The True Value of E-Commerce Websites: How much does an E-Commerce website cost?

In today’s digital age, the importance of e-commerce websites is undeniable. Yet, do people truly recognise their value, especially when compared to traditional brick-and-mortar setups and other sales avenues? Let’s explore this topic, exploring the costs involved and the broader implications for businesses.

The Cost Conundrum

When it comes to e-commerce website development, the question of cost inevitably arises. At Bronco, we specialise in crafting bespoke e-commerce systems. Our starting price for an e-commerce website is from £15,000 (as of Feb 2024), while a more comprehensive system can be £20,000 and upwards.

Elsewhere some agencies will offer solutions using platforms like Shopify or WooCommerce at a fraction of this price. While, other agencies may utilise more specialised off-the-shelf solutions, yet command prices several times higher than ours.

Each option has its pros and cons, but we prefer bespoke platforms so that we may deliver a solution that is best suited to the specific needs of our client.

Ultimately, the cost of an e-commerce website hinges on what a client is willing to pay for what they need or value most.

A Case Study

Consider one of our clients, a business established in 2019, whose website saw steady turnover after launch, with trend busting growth in 2023 resulting in an end of year turnover of £250,000.

Over the five years we have worked with this client, they have invested £15,000 in the initial development and subsequent updates of a lightweight e-commerce system – a modest investment in comparison to their current turnover.

While their initial investment may have been constrained by a lack of startup funds, their growth has allowed them to invest more in the marketing of the website and building their brand. Through 2023 their online marketing spend was close to £90,000.

Certainly, they will have other business costs that we aren’t privy to which increases their costs of running an online business, but these are costs many businesses will incur.

Exploring Alternative Channels

But how might these costs compare with the expenses incurred by brick-and-mortar shops, employing salespeople or call-centre teams?

For brick-and-mortar establishments, the annual rental cost, based on rent of £24.23 per sqft and a shop size of 2,010 sqft, would amount to a rental bill of £48,702.30 per year.

This figure, exclusive of start-up costs, staff wages, utilities, and council tax, underscores the substantial yearly commitment associated with physical premises.

Alternatively, consider the expenses associated with salespeople. Whether hiring a team of people within a call centre on minimum wage (£21,000 annually) or a single more specialised salesperson (£28,557 annually on average), the costs of hiring staff can be a large ongoing and ever-increasing expense.

Drawing Parallels

While direct comparisons between e-commerce websites and traditional sales channels are challenging, it’s worth considering the broader implications of each.

Launching an e-commerce website offers scalability and accessibility, driven by digital marketing strategies. This contrasts with the fixed costs of maintaining a physical storefront. However, physical spaces provide community presence and opportunities for customer engagement that cannot be replicated online.

Similarly, employing sales personnel introduces additional costs, including wages, training, and supervision. Yet, personal interactions with customers can build trust and loyalty, especially in industries where expertise or personalised service is vital.

To conclusively determine which approach offers more value would require observing two similarly positioned businesses differing only in their sales approach, which is challenging given the prevalence of online operations.

But in the absence of this data, could we make a more simplistic observation?

Is an e-commerce website, facilitating online sales, more or less valuable than investing £50,000 annually in shop rent or sales team wages? Personally, I’d opt for a top-notch website over a high-street shop.

Rethinking Value

In essence, the value proposition of e-commerce websites extends beyond their initial cost outlay. These platforms offer scalability, reach, and cost-effectiveness, making them indispensable assets in today’s digital landscape.

By understanding the nuanced differences in costs and functionalities across various sales channels, businesses can create informed strategies tailored to their unique needs. Success is rarely delivered when a business undervalues its e-commerce website, but in recognising their transformative potential in today’s digital economy.

As businesses navigate the evolving sales and marketing landscape, embracing the power and value of e-commerce websites becomes not just a choice but a necessity for sustainable growth and success.

References

• https://shepcom.com/theaveragesizeofaretailshop/
• https://www.gov.uk/national-minimum-wage-rates
• https://uk.indeed.com/career/salesperson/salaries/England