How much does an Ecommerce Website Cost in 2019?

Ecommerce, Featured
How much does an Ecommerce Website Cost in 2019?

Ecommerce websites come in all shapes, sizes, and — of course — prices. As an ecommerce web development company, the price question tends to turn up way too early in the conversation, before we’ve had time to learn the finer details of what our customer is looking for in a website.

Who can blame them? No one wants to waste their time and energy just to end up walking away from a developer because their cost doesn’t match their budget.

But giving a price too early can set unrealistic expectations for the customer. When I try to explain the number of factors that go into creating an Ecommerce website, customers often follow-up with the same question:

“But Simon, I’m not going to hold you to it. Could you at least give me a ballpark figure?”

Ask any developer. This “ballpark figure” approach seldom works in anyone’s favor. Most of the time we will underquote or overquote the project because we simply don’t have the information we need yet. An underquote makes the customer think we’re raising the price to cheat them (“What happened to your first estimate?”). An overquote causes us to lose the customer before we even start.

It’s a sure way to start a working relationship with unrealistic expectations.

In hindsight, the fact that I let this bother me so much was silly. If roles had been reversed, I would have wanted to know the same thing. But it’s easy to see why, for a long time, I was bothered when customers asked about pricing too soon. I wanted to talk about products, benefits, features, and goals of the project. Customers wanted to skip those details until they knew a price.

This got me thinking: how can we quickly satisfy the customer’s need for an estimate, while at the same time receiving the information we need to make that estimate reliable?

Solution: That’s why we created The Ecommerce Calculator Quiz, a tool that gathers the customer’s ecommerce data (Sales, Average Order Value, number of products, 3rd party integrations, etc.) to quickly and automatically provide a realistic estimate.

The best part? The quiz only takes less than 5 minutes to complete.

The rest of this article will explain how our ecommerce website development pricing works.

We dive into the formula we use to calculate project estimates in our quiz, without taking too much of a customer’s time.

Chapter 1: Problem / Solution Overview

The Problem: Non-transparent pricing puts clients against developers

The Ecommerce market is desperate for an open and upfront answer about cost. Yet developers don’t want to risk setting cost expectations too high or low before we’ve had a chance to understand the complexity of our client’s needs and goals.

The problem is, this back-and-forth pricing challenge puts my team against our clients, the very people we were trying to help.

The customer experience

  • Slow estimate process
  • The feeling that valuable information is intentionally being hidden from them
  • Having to learn how Ecommerce pricing systems work

The developer experience 

  • Website projects vary from bare bones to extremely complex, which results in a lot of price variation
  • Details like the project timeline, continuous versus one-time services, and types of technology impact the price
  • Cut-and-paste pricing sheets put us at a disadvantage against competitors (who may get their hands on our pricing and intentionally undercut us)

Our Solution: Provide as much price transparency as possible

The ecommerce development market desperately needs price transparency. Open conversations around pricing leads to:

  1. Trust
  2. Saved Time + Money
  3. Data-backed pricing models (to eliminate scams)

As I’ve tried to convey, development pricing can be time consuming and complex, yet the benefits of providing fast estimates are great for developers and businesses alike. That’s why our team broke that complexity down into a software that automatically makes fast calculations based on common Ecommerce website requests.

Ecommerce Website Costs Formula

We created the ecommerce website quiz to assess what a business should budget for a redesign, based on how your website performs right now. In essence: the smaller and less-complex your business is, the less money you should expect the budget for a website overhaul.

What factors are used in the Ecommerce website cost formula?

  1. Annual Ecommerce Revenue (BASE)
  2. Average Order Value (AOV)
  3. Total SKUs Variants in your Product Library
  4. Total Order History
  5. Total Customer History
  6. Number and difficulty of third-party integrations
  7. ERP Integration

We’ll break down each of these elements, as well as why they contribute to the cost of your website, in Chapter 2.

What is the formula to calculate the quiz results?

COST = BASE + (BASE x AOV) + (BASE x SKU Variants) + (BASE x Orders) + (BASE x Customers) + (BASE x # of Integrations) + (BASE x ERP{ Integration?).

Look intimidating? Don’t worry—we’ll walk you through all of it.

We plugged this formula into a calculator.

Try the Ecommerce Calculator Quiz

A note for startups and new businesses

When startups or businesses without a web footprint approach us to build a platform, we usually suggest starting with a minimum viable product (MVP). This provides small businesses the opportunity to test their market and positioning at relatively low risk and investment.

