When ecommerce website cost comes up, the conversation usually centres on the setup fee. The lines that shape the budget more arrive after the store goes live. Setup is paid once. The subscription is paid every month, payment fees and delivery on every order, and they continue for as long as the store is open.
A platform's pricing page shows the monthly subscription; to see what you keep from an order, other lines have to be added. We build stores on hosted platforms and on custom builds, so we set out the costs for both. First we separate each line by when it is paid, then we divide the total across a single order.
Where does the setup fee sit in the total?
Costs fall into three groups according to when they are paid. The figure you see when collecting quotes is usually only the first group.
Paid once
- Design and build: adapting a theme to your brand, or writing the store from scratch.
- Product import: from a spreadsheet, a supplier feed or an existing store.
- Setting up payment, delivery, invoicing and accounting connections.
- Migration, where there is one: product, customer and order data from the old store, plus redirects from the old addresses.
- A theme licence, if it is bought outright.
Paid monthly or yearly: platform subscription or hosting, paid apps, the domain and, if you also sell on marketplaces, integration software.
Taken from every order: the payment provider's fee, payment method fees, any platform transaction fee, invoicing charges that rise with order volume, delivery and packaging.
To compare the setup fee with monthly costs, choose a period; this article uses two years. Divide the fee by 24 and write it next to the monthly costs. You can then see the month in which a proposal with a low setup fee and high running costs catches up with the more expensive one. As order numbers grow, the largest share of the total moves to the lines taken from each order.
Hosted platforms and custom builds spread these three groups differently. We compare the two on our platform or custom build page.
Monthly platform and app costs
On a hosted platform, the monthly cost is usually made up of these lines:
- Platform subscription. Plans are usually tiered by features, staff accounts or sales volume. Work out your tier from the number of orders you expect a year from now.
- Theme licence. Some themes are bought once, others renew every year. Ask how long the update entitlement lasts before you buy.
- App subscriptions. Product reviews, advanced filters, abandoned basket reminders, invoicing or courier connections often come as separate apps, each billed on its own. These lines are missing from the pricing page, and they lift the monthly total above the subscription.
- Currency. Some platforms and apps bill in US dollars, so the sterling amount moves with the exchange rate. Mark these lines separately in the budget.
A custom build has no platform subscription. Infrastructure costs take its place: hosting, backups, the storage service that serves product images and the service that sends order emails. On top of these come keeping the software up to date and a development budget for new requirements. With open source platforms running on your own server, you pay for hosting and, if you use paid extensions, their yearly licences.
Whichever structure you choose, assume the store took no orders that month when you add up the lines in this section. The result is the amount you pay even without a sale.
Costs taken from every order
The rates for these lines vary by provider and contract, some depend on basket value, and all of them change over time. For that reason the table carries no rates; each line comes with a question to ask the provider.
Line | How it is charged | Question to ask the provider |
|---|---|---|
Payment provider fee | A percentage of the basket value; some contracts add a fixed fee per transaction | What is the rate for a standard UK card payment, is there a fixed fee per transaction, how many days until funds reach my account, and is there a chargeback fee? |
Payment method fees | Rates can differ for international or commercial cards, digital wallets and buy now pay later options | Which payment methods carry a different rate, and can I choose which ones appear at checkout? |
Platform transaction fee | Some hosted platforms charge an extra fee per sale, sometimes only when you use a payment provider other than the platform's own | Does my plan include a sales commission or transaction fee, and when does it apply? |
Invoicing or accounting software | Plans are often tiered by the number of invoices or transactions; above the limit you move to a higher tier | How many invoices or transactions does my plan cover, and what happens when I go over? |
Delivery | By parcel size and weight bands and destination; contract rates depend on shipping volume | How are the size and weight bands set, what does a return cost, and is there a surcharge for remote postcodes? |
Packaging | Boxes, void fill, tape and labels | How many box sizes do your products need, and what does each one cost? |
In two cases these lines come out larger than calculated. If you offer free delivery above a certain basket value, the delivery cost on those orders comes out of your margin. The outbound and return delivery of a returned item also often falls to the seller; if you know your return rate, spread that cost across all orders.
How to calculate cost per order
The calculation is a single line:
Cost per order = (monthly fixed costs ÷ monthly orders) + variable costs per order
Fill in the table below with your own figures. Divide yearly lines by 12 and the setup fee by the period you chose. Keep every figure either including or excluding VAT, the same way throughout.
Line | Type | Monthly amount | Amount per order |
|---|---|---|---|
Platform subscription or hosting | Fixed | ||
Theme licence | Fixed | ||
Paid apps | Fixed | ||
Marketplace integration software | Fixed | ||
Setup fee ÷ 24 | Fixed | ||
Payment provider fee and payment method fees | Variable | ||
Platform transaction fee | Variable | ||
Invoicing or accounting software | Variable | ||
Delivery (including a share for returns) | Variable | ||
Packaging | Variable | ||
Total | Fixed total: | Variable total: |
Divide the cost per order by your average basket value and you see what percentage of each sale goes on these costs.
