about investing in e-commerce.
According to research conducted by Forrester, more than 40% of companies underestimated the total cost of their e-commerce platform just a few years ago.
With e-commerce today requiring even more robust features and more frequent updates to keep your web store working optimally, it’s unlikely this disconnect between e-commerce cost expectations and reality has been bridged.
What’s more, e-commerce costs are not just limited to the price of your platform. As businesses overlook unexpected additional costs, they often end up well over their intended budget.
Here are the answers to some of the most common questions B2C and B2B businesses have about e-commerce costs:
1. So, how much does e-commerce software cost?
The e-commerce software market is extremely saturated, and pricing varies widely.
Depending on whether you want an enterprise platform or not, whether you need to heavily customize your experience, or whether you want to invest in extensive design capabilities, your e-commerce costs for software alone may range from a few thousand to a few million dollars. This does not take into account any additional implementation costs, and only speaks to the cost of your investment before your web store (or new web store) is even live.
For e-commerce platforms that are not ERP-integrated, you can also expect to incur some sizable added costs to connect your systems. For example, you’ll likely pay a large implementation fee (and potentially recurring fees) for any middleware or connectors needed to unify your e-commerce solution ecosystem (in addition to those of the software itself).
2. Once we’re live, what is the cost of web store maintenance?
Web store and e-commerce software maintenance costs depend on a few factors: the cost and time required for updates, and the cost and time required to manage data and order processing.
With integrated e-commerce (like Sana):
You’ve already invested in an ERP system, so a lot of the data maintenance workload can be easily taken care of with an integrated e-commerce solution. Your internal teams need only to keep your ERP data up to date, and it will integrate with your web store in real time. This also works in reverse: orders created in the web store are automatically shown in your ERP, ready to be processed. With a SaaS solution, you can also eliminate manual software updates by automating the process altogether.
With an e-commerce solution that is not ERP integrated:
If you are not looking for an integrated solution, you can expect to spend a good deal of time managing, replicating, and synchronizing your ERP data and web store data. You’ll be maintaining multiple interfaces and managing your data across systems. However, this approach may give you more flexibility to build out a custom experience and e-commerce ecosystem, including shopping cart software, connectors, and more.
3. How is customer support managed? (And how is the price of support impacted if we want to make changes to our web store?)
Unlike many competitors, Sana Commerce never adds additional charges to support your business or to handle web store issues as they come. Be wary of vendors that don’t offer flexibility when it comes to self-service, like Shopify. If you’re unable to make changes to your web store experience yourself post launch, it probably means that the changes will come with a hefty consulting and/or developer fee (and you’ll likely be billed hourly). Ask the right questions before you invest so you know what to expect.
4. What can we expect to pay in hosting costs?
Much like e-commerce software costs, hosting costs across vendors are not all the same. Typically, fees are charged on a yearly basis, depending on such factors as number of products, number of web store pages, and expected site traffic volume.
With Sana Commerce, hosting costs are included in the price of your subscription, and we host all Sana web stores securely in Microsoft Azure. With other solutions, you may need to consider the cost of an added (or multiple) hosting partners, such as Amazon Web Services.
5. Let’s talk TCO: Does e-commerce really save us money in the long run?
Depending on the e-commerce solution you choose, the total cost of ownership (TCO) can quickly add up. As we’ve noted, different e-commerce platforms can have very different setups and pricing structures (and vary in terms of how much they cost post-implementation).
Other factors to consider include:
- How much manual work and how much in labor costs can you save if your e-commerce solution helps drive automation? What is the value of added internal efficiency if you choose a solution that helps break down silos and increase internal transparency?
- What can you expect to pay down the line if your business or web store needs to scale?
- Note: If your platform is not ready to scale, your business may incur the additional costs of a web store crash, or of any time and effort that may be put into retrofitting solutions onto a web store that isn’t equipped for growth.
- How much might a lack of e-commerce security cost you?
Looking for a more tangible look at TCO? Use our free Total Cost of Ownership (TCO) calculator to estimate the long-term total investment of your e-commerce project. Or read a success story from Sana Commerce customer, Moto Direct, who reduced their TCO by 27% and implementation cost by 50% by switching from Magento
Dive Deeper into E-Commerce Costs (and Learn How to Get the Most out of Your Investment)
For more insights and tips on how to manage e-commerce investments as a finance professional, download our 2019 E-Commerce Finance and Accounting Guide.
E-commerce for finance and accounting professionals
Guide to e-commerce success