eCorner

eCorner
Secure eBusiness Solutions

Tuesday, 5 February 2013

How much should you pay per month for a hosted online store

What costs are necessary when we sell online?

Although we have covered the general costs of getting started online before there are still people starting out that get confused. There are so many different packages available in the market some starting at less than $20 / month and some over $300 / per month. Why the big difference and what are the issues to look out for?

First lets just summarise the overall costs of getting online. These costs do not include cost of goods, shipping costs, credit card and bank fee, tax & GST, accountants, salaries and other administrative costs. We are just dealing with the online store.

Annual Recurring Costs

Small Shop

Medium Shop

Large Shop

Over 10,000 SKUs

Domain (per domain) $99.00 $99.00 $99.00 $99.00
Business email (per 5 adresses) $99.00 $99.00 $99.00 $99.00
SSL Certificate (per certificate) Optional $260.00 $260.00 $260.00

Annual Recurring Costs

$198.00

$458.00

$458.00

$458.00

Monthly Recurring Costs

Website $99.00 $122.00 $220.00 $600.00
SEO Optional Optional $100.00 $200.00
SEM (based on Adwords clicks) Optional $250.00 $500.00 $1000.00
Payment integration Included Included Included Included
Shipping Integration Included Included Included Included

Monthly Recurring Costs

$99.00

$372.00

$820.00

$1,800.00

One Time Costs (Optional)

Design (estimate) $600.00 $600.00 $2,000.00 $4,000.00
Customisation (estimate) $1,000.00 $5,000.00

Total One Time Cost

$600.00

$600.00

$3,000.00

$9,000.00

First Year Estimated (from)

$1,986.00

$5,522.00

$13,298.00

$31,088.00


Hosted online shop package prices

So what is included in the hosted online shop package (or hosted eCommerce solution) and what price do you pay?
This is sometimes a very difficult question to answer as you get assailed with feature lists and jargon that don't really mean that much. Most people never look at the Terms and Conditions that control what you get and how you can use it. These can often make what seems to be great deal taste sour.
Reality is that most of the major online shop solutions all have the same or very similar feature sets. So in general you should spend more time on how it works rather than what it does. "How it works" might be the difference between success and failure. If you find that you cannot use the back end administration system easily then you might be better off going elsewhere. So always insist on a Free Trial Period so that you can use the system without paying for it.
Compare cost of hosted eCommerce packages
For this comparison we will use some metrics that we have from our own small business customers looking at the average number of products, orders, average order value and average monthly revenue. This comparison is done based on a sample shop that expects to make around $20,000 per month in revenue.
How did we get to these numbers?
Firstly we were careful to bring all the solutions to the same currency, in this case Australian Dollars (AUD$) using a rate to the US Dollar (US$) of $1.04 and by excluding GST from the price. By doing this we are doing a like for like comparison at this time (i.e. February 2013) but be aware that currencies fluctuate daily and the AUD$ vs US$ has moved by around 50% in the last 3 years. So if you lock in to a foreign currency plan that is what you are stuck with so we have identified the US$ based companies next to the name.
We went to the published information on the website of each of the companies listed and took the available public information to create the comparison.
All the brand names and product names mentioned are the property of their designated owners and only publicly available information has been used.

Example Online Business Metrics (AUD$)
Orders per month 200
Value per order $100
Monthly revenue $20,000
Number of products 2,000
Company eCorner BigCommerce (US$) Shopify (US$)
Package type * CloudMerchant **Platinum **Professional
Cost per month ex GST $110.00 $143.27 $56.73
Transaction fees $0.00 $0.00 $200.00
Total cost per month $110.00 $143.27 $256.73
Setup fee $0.00 $0.00 $0.00
Storage allowance 5GB 1GB 5GB
Data transfer Unlimited Unlimited Unlimited
Australian hosted YES NO NO
Company Volusion (US$) Neto Magento Go (US$)
Package type * **Gold Business **Go Anywhere
Cost per month ex GST $120.19 $99.00 $120.19
Transaction fees $0.00 $200.00 $0.00
Total cost per month $120.19 $299.00 $120.19
Setup fee $0.00 $169.00 $0.00
Storage allowance Unknown Unknown 5GB
Data transfer 25GB 15GB 32GB
Australian hosted NO YES NO
Notes: * Plan chosen to provide for total number of products and generally matching features.
** AUD$ Equivalent at rate to US$ = 1.04

So what is the conclusion and what next?
The conclusion is that all the actual total monthly costs are very similar when you include transaction fee. The lower priced plans seem to be those that add transaction fees. The lower monthly cost providers become much more expensive as you add in the transaction fees and as your online sales grow.
Although some providers offer very low plans the capabilities and features that are available may not be sufficient to start and run an online business successfully leaving you constantly upgrading. Make sure that the plan that you choose has everything you need to be successful.
The other differentiators are the plan infrastructure, meaning;
Bandwidth - the amount of internet traffic space available to your online store. With more social media, video and rich content and images the bandwidth utilisation of a busy store can be quiet high and can vary.
Storage - as with bandwidth video, larger images and rich content mean that more storage is required for a busy and successful online store.
Hosting location - this is where your website hosting is actually located and where your service providers servers are. They should be in the jurisdiction that your business is based in or is targeting. Although the web has made location less important issues such as security, maintenance windows, support, speed and SEO need to be considered.
If you are targeting multiple countries and international sales then ask about a content delivery network (CDN), multi-currencies and multilingual capabilities.
Are there other issues to consider?
There are other issues like payment systems that will support local banks and shipping calculators that support local carries. Make sure everything that you need is available.

All in all the final decision is up to you. By making up a simple spreadsheet like we have above you can easily compare the real costs. Try the solution before you commit and importantly talk to the people in the company that you choose. Being able to easily communicate in your own timezone can be a factor in your success.

You can try an eCorner Online Store for 30 Days Free

Your online trial shop access will arrive via email after you register so check your mailbox!