Base level templates from platforms such as Shopify or WooCommerce are great resources for getting a store up and running quickly. Both base platforms offer minimum customizations, but are easy to work with.

As your business gains more traction online, eventually you should consider creating a custom theme for your store. When that time comes, we hope you’ll consider us!


Chapter 2: The Ecommerce Website Cost Formula

1. What is Annual Ecommerce Revenue (BASE Cost)?

What is Annual Ecommerce Revenue? Annual ecommerce revenue is the revenue you can directly attribute to your ecommerce store.

Why this affects cost? The smaller your business, the less money you should expect to budget for a website, and vice-versa. Larger companies tend to require more features and better functionality, which requires more labor to build and maintain.

How can I find this stat? Go to your current ecommerce platform and clicks on Reports. Filter the date range from 1/1/2018 to 12/31/2018 to find gross sales or total sales.

ecommerce-analytics-stats-woocommerce-how-much-does-ecommerce-website-cost-in-2019

Additionally, you could find this in Google Analytics if you setup Ecommerce Tracking. For more info on how to setup Ecommerce Tracking, see this post: How to Track Ecommerce Sales in Google Analytics?

How can I calculate this: Remember Brick-and-mortar revenue is not included, only Ecommerce Revenue. If you’re an established business with steady sales, you should average your ecommerce revenue from the past 3 years and use that number. Otherwise, go with what last year’s revenue or whatever your projected revenue for this year is.

Example of how this is Calculated?

CALCULATING BASE

Your BASE is equal to 3% of your Annual Ecommerce Revenue (AER).

In this example, our AER is $1,000,000.

BASE = 3% of AER = 0.03 x $1,000,000 = $30,000.

2. What is Average Order Value (AOV)?

What is Average Order Value (AOV)? AOV tracks the average dollar amount spent each time a customer places an order on your website. For example, Customer A purchased a product on your store for $100 and Customer B purchased a product for $50. The AOV for these 2 customers would be $75.

Why does this affects cost? As a general rule, it takes more time and effort to sell a high-ticket product. Consider these two products as an example:

Pricing: BoomBoom Lanyard costs $2.95 and doesn’t require much detail to sell. On the other hand, the CircleRock Custom Suit costs $950. Circle Rock includes a link to customize your suit/measurements, more product photos, additional details about the product, reviews, and delivery time. The website must be more user friendly and make it easier for people to make a purchase than the lower-cost item.

Selling high-ticket items tends to require more robust details about the product, a simpler user experience to reinforce trust, and more information so customer feels comfortable buying.

Result: High-ticket items cost more during your redesign because they need more attention.

How can I find this stat? If you cannot easily find this stat in your current ecommerce platform, find your total sales revenue and divide by number of orders. In the above examples, total sales were $150 and there were 2 orders. $150 Total Revenue / 2 Orders  = $75 Average Order Value.

Additionally, if you have Google Analytics Ecommerce Tracking setup, you can find this in your Google Analytics dashboard.

How can I calculate this: To calculate your company’s average order value, simply divide total revenue by the number of orders. Total Revenue / Number of Orders = Average Order Value

Average Order Value% of Base
Less than $500%
$51 to $10025%
$101 to $25050%
Greater than $25075%

Example of how this is Calculated?

CALCULATING AVERAGE ORDER

Our average order is $75 dollars.

That means our costs for Average Order Value are 25% of BASE.

Average Order Value Cost = 25% of BASE = 0.25 x $30,000 = $7,500.

3. How many product/SKUs variants do you have?

What is a SKU? By definition, a stock keeping unit (SKU) is a number assigned to a product to identify its variants (price, size, and colors).

How is a Product different than a SKU? A product describes each design that you have. For example, a long-sleeve t-shirt is an example of a product. A long-sleeve SKU would be a Medium long-sleeve t-shirt.

Why does this affect cost? Simple: The more skus you have in your product library, the more data your website needs to store or move. (It takes less time to migrate 50 products than 2,000.)

How can I find this stat? Go into your CMS Platform and you should be able to find the revenue you have done for the year as well as # of orders.

How can I calculate this: To calculate the number of SKUS your company’s store contains, adding up all products and product variants in the website store.

Product Variants% of Base
Less than 500%
50 to 5003%
501 to 25005%
2501 to 50007%
Greater than 500010%

Example of how this is Calculated?

CALCULATING PRODUCT LIBRARY COST

We have 2,000 products.

