Most entrepreneurs think running an e-commerce business is really cheap and the monthly operating cost is pretty low. A lot of them think all they need is a PC, an internet connection, and few products to start selling online. Turns out, we need quite a bit more than that.
In this blog, TechoSquare will tell you about the average cost involved in starting and operating an e-commerce store.
The major detail of understanding the operating cost of an online shop is that it majorly depends on the type of e-commerce solution that you have selected.
If you are choosing a self-hosted solution, then overall e-commerce operating costs would depend on the following aspects:
Domain: You can either buy a new domain or go with one that has already been used. While a new regular domain usually costs around US$10-50 per year, the price of a preregistered domain is more expensive.
Hosting: Hosting is required to store all your site data. There are different types of hosting plans available for online stores. A shared web host is usually cheap. Expect to pay US$5-25 per month for a shared hosting plan, VPS hosting costs US$25-50 per month.
Site design, development & deployment: The initial online store design, development & deployment is expensive. If you are building from scratch and need all the store features in the world, be ready to pay anything between US$3000 and US$15000.
If you are opting for a self-hosted turnkey solution like Swiftkart, you can be up and running for US$499.
Maintenance fee: Maintenance fees depend on your store size, technology, and features. Expect to pay anything between US$100-500 per month or every quarter for a decent sized store. New feature additions will cost more!
Payment processing: Payment processing fees tend to be around 2.9% per transaction, plus a small fee. You might also need to pay a monthly service fee for certain payment processors.
For those planning to go with a hosted solution, the overall e-commerce operating costs will be determined based on the following factors:
Monthly fee: The monthly fee for a hosted solution depends on the package you have selected. The price may start from US$30/month and go up to US$1000/month for the higher plans. Enterprise ecommerce solutions cost more.
Payment processing fee: The overall payment processing fee majorly hovers around 3% + a small fee depending on the e-commerce store provider you have chosen.
Plugins and add-on features: Using plugins and add-on features increase overall online business expenses significantly. A plugin can cost anything between US$10 to US$100+ depending on what capability it brings to your online store.
Whilst the above are some major elements that contribute to the overall operating cost of an e-commerce website, there are other factors that add to the overall building cost too. Those factors are:
Permits and licenses
Utilities
Shipping methods
Rewards and refunds
Equipment
Assets
Inventory management
Storage
Marketing and advertising
Finalizing e-commerce startup cost
The final cost of starting an e-commerce business using a self-hosted solution will vary from US$600 to US$15,000 (one-time) plus monthly expenses listed above.
On the other hand, the operating costs of a hosted online store will start from US$100 and may go up to US$1000, depending on the package you have selected.
Above are the estimated operating cost of an e-commerce store using different solutions.
If you want to start lean and grow faster, we recommend starting your e-commerce shop with this online store builder for just US$499
Also read: 10 niche e-commerce business ideas to dominate 2021
Email us at info@techosquare.com to discuss your e-commerce business goals.
