With the rise in online shopping over the past decade, many retailers are considering opening an online store to cater to the audience who can enjoy a relaxing shopping experience from the comfort of their homes.
Starting an e-commerce store can be challenging and time-consuming, especially for those new to the business. You must set a budget and plan ahead to avoid spending too much money upfront.
One of the most important things you need to consider when starting an e-commerce store is how much does it cost?
The answer to this question depends on various factors. Some of the main factors include the size of your business, the type of product you are willing to market, and the structure and specialization of the online store you intend to set up. The cost of an e-commerce website can range widely. You could pay as little as $50 or as much as hundreds of thousands of dollars.
The cost of a well-designed website will vary from $500 to $25,000, depending on the features you want in your store.
Suppose you are looking for a simple website with basic functionalities. In that case, the price can be as low as $500 if you are lucky enough to find someone that knows what they are doing and can deliver it on time. On the other hand, if you want to set up a highly specialized and sophisticated online store and deliver it on time, it might cost you anywhere between $5,000 and $20,000.
The way to reduce the cost of web development is by overseeing the development yourself. You would hire developers from overseas using a freelance website, post a job, sift through many freelancers and agencies, interview them, hope you hire the right company, and ensure they perform all the requested features. And hopefully, they speak your language clearly enough to communicate effectively.
Factors That Affect Your E-commerce Website Costs
1. Domain Name
A domain name is one of the most affordable expenses for an e-commerce business. Yours could be registered for between $10-$15 each year. And since you're expecting to run the e-commerce site for a while, you may opt for the maximum domain registration time of 10 years, increasing the total cost to $100 to $150.
We recommend setting it to auto-renew every year if you are starting out.
The price can vary significantly based on the types of domains you buy and where you buy them.
We recommend domains.google.com. They provide privacy and the domain at one low cost of around $12 a year. Do not use GoDaddy. In our experience, they need better customer service and are complicated to navigate.
Estimated cost: $12-$15 per year
2. Web Hosting
Website hosting is similar to a business's electrical company. You need a website hosting package if you want to switch on the lights for your online business. Shopify is a type of hosting platform. They are much more than hosting, but that is what they are doing at its core.
There are three primary types of web hosting, each with pros and cons. The ideal solution for your company is heavily influenced by its size and future expansion goals.
1. Shared Hosting
In this type of hosting, your website shares bandwidth and server space with several other websites. It’s a less expensive choice because you're also splitting the cost of that space and bandwidth with other companies and people.
Estimated cost: $9–$30 per month
2. Virtual Private Server (VPS)
This is a balance between a shared server and a private server. While the operation is similar to shared hosting, there is typically a minimum bandwidth guarantee that scales to accommodate unforeseen increases in traffic. Regarding software updates, VPS agreements are also more accommodating.
Managed hosting means that your subscription will include knowledgeable technical assistance. Self-managed implies that you handle configuration on your own.
Estimated cost:
$25 to $250 per month for self-managed VPS hosting
$240–500 per month for managed VPS hosting
3. Dedicated Hosting
Your company receives a server of its own. This helps effectively manage unusually high website traffic. Compared to the other two options, there are fewer restrictions on bandwidth and memory, more flexibility and reliability, and professionals from the hosting firm handle common problems like updates, upgrades, security, and maintenance.
Estimated cost:
$220–400 per month for dedicated self-managed hosting
$700–$800 per month for dedicated self-managed hosting for large businesses
$400–830 per month for dedicated managed hosting
TIP: All in all, we wholeheartedly recommend Shopify. They provide almost everything you need in an all-in-one package for an affordable price. Don't get your domain with them. Get it with Google to keep them separate if you ever leave Shopify.
4. Security - SSL Certificate
To increase security on your website and reassure visitors, you'll need an SSL security certificate.
A padlock appears in the address bar, and your website converts from a regular HTTP' to HTTPS prefix if it has an SSL certificate. Web visitors, clients, consumers, and search engines can tell that your website connection is secured by the letter "s," which stands for secure.
In summary, Google and your clients will be more likely to take your website seriously if it has an SSL certificate. Therefore, you should confirm that one is included in your package with your web designer.
Estimated cost: $0-$1500
Note: This is included with Shopify and similar platforms.
Building and Designing Your Website
It's time to get down to business now that your website has a home and an address.
Your online store's e-commerce platform will serve as its central hub. You'll struggle if it isn't well-designed and user-friendly. We recommend choosing end-to-end SaaS e-commerce platforms that provide a dynamic website builder, adaptable e-commerce website templates, and the entire suite of store management characteristics.
Platforms like Shopify, Wix, BigCommerce, WooCommerce, and Squarespace can all create, host, and power e-commerce websites for as little as $30 per month. You can create your online store by making adjustments to a pre-built template in a user-friendly WYSIWYG (What you see is what you get) editor.
In the web design phase, your website's look and feel ultimately take shape. If you're not careful, expenses there could go out of control.
You can pick from e-commerce web design themes for all the major e-commerce solutions. Some themes may not add to the fee you pay to use the platform, while others cost between $60 and $400 per theme.
Or, if you need a specialized website, you can hire a professional to build it.
1. A Web Design Agency
Excellent project managers coordinating with programmers, graphic designers, and other specialists will continuously align the design process with your objectives. The agency will set up and maintain all the bespoke features required for handling varied product catalogs, distinctive customer experiences, and managing a high amount of traffic.