That means our costs for product data are 5% of BASE.

Product Data Cost = 5% of BASE = 0.05 x $30,000 = $1,500.

4. How many Past Orders do you have?

What is a Past Order? All orders that have been made previously on your ecommerce store.

Why does this affect cost? Orders are data. Like with product data, migrating tens of thousands of order data is a significant time investment. Migrating past orders correctly is important, especially if you want to give your customers the ability to reorder items from orders stored in their account.

How can I find this stat? Go into your CMS Platform and you should be able to find the total number of past orders that exist in the CMS.

How can I calculate this: If you have a fairly new CMS, this may be harder to find. That is why we give a range in the Ecommerce Project Calculator of  less than 1000 orders, 1000 to 5000 orders, and over 5000 orders.

Total Orders% of Base
Less than 1000 0%
1000 to 50005%
Over 500010%

Example of how this is Calculated?

CALCULATING ORDER HISTORY COSTS

We have 2,500 orders

Our estimated order data costs are 5% of BASE.

Order Data Cost = 5% of BASE = 0.05 x $30,000 = $1,500.

5. How many Customers do you have?

What are Total Customers? The total number of Ecommerce customers you had last year. Again, remember not to count any brick-and-mortar customers in this number. This is online customers only.

Why does this affect cost? The size of your customer base determines the technology requirements, hardware and software. If you have a large customer base, you will require a website and supporting applications that can handle heavy traffic. This dictates the technology you use and the type of network, servers, and other hardware required. This also dictates the size and expertise of your development team.

How can I find this stat? Go into your CMS Platform. You should be able to access the total number of past customers.

How can I calculate this: If you have a fairly new CMS, this may be harder to find. That is why give a range in the Ecommerce Project Calculator of stores that have less than 500 customers, 500-2500 customers, and over 2,500 customers.

Total Customers% of Base
Less than 5000%
500 to 25005%
Over 250010%

Example of how this is Calculated?

CALCULATING CUSTOMER DATA COSTS

We have 9,000 customers.

Our estimated customer data costs are 10% of BASE.

Customer Data Costs = 10% of BASE = 0.10 x $30,000 = $3,000.

6. How many 3rd Party Integrations are needed?

What is a 3rd party integration? Almost all Ecommerce websites require some level of third-party support. This can complicate your costs. Some of these include pre-built connectors, while others require custom integration. You should understand all of your website’s technological requirements before you hire a web development agency because these customer integrations can significantly drive up costs.

Examples of 3rd Party Integrations + Custom Functionalities?

  • Shipping + Fulfillment: Shipping Easy, Shipstation, Aftership, Narvar, Dropstream, NRG (Filemaker)
  • Accounting: Xero, Freshbooks, Quickbooks
  • Payment: Sezzle, Afterpay, Affirm, Apple Pay, Stripe, Amazon Pay, Paypal
  • Email Marketing: Mailchimp, Kylavio, Drip, Convertkit
  • Tax: Avalara, Avatax, Taxjar
  • Inventory: Unleash, TrackGecko, Apparel Magic, Accumula, Webgility
  • CRM: Hubspot, Salesforce, Pardot,Insightly, Agile CRM, Infusion soft, Freshdesk
  • Product Review: Yotpo, Wiremo, Stamp
  • Gift Card: Pimwick
  • Video: Youtube, Vimeo, Wistia
  • Analytics Tracking: Google Analytics, Hotjar, Mouseflow, Glue
  • Other: AWS, Gravity Forms, Advanced Custom Fields, ReferralCandy, Woo Subscriptions

(Note: We have experience implementing all integrations listed above.)

Pre-built connectors on leading ecommerce platforms: Many popular shipping, fulfillment, payment, POS, and 3PL integrations have pre-built connectors with leading ecommerce platforms. If that’s the case, your overall investment in integrations should be pretty low.

Why does this affect cost? Many popular shipping, fulfillment, payment, POS, and 3PL integrations have pre-built connectors with leading ecommerce platforms. If that’s the case, your overall investment in integrations should be pretty low. That said, we often need to create custom APIs for our customers. Custom eCommerce functionality is important for helping your business operate efficiently. It can give your site a competitive edge, but often comes at a large price tag.

Why is it so hard to predict time for 3rd Party Integrations? Implementing a single feature in the website could take up anywhere from an hour to a hundred depending on the complexity and inputs needed.

