How Much Does e-Commerce Cost?

The simple answer is that e-commerce is inexpensive enough that many small merchants are using it.

The Web Site

The web site is going to cost more simply because you have to add your catalog to the usual marketing and contact pages. And you have to include the administrative pages that handle checkout and shipping. But all of that is manageable, and of course it's a one-time cost except for the much smaller cost of updating the catalog now and then.

e-Commerce Costs

Making the funds move from your customer's credit card account to your bank account used to be the big challenge of e-commerce. Today, the challenge is gone but now there are more choices. Our job is to help you make the best choice, based on your expectations for your business. In the end, the cost will be only slightly more than over-the-counter credit-card transactions.

The specific costs depend on the size of your business, the number of transactions per month you expect, and whether you already accept credit cards in your business. Smaller businesses pay more to handle credit cards, but the good news is that as your business grows the cost per transaction goes down.

Typical Costs – Small Businesses

If you have a small business, the best place to start is with PayPal (http://www.paypal.com). PayPal used to require your customers to open an account with PayPal, a major disadvantage that discouraged a lot of potential users. PayPal has now seen the error of its ways and no longer requires this, making it our choice for small businesses.

PayPal handles all the gateway and merchant account issues and also offers ways to set up a series of Pay Now buttons on your website or even a shopping cart system if you have a larger catalog of products. PayPal's costs are very reasonable: 2.9% plus $0.30/transaction.

Typical Costs – Not So Small Businesses

Small businesses get the best combination of needed features and minimum effort through the use of a turn-key system. This is usually a system maintained by a hosting service – either the same one that hosts your main site or another one – so all you or your webmaster has to do is set up the parameters for each product.

Typical costs for such hosting is about $50/month. Fees for the merchant account and payment gateway are about $25/month plus a percent of each transaction (typically 2.3-2.5%) and sometimes a per-transaction fee (about $0.25). These are the recurring costs. Setup fees can be $350-$500 or more.

On our page on e-commerce safety, we mention that there are several levels of security. If you opt for higher security, you will be charged for that also (usually a per transaction charge).

Summary

So, while the costs are not trivial, they are reasonable and can be scaled to your business. Of course the real test is whether it makes money. But if you have a going business now that makes a profit, you should be able to add an e-commerce arm that also makes money for a reasonable investment.

Now let's talk about how safe e-commerce is, for you and for your customers.