Attempting to start an E-commerce project can seem like a daunting task, with lots of things to consider. Take a look at these 5 simple factors that you should incorporate into your budget!
When you're drawing up a budget for your E-commerce project, you need to make sure that you arrive at a reasonable and sufficient amount. If the budget's wrong, the entire project will go into disarray and you'll be left with something far different from your dream website.
Consider the following 5 things when budgeting to ensure that you don't get any nasty surprises!
1. Designing and building your website
When budgeting for your project, this is the main upfront cost that you need to consider. While the other costs in this list aren't necessarily paid upfront, they are ongoing throughout your E-commerce career.
There is often a dilemma that people face when planning their E-commerce business, which is whether they should buy pre-made themes for their website or have one custom made. There are benefits to both options, we'll start with existing themes:
- Firstly, it's cheap. Most themes aren't too expensive, never costing more than £120, and for someone on a minimal budget they could be a cheap alternative.
- Secondly, it's a solution if you want to get online very quickly; it doesn't take long to install a theme onto your website and you can, theoretically, start selling faster.
However, if you want to customise it in any way, add any new features or something similar, then things can begin to get a little tricky! Without a good understanding of code, you'll find it difficult to get your website looking and functioning exactly how you want it to, which can be frustrating. If you approach a good designer to make your website for you it'll be easier to use and SEO optimised.
It's also pretty hard to carve out a unique brand when your website is using the same theme as thousands of others! And without a unique brand, it's much harder to do effective marketing.
Now, a look at prices.
On a hosted platform like Shopify, you wouldn't pay more than £120 for an off-the-shelf theme. If you wanted an agency to set up the store for you, you'd be expected to pay around £1000 for a complete store setup, and prices from £3000 for a bespoke designed theme that is unique to your business.
On a self-hosted platform like Magento or Drupal Commerce a build project would be at least £10,000, with some more complex sites being upwards of £50,000. Note, also, that Magento Enterprise has an annual license fee.
There are benefits to both custom websites and templates, and they should be considered when factoring in the cost of designing your website. Again, what you opt for is totally dependent on your needs as a business.
2. Financial transactions
An often-forgotten pesky thing, the cost of financial transactions can be something that could break your budget if you fail to factor it in. Depending on the payment gateway you use, the cost can vary, but it will often be a small percentage of the order value.
A low cost alternative would be to use Shopify Payments as part of a Shopify website, which ensures that you pay no transaction fees unless you use an external payment gateway, such as PayPal. We have a full comparison of the UK payment gateways you can use on Shopify here.
If you use Shopify Payments however, there is a fee of 1.8% + 20p – 2.4% + 20p, depending on your price plan, for every transaction that uses a credit card, so bear that in mind too.
It's worth noting that you'd also have these costs with a bricks-and-mortar store, except for when a customer pays with cash, so don't be put off to start up an E-commerce business!
3. Hosting and security
This is a recurring cost throughout your business's life, and should be considered in both your immediate and long term budget. It is typically a monthly fee, and prices can vary depending on the hosting provider you opt for, but the security will often be included into the package by the host, along with some storage for your content. Here are some examples of different hosting packages:
- SiteGround offers plans from £6.95 - £19.95 per month, which would give you 10GB - 30GB storage, respectively. These are competitive prices, but some of the essential features like backup and priority assistance, aren't included in the cheaper plans, so your business could suffer if you run into any issues with your website.
- 34SP will give you 15GB - 82GB storage for £14.95 - £59.95 per month, without leaving out important features from your service!
- Shopify's price plans range from around £9 to £114, and will get you 1GB to unlimited storage. This fee includes secure, unlimited E-commerce hosting with high quality servers.
It's worth pointing out that, aside from Shopify, none of the above include support. If you pay an agency to do this for you the cost will be more, typically from £300/month, but sometimes up to £2000/month for more complex E-commerce sites such as Magento.
Each of these companies have their unique selling points, and your choice will ultimately rest on the individual requirements of your E-commerce business.
4. Marketing
There are rare success stories of E-commerce businesses being worth multiple millions after having zero marketing budget. Though, to be honest, these stories are rare for a very good reason: without fantastic marketing, you won't generate traffic.
Content is king, Bill Gates once famously said, and it's true. Content marketing remains a fantastic option if you have the time at your disposal to to build up an engaging library of content. There is no financial cost incurred - the main cost to content marketing is that it takes a lot of time. To build an effective library of content, you'll need to put a lot of effort into both strategy and production. Take a look at this simple guide to content marketing.
A popular technique for marketing a business is to use Google AdWords. AdWords is a Pay Per Click (PPC) service that advertises you on the sidebar of Google searches relevant to your business. The cost of this service varies depending on what keywords you wish to trigger your advertisement. A main benefit to using AdWords is that you only pay for the advertising you receive, so no nasty hidden fees! You choose how much you think your advert is worth, 10p for example, and only ever pay that when someone clicks on it. How high you are in the advert rankings, your visibility, is determined by a combination of two things: how much you're 'bidding' for your advert, and how high the quality of it is (i.e. how relevant it is to what the user is searching for). It can also be tailored to certain times and geographical regions, so you know that you're targeting the exact audience you want to! In terms of real-world price, AdWords campaigns normally start at around £400/month if you're serious about getting results.
Another popular marketing technique is the use of social media. While this is technically 'free', you should keep in mind that you either need to pay someone to do this for you, or spend a lot of time doing it yourself. Whether you do this yourself will depend a little on your budget. If instead you decide to outsource your social media marketing to an agency, you'd be expected to pay:
- £1300/month - £2600/month for Twitter.
- £1600/month - £3200/month for Facebook.
Print advertising is still used by some businesses that wish to market themselves, though it is arguably beginning to lose its popularity in the digital age. The cost of it depends entirely on the publication you wish to market in, and a further drawback is that its effectiveness and reach is hard to track. It's also worth considering that there are more suitable places you could advertise, if you're targeting online shoppers, than in paper publications.
Affiliate marketing is another way you can promote your business, and is the process of you letting other people market your products in return for a percentage of sales that you generate because of their publicity. This can be costly to your business as the affiliate will take always take a percentage as a commission. This can vary greatly, with some taking 6% and others taking 50%, largely depending on the type of product you are marketing. If you use an affiliate network - a company that allocates you with a suitable affiliate - they will also take a fee in return for you using their network.
Take a look at this ultimate guide to getting traffic and generating sales.
5. Time
No E-commerce success has ever happened overnight. If you are serious about starting a prosperous business then it's going to need a lot of your time.
It's been said before, but time is your most valuable commodity. When you realise just how valuable your time is, your productivity will grow and your customers will notice the difference. While it's not something that necessarily has to be budgeted, you must always be realistic with time when you are planning an E-commerce project.
Time affects many aspects of E-commerce, from shipping to customer service, and the phrase time is money rings true. If you put too much of your time into one aspect of your business and neglect another because of it, your customer will suffer and so will you.
Conclusion
These are the main things you need to consider when you're budgeting for your project, so leave any of them out at your own peril!
If you want to discuss your project with us then please feel free to get in touch to have a chat about your requirements.