Just consider what it takes to integrate a product review plugin: Does the review plugin need to be customized CSS to be on brand on each product page? Do you wish to include product images with your reviews? What about automated emails for good reviews? What pages —  Home page, Category page, Product Page, Checkout page — on your site do you need to show product reviews? Will product reviews also be integrated onto other selling platforms/marketplaces (facebook, instagram, Google Shopping Amazon, Ebay, etc.)? Do you have a custom process when someone leaves a bad review? Do you need to export all your current reviews from one CMS platform or another review plugin?

And that’s just the customization necessary for one plugin. The more complex the integration, the greater the cost.

Why is the experience of the developer important for customizing 3rd Party Integrations? A good developer will take the time to find the best plugin — at the best price — for your specific needs. They will also go the extra mile to integrate everything on your site, making it easy for your customers to start utilizing that feature right away.

How can I find the number of integrations needed? Go into your CMS Platform and you should be able to find some of your current 3rd party integrations. You should understand all of your website’s technological requirements before you hire a web development agency. That’ll help both you and your developer make smart decisions about whether or not to custom integrations are necessary.

How can I calculate this: If you have a fairly new CMS, this may be harder to find. That is why give a range in the Ecommerce Project Calculator of less than 3, 4 to 7, and greater than 7.

# of 3rd Party Integrations% of Base
3 or less0%
4 to 710%
Greater than 720%
Greater than 7 + Custom API functionality30%

Example of how this is Calculated?

CALCULATING INTEGRATION COSTS

We have a total 7 3rd party integrations.

Our estimated customer data costs are 20% of BASE.

Customer Data Costs = 20% of BASE = 0.20 x $30,000 = $6,000.

7. Do you need a ERP Integration?

What is an ERP Integration? The industry uses the term ERP (Enterprise Resource Planning) to describe a host of software that manages your inventory, shipping (“3PL”), invoicing, and other back-office services. Good developers will create cohesion across these back-office systems to help your website achieve more.

Do I need a ERP Integration? If you have to ask, then you probably don’t need one, especially if you don’t currently integrate your Ecommerce channels (Shopify, WooCommerce, etc) and your ERP system. When a significant portion of your or your team’s time is spent performing necessary yet seemingly trivial tasks that don’t add value, then it may be time to integrate ERP.

Examples of ERP Systems: Sage, SAP, Microsoft Dynamics, Netsuite, Apparel Magic, Filemaker, Oracle

Examples of Ecommerce websites on which we’ve integrated a ERP Integration Solution:

Here are some platforms on which we offer ERP Integrations, so you can an idea of our capabilities:

Why does this affect cost? Some ERP solutions can cost over $100,000 for a single annual license. Integrating those with a website can also take hundreds of hours of programming. A smaller company may rely on “out-of-the-box” or built-in inventory and back-office solutions to reduce costs.

Why is an ERP Integration so complicated? Integrating your website and ERP can be a lot of work and often involves a lot of moving pieces. The success of the project tends to come down to how well the project was planned from the beginning. Typically it takes a lot of experience to successfully integrate ERPs with Ecommerce websites.

Example of how a ERP Integration Saves Money in the Long Run: Your Ecommerce developer may have to sync the website database with your in-house inventory management system. This enables your website to update all products automatically in real-time. Development costs for ERP integrations may be higher, but in the long run, it often saves businesses a lot of money by making these systems simpler to navigate for employees.

What are other benefits of Ecommerce ERP Integration?

  • Reduce manual entry to save time and increase throughput while reducing errors, when entering order, inventory, item, customer and shipping data
  • Streamline inventory synchronization, track updates, and provide accurate inventory levels to customers, without hiring staff to manage these tasks
  • Automatically notify customers when orders have been shipped and allow them to track the delivery of products
  • Simplify how you manage price and product changes to inventory
  • Have flexibility to add multiple online and offline sales channels, without losing operational efficiency
  • Meet tax requirements with automated tax compliance and eliminate exposure
  • Handle increased demand in online orders without extra resources

How do I know what type of ERP Integration I need, if any? If you’re asking, you probably do not need one, if you don’t currently integrate your ecommerce channels (Shopify, WooCommerce, etc) and your ERP system.

ERP Integration% of Base
No0%
Yes, Integrate ERP10%
Yes, Integrate ERP + Implement Custom Solution 30%

Example of how this is Calculated?

CALCULATING INTEGRATION COSTS

We have a ERP integrations.

Our estimated customer data costs are 10% of BASE.

Customer Data Costs = 10% of BASE = 0.10 x $30,000 = $3,000.


