A Buyer’s Guide To Magento Website Cost
Are you searching for an eCommerce platform for your business and stumbled across Magento? Pretty sexy, isn’t it? Magento is chocked full of awesome eCommerce features and powers some of the world’s leading brands, including Burger King, Nike, Helly Hanson, Warby Parker, Vizeo, Land Rover and Olympus. The initial excitement you experience from such a discovery quickly turns to apprehension as it is not very clear on how much Magento actually costs. In this article, we will discuss the options of the platform and help determine the proper Magento website cost for your business.
What is Magento?
Magento is a leading open source eCommerce platform. Every year, Magento handles over $100 billion in gross merchandise volume and powers close to 800,000 eCommerce websites, according to BuiltWith. Although these are impressive numbers Magento has a smaller market share than more popular eCommerce platforms including WooCommerce, BigCommerce and Shopify. The reason for this is quite simple. Magento costs a helluva lot more to build your eCommerce website on. From my experience, any smart business owner would choose Magento based on its features and performance to power their eCommerce website. However, the cost of building a Magento website and maintaining it is cost-prohibitive for most small businesses. If your business generates less than $1 million/annually in online sales I suggest you find a more cost-effective solution, like with the platforms I mentioned above.
How does Magento compare to its competitors?
Providing an accurate cost estimate to implement Magento is not a simple task, and there are considerations that will determine the precise price for development and support. Before we discuss these considerations let’s start by comparing the competition.
Shopify is a proprietary eCommerce platform for online stores and retail point-of-sale systems. With Shopify, you do not need the added cost of hiring a developer. Shopify is known as a DIY store builder, and with a little perseverance you can create your eCommerce website on your own. Shopify offers a suite of web-based tools for smaller merchants to simplify the process of running an online business. Shopify offers three different plans and price-points, based on features and what your budget can afford. Prices range from $29/mo for the basic package to $299/mo for the advanced package.
Estimated cost: $360 – $3,600 annually
BigCommerce is similar in many ways to Shopify, but the consensus is that it’s just not as good. BigCommerce offers free themes that provide a good starting point for building an eCommerce store on a tight budget. BigCommerce’ pricing plans use the same model as Shopify and starts at $29.95/mo for their basic plan. Their Pro plan starts at $299.95/mo for less than $400k in eCommerce sales, plus an additional $150/mo for each additional $200k in sales.
Estimated cost: $360 – $3,600+ annually
WooCommerce is a plugin that allows you to run an eCommerce store with WordPress. The WooCommerce plugin is free, but you can have additional costs such as premiere themes and extensions. In addition, you will have developer fees to create website unless you are a programmer. WooCommerce is an excellent choice for a start up business or anyone working on a tight budget.
Estimated cost: <$5K
How much does a Magento website cost?
Okay, so we’re feeling a little bit better based on the competitor’s pricing models. But don’t get too excited just yet, because with Magento you will be moving into a different stratosphere of cost. In fact, we’re not even on the same planet as the competition. Before we can get our rough estimate on the average cost of a Magento website, let’s review the different editions Magento offers.
Understanding Magento Editions
Magento offers three different editions of its platforms:
- Magento Open Source
- Magento Commerce
- Magento Commerce Cloud
Depending on the platform you choose, the project cost will vary significantly.
Magento Open Source
Magento Open Source is a free edition of the platform that targets small businesses with a modest budget. This version can be downloaded at Magento.com and is completely free of charge. Magento offers no technical or customer service support for this edition.
Bear in mind that although the open source edition is free the cost of development isn’t. Magento is well knowns as a difficult platform to develop, which is why you only want to work with an agency that has extensive experience working with it. Based on our own experience, the price for a Magento Open Source website that includes standard eCommerce features with limited integration with other platforms starts at around $15,000.
Magento Commerce & Commerce Cloud
Magento Commerce and Magento Commerce Cloud provide advanced features that target larger eCommerce retailers that require more robust functionality and customer management. The cost of using these two versions depends on the gross sales revenue:
As you can see, the costs for a Magento Commerce license starts at $22,000/annually and goes all the way up to $190,000/annually for merchants that generate $25,0000,000 or greater in online revenue. These costs are for the license only, and it is common sense to expect that with advanced features and functionality the development cost will grow exponentially. A custom-designed Magento website using this edition will easily surpass $100,000 in development costs and can go much higher. This is the platform for the big boys of eCommerce.
Click Here to learn about the features comparison for Magento Open Source and Magento Commerce.
What are the additional Magento website costs we can expect?
If you’re still with us you have made it past the initial shock of the cost associated with developing a Magento eCommerce website. But that’s just the beginning. In addition to any annual licensing fees, you will have two other significant expenses you can expect.
Most host companies offer a suite of hosting options:
Shared hosting is the cheapest and most popular choice, but you get what you pay for. When you have a shared host account, you are literally sharing the server space with several other websites. This is fine for low traffic websites, but as your traffic increases you will need to consider upgrading as the shared server will struggle with spikes in site traffic, both from your website and other websites on the shared server.
VPS hosting is a big step up from shared hosting. With VPS, or Virtual Private Server, you will get better performance and capacity for the server to manage your traffic spikes, leading to increased website speed. VPS also use SSD, or Solid State Drives, over traditional hard drives to boost performance. With VPS, you are still sharing the server with other websites, but your site will have its own dedicated portion of the box.
Dedicated hosting is the best option and also the most expensive. With a dedicated server, you are literally renting the entire box for your website. Larger websites, such as Amazon or Apple, will run their website on multiple dedicated server to manage the massive traffic their websites receive. Dedicated hosting can be extremely expensive and should be considered overkill for most website needs.
The cost for hosting a Magento Open Source website varies based upon your host provider. Costs of unmanaged hosting can start at $10/mo and can reach up to $250/mo, whilst the price for managed hosting can start at around $190/mo.
For websites built on Magento Commerce the cost for managed hosting starts at $500/mo for dedicated boxes. Magento Commerce Cloud is hosted on the cloud, so the hosting fees are already included into the license.
As with any website, you should factor support into your overall budget. The cost of support and website maintenance will vary depending on your web developer and your site requirements. Services that fall under support can include Magento core updates, plugin updates, content review, mobile device review and SEO. Support plans are designed for your specific needs and can cost upwards of $2,500+/mo.
Magento is a powerful tool for larger businesses that seek to increase their online sales using advanced features and functionality that will provide them with better customer service and competitive advantages. Unfortunately, the cost of building and maintaining a Magento website is simply too expensive for most smaller businesses, and the platform remains out of reach. Bottom line, with a Magento website you can expect to spend between $150,000 and $350,000 per year.
But don’t forget about Magento. As your business grows and sales increase, you might just find yourself in a position in the not-too-distant future to take full advantage of the power of Magento.
D E E P B L U E Knows the Market
If you are interested in creating a Magento eCommerce website for your business then give us a call at +1.888.938.8289, we’d love to work with you.
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