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Average Cost for Ecommerce

by Mike Banks Valentine

In helping small business online I'm often asked for "Average" prices for establishing an ecommerce enabled presence online.

There really is not an *average* cost for ecommerce because there are far too many factors to consider in establishing a secure and effective shopping environment and securing ordering information. The number of products and their pricing, sales volume and profit margin affects the type of shopping cart software dramatically. The number of customers you expect and whether you're maintaining a permanent customer database for future marketing reference determines many expenses.

I have set up shopping carts for online businesses selling a high-profit item with low volume of sales through a *free* service that only takes a 10% cut of the sale price with NO monthly fees or ongoing bank or merchant account fees. On the other hand, if you have high volume sales with low margins and more than 10 or 15 products to sell, it varies from a very basic $20 to $50 monthly fee for the secure ordering environment, (*without* database needs for customer retention or product inventory, shipping and no updating of merchandise prices, etc.) to a fully automated system with all of the above and additional software requirements. It could be thousands of dollars monthly because of complex customized solutions required.

The variables are too great to define an average price. What you sell, how many sales you make, what your profit margin is and the extent of your database and custom software required, all combine to determine a price for YOUR needs.

Security of customer information is critical and should always be of paramount importance. Most online shopping cart hosting services can be trusted overall with the security of your data if you choose a well known and respected company. That should always be well researched before you commit to using any particular service.

If you pay the additional expense of hosting your own secure server and maintain sensitive and private customer information yourself, then you must simply follow sensible security recommendations that have become internet industry standards. Once again, rely on a well respected professional team to set up a secure environment for you. Sometimes this is offered as a benefit of your hosting company, or you might have your own server with an IT staff to maintain and protect information. As stated before, the sales volume, profit margin, number of products and complexity of your database needs will determine how far you need to go. Starting with the simplest hosted third party service and minimal record keeping done by hand up through a fully automated complex system with built-in security measures.

There is no quotable average because your needs are not the same as that of other online businesses. If you operated an online business with a sales figure, profit margin, overhead expenses and operating costs that were the same as a similar business, *then* you might determine an average for that sales volume, within that industry and with that particular business model.

Return on investment should be a standard starting point for determining your needs in the planning stages, so you absolutely must assesss those needs before you launch your online sales.

All of these variables are a part of establishing a customized solution for your business.

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About the Author:

WebSite101 "Reading List" Weekly Netrepreneur Tip Sheet Ezine emphasizing small business online http://website101.com/arch/ e-tutorial online at: http://website101.com/shortcourse.html By week's end you're ready expand your business to the web!




















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