If you’re a business owner or entrepreneur you might be starting to consider building an e-commerce site. However, before you do you need to consider all the ‘hidden’ costs that you will mostly likely encounter. At first glance, opening an e-commerce site seems like an easy solution that will bring in mounds of cash to your business. However, hidden costs can quickly add up, leaving you wondering if it was all worth it. Here we are going to discuss the costs that most commonly creep up on unsuspecting e-commerce owners so you can go forth with your business plans without unwelcome surprises.
Any time a business starts offering services or products for sale online there are certain pieces that are required to not only make customers feel secure in giving you their payment information but also to keep those transactions secure and safe. One of these requirements is called an SSL (or Secure Sockets Layer) certificate.
The SSL certificate creates an environment of trust between you and your customers. It establishes a secure, encrypted connection using a public and private key between your customers’ computer and your site. Any information that is exchanged with a website that has an SSL certificate is encrypted and secure. Sites with SSL certificates generate a lock symbol or green bar in the browser so customers have a visual clue that their payment information is safe when dealing with you and your e-commerce site.
These certificates aren’t really an option to e-commerce sites because most, if not all, merchant services will require that your site be SSL certified before you can set up merchant services with them. (See below for more about merchant services)
How much does it cost to get an SSL certificate? It depends on the vendor you get it from but generally the cost for an SSL certificate for one website will be between $150 and $300 per/year. You might also find a hosting or shopping cart provider that will provide you with an SSL at a monthly cost. This is a required cost, since without this security certificate you are leaving your customers’ sensitive information open to being stolen and your business open to risks as well.
Now running an e-commerce site isn’t as easy as setting up a storefront and getting an SSL certificate. You still need a way to get the customer’s payment information from them and into your business’ bank account, and that’s not possible without using some form of Merchant Services. Merchant Services allow your e-commerce site to accept and process payments from customers. These payments can be in the form of Visa, MasterCard, Amex, or even e-checks, debit, or gift cards depending on the Merchant Service you sign up for.
Costs fluctuate greatly depending on the types of services your e-commerce site requires and any added features you might want to add but generally you will pay a flat one-time set up fee and a monthly gateway fee. On top of that you will generally pay a small percentage (1-4% typically) and a small flat fee (ex. .30 cents) per transaction that is processed on your site. Generally these fees are minimal in the big scheme of things and you will only have to pay the transaction fees if you actually have customers buying things, so that’s a good thing.
A huge responsibility of having an e-commerce site is making sure you keep your customers’ private, sensitive information safe at all times, and with that responsibility comes the cost of keeping all software and security for your site up to date at all times. Sometimes these updates will be free, but many times it requires the purchase of new software or updates in order to be compliant. Depending on what software and security measures you use on your site, the prices will vary.
An e-commerce shopping cart most likely will be one piece of software that you have to maintain and update. Shopping carts allow you to give your customers a shopping experience from start to finish without leaving your site. Doing this makes customers feel more secure than hopping around to other sites to pay. Shopping carts provide buttons that allow customers to add products and services to an e-commerce cart directly on your site and once they are ready to check out they can complete their transaction directly on your site.
Costs for shopping cart software can range from free to hundreds of dollars depending on how many payments you take on your site. There are many companies out there that provide these services, including some Merchant Service companies. As for security updates, those too can fluctuate depending on what things you are utilizing on your site. Just be aware that these types of costs do lurk around on an e-commerce site.
Let’s face it. Most people are visual creatures, especially when it comes to shopping, and they buy what they are attracted to. If you are going to set up an e-commerce site, it would be logical and beneficial to make sure that the product photography you use be of top quality. The quality of your product photography can mean the difference between selling lots of products and services or going out of business. Make sure the photos on your site represent the products or services you are selling in the best light possible.
Costs for product photography can also vary depending on whether you contract a design company to take the photos, you hire a freelance photographer, or even take them yourself. It’s okay to take the photography yourself, but just make sure the end results look professional and really show your products in a way that’s appealing to the customer. There are options in this category to meet the needs of every e-commerce site. You just have to shop around and decide how much your budget will allow. For more information on product photography click here.
Shipping, Handling & Fulfillment
Once you’ve got all the basics above figured out and people are buying from your e-commerce site, then you need to get the products or services they’ve purchased to them as quickly as possible. This feat requires you to pay shipping, handling, and fulfillment charges. Depending on how big your business is these fees could range from packaging and postage fees at your local post office to paying a fulfillment company to ship products to your customers.
Costs for shipping, handling, and fulfillment services can also vary greatly depending on how big your operations are and how many customers you have. Generally fulfillment services charge per item ordered and give bigger discounts the larger the orders are.
Marketing is another ‘hidden’ cost that many don’t think about when setting up an e-commerce site. However, once the e-commerce site is set up you might want to do some marketing around it to let people know where you are and what products and services you have to offer them. This type of thing doesn’t just happen totally by word of mouth; the days of “if you build it, they will come” on the Internet are over. Generating website traffic takes work! You have to give it a little effort, time, and money because it requires a well thought out marketing plan.
Again it’s difficult to put an exact cost on many of these things because they depending on what you’re selling, how big your business is, and how much of a budget you can afford. However, it is possible to have very low-cost marketing plans that include flyers and posters to more elaborate marketing plans run by major marketing firms. It all depends on how big you are and how much you can afford. Also consider Social Media, Pay-Per-Click, Cart Abandonment software and more.
Now this isn’t a definitive list of hidden e-commerce costs. Technology is always changing and with that change comes the possibility of new costs plus, depending on your business, there may be other services or tools that you need that aren’t listed here. However, these are the most common ones that most e-commerce sites will encounter.