Chapter 3: The Ecommerce Website Cost Formula in Action

Now that you’ve broken down the numbers, it’s time to walk through the formula itself. This is when we plug our numbers into the formula I laid out in Chapter 1.

Let’s assume some bases:

Annual Ecommerce Sales: $1,000,000

Average Product Value: $75

Total Products (including S/M/L size variations): 2,000

Total Orders: 2,500

Total Customers: 9,000

3rd Party Integration: <7

ERP Integration: Yes, Integrate

Let’s consider our function table to grab the right formulas.

Now all you have to do is plug in your numbers and add everything together.

BASE = AER x 3% = $1,000,000 x 3% = $30,000.00

Now let’s look at product multiplier. Our average product value is between $251 and $300, so we use 50% in our calculations.

Product Multiplier = BASE x 25% = $30,000.00 x 0.25 = $7,500.00

Then Product Data Migration cost. We have 2,000 total products, so we use 5% in our calculations.

Product Data Migration Cost = BASE x 5% = $30,000 x 0.05 = $1,500.00.

Next up is Order Data Migration Cost. We have 2,500 total orders, so the table says we should use the 5% multiplier.

Order Data Migration Cost = BASE x 5% = $30,000= x 0.05 = $3,000.00.

Customer Data Migration Cost. We have 9,000 total customers, so the table says we should use the 10% multiplier.

Customer Data Migration Cost = BASE x 10% = $30,000 x 0.10 = $3,000.00.

Next, let’s look at integration costs. We have 7 integrations, so, we’re going to use the 20% multiplier.

Integration Cost = BASE x 20% = $30,000 x 0.20 = $6,000.00.

Last but not least, let’s look at ERP integration costs. We need to integrate the ERP system, so, we’re going to use the 10% multiplier.

ERP Integration Cost = BASE x 10% = $30,000 x 0.10 = $3,000.00.

Now comes the easiest part: add everything together.

Total Cost = BASE + Product Multiplier + Product Data Migration Cost + Order Data Migration Cost + Customer Order Data Migration Cost + 3rd Party Integration Cost + ERP Integration Cost

= $30,000 + $7,500 + $1,500 + $1,500 + $3,000 + $6,000 + $3,000

= $52,500.

Remember: this number includes everything—design, development, data migration, integrations, etc.

If you wanted to do this by hand, now you know how. You should arrive at the same number as our Calculator.

Try the Ecommerce Calculator


Chapter 4: Common FAQ

Question: Does the estimate represent all costs in the project?

Answer: Yes, this estimate includes everything from assets to developmentdesign, development, data migration, and integrations.

Question: What is included in “design, development, data migration, and integrations?”

Answer: When we create a custom Ecommerce theme for a client, we do a lot more than just developing a custom theme. We’re usually leading an Ecommerce implementation project from start to finish, which includes all of the following features/integrations and bells and whistles within a project. 

Question: Why is an Ecommerce redesign is worth the investment?

Answer: Here are some resources about the value of website redesign: Is a Ecommerce Website Redesign Worth the Investment?

Question: Do you have additional tools to guide me through the Ecommerce redesign process?

Answer: Yes, please see our Project Planner, where we get more information to provide an accurate quote and proposal.

Question: Do you have a preference of Shopify or Woocommerce for my Ecommerce platform?

Answer: Yes we do! Please read this article to learn more about our preference: 🙂 Shopify vs. WooCommerce: What to Use for Your Ecommerce Redesign

Question: What does a typical Ecommerce redesign process include?

Answer: See this page: Our Process

Question: Does it matter which development agency I work with?

Answer: Yes a lot! Each development agency is different. If you hired 5 different agencies, you would end up with 5 unique projects. I like to compare this to custom home builders as if you hired 5 different custom home builders, you would end up with 5 different houses. For additional info, we wrote a post on 10 Questions You Must Ask Before Hiring An Agency.

Question: What should I know about maintenance and on-going support?

Answer: SG Web can provide your team ongoing maintenance, support, and updates on an as-needed basis. Here’s more information about our Maintenance and On-going Support packages:

Question: Where can I take the Ecommerce Calculator Quiz?

Answer: Take the quiz by clicking the button below.

Take the Quiz

Question: How do I get started on a project with SG Web Partners?

Answer: The best way to get started is by filling out our project planner and scheduling a time for a conference call. 

See the project planner


Overall, what are your thoughts? Would love to hear your feedback in the comments.

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