How to Calculate the Real Cost of an Ecommerce Solution: Crunching the numbers to figure out total cost of ownership

“How Much Does It Actually Cost?”

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This is the question every decision-maker asks when investing in any product or service for their business. Understanding the cost of an e-commerce solution is vital when planning budget allocation, weighing the potential return on investment (ROI), and total cost of ownership (TCO).

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The answer is not as simple as you might think—or hope—when it comes to e-commerce technology.

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Building a Better E-commerce Model - Digital, Scalable, and Unified

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Almost every modern company has some form of web presence, regardless of industry or business type. Most companies sell goods or services online and need a platform to support those transactions. An e-commerce solution like NetSuite is an excellent unified platform that integrates functions like order and inventory management, financials, and customer relationship management.

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The e-commerce industry, in specific, demands a solution that's both easily adaptable and scalable. Ecommerce businesses have to adapt to changing needs of an online business. Customers expect a highly personalized experience when shopping on your online business at every touch point, from when they first enter your site, all the way to making a purchase. Customers have come to expect flexible payment options, personalized product recommendations, and smooth checkout processes.

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In order for your e-commerce business to stay competitive, it’s important to think of how to continually boost sales and increase customer satisfaction as technology develops and consumers expect more personalized shopping experiences. An ecommerce solution, like NetSuite, helps your ecommerce store streamline operations and improve efficiencies at every touchpoint of the customer’s journey. By leveraging a unified platform, e-commerce businesses can drive revenue through more efficient processes and greater customer satisfaction.

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NetSuite integrates the entire business, from order and inventory management, complete financial control and management, and comprehensive customer relationship management capabilities.

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Deciding to implement or re-platform to a new e-commerce solution can be an effective way to boost revenue, but just like any other valuable investment for your company, it comes at a cost. And that cost is not as simple to calculate as you might think.

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From licensing to implementation, integrations to add-ons, transaction fees, and beyond, there are numerous ways for costs to mount up for your organization’s total cost of ownership for the solution over time.

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The importance of accurately estimating the costs associated with implementing and maintaining an e-commerce solution cannot be overstated. Many decision-makers may initially focus solely on the upfront costs, such as licensing fees, but it’s crucial to consider the long-term expenses as well. This includes ongoing support, updates, and potential scalability needs as your business grows.

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• ‍Licensing Fees: The initial cost of obtaining the software license is often the first consideration. However, it’s important to delve deeper and understand whether the licensing model is based on a one-time purchase or recurring payments. Recurring fees can significantly impact the TCO over time.
• ‍Implementation Costs: Implementing an e-commerce solution involves various expenses, including customization, data migration, and training. These costs can vary depending on the complexity of your business processes and the level of customization required.
• ‍Integration Expenses: Integrating the ecommerce platform with other systems, such as CRM or ERP software, is essential for seamless operations. However, each integration comes with its own set of costs, including development time and potential third-party fees.
• ‍Add-Ons and Extensions: While the base ecommerce platform may meet most of your business requirements, you may need additional functionalities through add-ons or extensions. These can include features like advanced analytics, marketing tools, or payment gateways, each adding to the overall cost.
• ‍Transaction Fees: Many ecommerce platforms charge transaction fees for each sale processed through their system. While these fees may seem small individually, they can accumulate over time, especially for businesses with high sales volumes.
• ‍Maintenance and Support: Regular maintenance and support are necessary to ensure the smooth functioning of your ecommerce platform. This includes software updates, security patches, and technical assistance. Ignoring these aspects can lead to downtime and potential revenue loss.
• ‍Scalability Costs: As your business expands, your ecommerce solution must scale accordingly to accommodate increased traffic, transactions, and data volumes. This may require upgrades to infrastructure, additional licenses, or customization to meet evolving business needs.
• ‍Hidden Expenses: It’s essential to be vigilant for hidden expenses that may not be immediately apparent. These can include costs associated with downtime, compliance requirements, or unforeseen technical issues that require urgent resolution.

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Calculating the TCO of an e-commerce solution requires careful consideration of all these factors. By taking a comprehensive approach and factoring in both upfront and ongoing expenses, you can make a more informed decision that aligns with your budget and business objectives.

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This e-book was created by the team of experts at Para to highlight some of the important variables to consider and include in your TCO calculation. If you are looking for further information or pricing specific to your organization, we offer free initial consultations. Claim your Free Consultation, now.

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