Worked example (assumption). The figures were chosen to show how the calculation works; they are not data from any store or provider tariff. Monthly fixed costs total £700 and variable costs per order total £9 (payment fees £2.50, delivery £6.00, packaging £0.40, invoicing £0.10). The average basket is £75.
100 orders a month | 400 orders a month | |
|---|---|---|
Fixed cost share per order | £7.00 | £1.75 |
Variable costs | £9.00 | £9.00 |
Cost per order | £16.00 | £10.75 |
Share of basket value | 21.3% | 14.3% |
When orders rise fourfold, the fixed cost share falls from £7.00 to £1.75 per order; variable costs stay where they were. In this example, the payment and delivery contracts account for more than half of the cost per order at both volumes. The monthly subscription and the number of apps weigh on the figure while orders are few, and their effect shrinks as volume grows. You can run the same calculation with your own figures.
COST PER ORDER WITH YOUR OWN NUMBERS
share of fixed costs £7variable costs £9the full bar is the basket value
COST PER ORDER
£16
SHARE OF BASKET VALUE
21.3%
This figure leaves out the cost of the product itself and advertising spend; both are added as separate lines when you work out profit.
What changes if you also sell on marketplaces?
If you sell on marketplaces such as Amazon or eBay alongside your own site, two lines are added to the calculation.
The first is integration software. Ready-made tools that manage stock, prices and orders from one place usually run on a monthly subscription, and the fee may be tiered by the number of connected marketplaces or by order volume. It goes into the fixed costs in the table. If you have a pricing rule the ready-made tool cannot handle, or your own ERP, the connection is developed for you, and a development fee takes the place of the software licence.
The second is the loss that comes from stock falling out of sync. When stock is not managed from one place, a product that sells out on one marketplace can stay on sale in other channels. An order that cannot be fulfilled is cancelled and can affect your seller performance metrics. This loss never appears as a separate line on any invoice; it enters the calculation through your cancellation rate.
Each marketplace's own fees vary by category and are published by the marketplace. The same product has a different cost per order on your site and on a marketplace. Fill in the table separately for each channel and you can see what remains in each one.
Where do costs grow later?
Some costs are not foreseen at setup and enter the budget months after the store opens.
- An accounting or ERP connection added later. As orders grow, keying invoices and stock movements into your accounting software by hand becomes a workload of its own. If the software you use, such as Xero, QuickBooks or Sage, has no ready connection to the platform you chose, the connection has to be developed. Ask whether a ready connection exists before you choose the platform; the answer can change the choice.
- A theme change. Customisations made on a theme often do not carry over to a new one; when the design is renewed, that work is done again.
- Apps piling up. Each app added for a new need raises the monthly total in small steps. Reviewing the app list once a year and cancelling the unused ones keeps this line under control.
- Migration. Moving the store to another platform means transferring product, customer and order data and redirecting old addresses to new ones. A store moved without a redirect plan can lose the visitors it gets from search engines.
Migration is usually triggered by a need the platform cannot meet. Trade pricing for resellers, subscription selling and two-way data flow with an ERP are typical examples. Some of these needs are already clear at setup and can be taken into account when choosing.
Where can you save?
Most of the saving comes from the lines paid every month and on every order.
- Review your paid apps. Every paid app added at setup is paid for every month. Removing the ones you do not use feeds straight into cost per order while orders are few.
- Renegotiate payment and delivery contracts as volume grows. As order numbers rise, most of the cost moves to variable lines. Payment rates and delivery prices can be discussed again with the provider once your shipping volume has grown.
- Plan later connections at setup. If ERP, accounting or marketplace connections are left out at the start, they are revisited later together with the data structure, and that work can cost more than the original setup.
- Open accounts in your company's name. When the domain, payment provider and delivery contracts are in your company's name, you do not have to set them up again when you change platform. We cover this in detail in who owns your website.
Comparing proposals on the same lines
When two ecommerce proposals sit side by side, the eye goes first to the setup fee. The total, though, is often changed by lines the proposal leaves out. Before comparing, ask each provider for the same information:
- Which work the setup fee includes: design, product import, which connections, migration and redirects.
- Who the platform subscription, theme and apps are paid to, in which currency and how often.
- Which apps in the proposed setup are paid, and what they total each month.
- Whether connections for your accounting software and marketplaces are ready made or will be developed.
- For a custom build, whose name the hosting account will be in and who pays for it.
- Whose name the store account and source code will be in.
Then fill in the table above for each proposal and put two figures side by side. One is the 24 month total, the other is the cost per order at the order volume you expect. The difference between a proposal with a low setup fee and high monthly costs and one built the other way round shows in these two figures.
To go through a build proposal line by line before you sign, you can use our website proposal checklist. We describe what a build covers in the scope of an ecommerce build; the fee is set out in a written proposal once your scope is clear.