What Does An Online Store Cost?

In Ecommerce - just as with any other business – one of the first questions you might ask before getting started is: "how much does this all cost?" After all, you're more than likely looking to make more money – not lose it! - and a clear understanding of your costs is super-important in helping you hit your goals.

The whole 'what does it really cost?' thing is a question we're often asked, so we thought we'd take a look at some of the major expenses you'll face should you take that plunge into selling stuff online...

Selling on Marketplaces like Amazon & eBay

The obvious place to start selling stuff is on a high-traffic website like Amazon or eBay. For beginners, this can be a good place to start. It's free to join and you'll get great visibility for your products, positioning them in front of a vast audience, which – in turn – can help boost your sales and acquire new customers.

However, you'll also be subject to marketplace fees, which are deducted as a percentage of each sale and can dramatically eat into your margin. Startups and private sellers can expect to cough up anywhere between 3% and 10% of the value of each and every transaction, so proceed with caution! We'll talk more about transaction fees later on.

Coupled with the fact that these sites also offer limited potential for you to display your brand, communicate with customers and synchronize your product inventory, it's pretty apparent that you will need your own online store to reach the next level.

Your own Ecommerce store: Setup Costs

So, the next logical step is to set up your own store. But where do you start and how much does it cost?

Well, it's easier than you may think. The first thing you'll need is a Domain Name. You can search and buy from vendors such as Go Daddy, Name.com or 1and1. The good news is, registration will often set you back less than ten dollars per year – a fairly modest investment for something that's so important.

Next, you'll need to decide on an Ecommerce platform. Generally you can expect to pay for this on a monthly basis, and it's important to find a package that suits your needsright now,as well as having the capacity to grow with your business in the medium-long term.

You could sign a 12 month contract to use a platform that is absolutely perfect for you right now, only to find that you've outgrown it within 3 months. Not ideal! Here at AmeriCommerce, we offer 5 different packages to suit different needs and budgets, from $24.95 per month to $299 per month...and our clients are free to change their plan at any time.

What about web design and security? Ecommerce websites require cosmetic beauty, powerful functionality and water-tight security on a level that simply isn't always necessary for other types of websites.

You could pay extra and have a custom website built for you, or, as a slightly less expensive option, you could simply choose a platform which offers themes. You have choices when it comes to security, too. The default option for our stores is to use our free, shared SSL certificate...but you can pay extra to purchase a dedicated certificate if you have the budget. Find out more. This can be a real confidence-builder, which is always a big help when trying to convert visitors.

Another cost you may find associated with an Ecommerce platform is transaction fees. In other words, every time you sell something, your platform provider takes a couple of percent of the transaction value which, again, can hurt your margin. Here at AmeriCommerce, we don't charge transaction fees – on any of our packages. The money you make when you sell stuff is yours to keep! This can make a very healthy difference to your bottom line.

Ecommerce Business: The Logistics

Once your store's been setup, designed and published, it's all about the logistical costs of your business; buying stock, shipping it, paying taxes, HR and marketing.

If you decide to stock inventory, you'll need to consider the costs of not only buying, but also storing your products. Do you have room at home for storage, or do you need to consider acquiring some extra storage space? Stock your own inventory also means you'll need to ship it yourself; this is an essential cost to factor into your business plan.

If, on the other hand, you utilize dropshipping, it's all about calculating the overall cost of the order fulfilment and ensuring you factor in enough margin for yourself to make it worth your time.

Taxes are another important consideration. Make sure you're familiar (and compliant) with the tax laws in your state, and keep up with latest developments – for example, the MarketplaceFairness Act is a proposed piece of legislation that will see radical changes in how online sales are taxed.

An element of paid online marketing is definitely advisable as you grow your business. Check out some of our other blog posts and our e-book 21Tips to Thrive in Ecommerce to find out more!

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Comments
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Keri Blakinger
August 14, 2014 9:28 PM
Ugh, Amazon transaction fees. I have tried to sell some of my used books on Amazon and discovered that I can't even break even given the transaction fees. I don't understand how stores are selling used books for 99 cents and not losing money, although presumably the transaction fees are not the same for everyone.
David Adams
August 18, 2014 4:07 PM
Yeah transaction fees are a bust to me. I used Amazon a few months back to sell off my college text books that I didn't need and the fees were really annoying. I probably lost $50 out of like $200 worth of text books, which is just not good. Thankfully I follow suit with the whole running my own site and so on. I may look into your guy's service more though, because it sounds very appealing to me.
Bo Tipton
August 18, 2014 6:39 PM
I have learned to test the waters. Like you said if you jump in with both feet and sign and annual contract and then find it does not fit what you need then you are stuck. I think it is important to start in a way that you can scale up as you go with out having to make major changes. Change to much to quick and you can actually drive customers away when you are first starting. Thanks for the post.
Hailey Tresch
August 14, 2018 6:05 AM
This list of eCommerce credit card processing costs is the first I've seen that thought to add the price of stocking your inventory. Very inclusive, thanks! Choosing a hosted shopping cart can be a daunting decision too because there's so many. Of course, it's most important that they align with your website and payment processor.

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