Only self-hosted open-source e-commerce platforms like Adobe Commerce (formerly Magento), WooCommerce, and PrestaShop allow this flexibility. You can't obtain the same level of dependability and accountability from other solutions as a competent web design agency.
Estimated cost: $5,000 - $30,000 (one-time)
2. Freelance Web Designer
E-commerce businesses needing more flexibility could opt for WooCommerce. This free, open-source e-commerce platform rides on the WordPress framework.
It just so happens that while WooCommerce is compatible with drag–and–drop WordPress page builders, you can only realize its full potential through custom coding. For that, you can hire freelancers.
You'll receive a more individualized approach than working with an agency. However, many independent freelancers work for multiple clients, which can cause projects to take longer than anticipated.
Estimated cost:
$30-$45 per hour for beginners
$50-$100 per hour for intermediate-level experience
$125+ per hour for the most advanced WooCommerce developers
TIP: Typically, you will want to use Shopify unless you need a customizable and totally unique website with insanely robust features.
Payment Gateways
The cost to develop and maintain a payment gateway service on your e-commerce website depends, among other things, on the adaptability of your e-commerce platform, the transaction processing fees, and the chosen payment methods of your consumers.
To begin with, the type of payment gateways that can be linked to your e-commerce site depends on your e-commerce platform.
For example, if you created a Shopify e-commerce business, you could select from more than 100 alternative integrated third-party payment gateways besides Shopify Payments. Skrill, PayPal, Stripe, Braintree, and other examples are provided.
On the other hand, WooCommerce offers more than 84 payment processing options, with some of the most popular ones being WooCommerce Payments, Square, Amazon Pay, Authorize.net, Worldpay, Braintree, and PayPal.
You could potentially go through all of these integrations to identify the payment processors that are accessible in your country of business, then evaluate them based on the pricing and methods of payment processing.
The ones you choose should provide the lowest payment processing charges on the preferred remittance channels of your target audience.
Estimated Cost: Typically free
Plugins and Add-ons
No matter how hard you look, there isn't one e-commerce software that will contain everything you need for your online store. This is where add-ons, plugins, and extensions come into play.
Over 9,000 apps have been created by nearly 1,000 independent developers for Shopify's app store. You should be able to find convenient integrations for improving your product research, sales operations, order fulfillment, marketing and conversion, e-commerce shop design, and store management.
However, only a few of them are free. Most of the e-commerce software available here has a cost, which may be one-time or subscription-based.
For each premium app, you can anticipate paying anywhere from $10 to more than $400 per month. As a result, you will have incurred a cost of $500-$5000+ by the time you have added some necessities, like CRM, an abandoned cart saver, a form builder, a product searcher, a currency converter, an order tracker, and a product reviews extension.
Estimated Cost: $0-$1,000+ per month
Content Creation and Marketing
Content does the same, like the furnishings that make a house a home. Quality content attracts web visitors and turns them into customers more than everything we've mentioned.
Every type of writing—page copy, product descriptions, social media posts, blogs, etc.—has a purpose and requires a talented writer to bring it to life.
Typically, copywriting companies charge clients based on the kind of material that is created. Your website needs updated content to remain relevant for visitors and appear on search engine results pages.
Estimated cost: $100-$10,000 monthly, depending on needs
But how do you get your business to appear on top of the list when it is searched for on a search engine?
That’s where SEO comes into play. Search engine optimization, or SEO, refers to the act of improving a website so that it will rank higher on search engines like Google. Every business needs effective SEO, so you should employ a freelancer or SEO service to review your website once a month to make sure it stays optimized.
You need a well-planned marketing pipeline to build awareness for your company, attract clients, generate leads, expand your e-commerce store, and eventually turn it into a profitable online venture. You might want to start promoting your brand with pre-launch campaigns while the e-commerce site is built.
Then you can start with a soft launch as the market is getting used to the brand. As a result, you'll have the chance to obtain feedback from your target market and adjust your e-commerce business before the big launch.
When the e-commerce site launches, you'll have generated enough word about it to pique the curiosity of the intended audience. By doing this, you may draw in a substantial number of visitors immediately, providing your mailing lists the perfect amount of traction to grow and launch personalized omnichannel communications.
At this point, you’ll need a Customer Relationship Management system to contact all the generated leads through all channels, maintain contact details and analyze them for conversion.
Here is a list of estimated costs of these marketing tactics:
Pre-Launch Marketing Campaign
- PPC (Pay per Click) Advertising: $1000-$10000
- Influencer Marketing:
Macro influencers: $5000-$50000 per post
Mid-tier influencers: $500-$5000 per post
Micro-influencers: $100-$500 per post
Nano influencers: $10-$100 per post
- Press releases: $500-$2500 per post
Post-Launch Campaign
- SEO: $2500-$25000, depending on your requirements
- Social Media Marketing: $500-$10000
Lead Conversions
- CRM:
Starts at $12 per user every month for SMBs (small, medium businesses)
Enterprise-level features cost approximately $50-$150 per user every month.
- Email Marketing: $500-$5000 per month
The Bottom Line
Selling online allows you to increase your profit margins, increase your total revenues, create a competitive advantage and build a strong brand.
Setting up an e-commerce store is not as simple as creating any one-page website; you need a proper online store that you can nurture and grow into a profitable online business over time – and this can be expensive and time-consuming. However, it will reap long-term benefits with the right strategy and effort.
Now that you know the cost of setting up an online store, consider launching your e-commerce venture in 2023. Good luck!