How Much Does an Ecommerce Website Redesign Cost in 2017?

If you’re preparing for a redesign, you may be wondering "How much does an ecommerce website cost in 2017?".

Over the past 6 years we've worked with dozens of ecommerce brands in multiple verticals. Throughout that time, we developed an internal system for quickly sizing up ecommerce brands regardless of who they are. Today, for the first time, we're sharing that formula with you.

This formula will allow you to create an accurate budget for your ecommerce redesign based on the size and complexity of your organization, as well as the products you sell.

The Formula Sizes Up Ecommerce Website Cost By Focusing On:

• Annual ecommerce revenue
• Average product value
• Total product library
• Total order history
• Total customers
• Volume, and difficulty of third party integrations

If you've already read this article, here's a quick link to the ecommerce budget calculator, if not, I definitely suggest you read this article in full before trying this bad-boy out.

 

We Feel Brands Big And Small Don't Know How To Budget For A Redesign

As things start to gear up for the end of year and beginning of next, inquiries have been flying (woo!). Problem is, most companies haven't done their homework and prepared for their ecommerce redesign properly. Stepping back and looking at things as potential client, it seems there isn't a lot of strong public knowledge on how brands should be budgeting for websites.

Maybe other agencies want to keep all the secrets to themselves, but we feel it's best for everyone if theres more transparency on what ecommerce websites cost.

How We Believe Brands SHOULD Budget

By Prioritizing Your Brands Needs, Not A Boxed Product

Ecommerce stores can take many forms, ranging from very simplistic to very complex, there isn’t a one size fits all answer. Top articles on this subject to date seem to be preaching something else, and we think that's misleading.

A fixed cost or packaged model for ecommerce pricing just doesn’t work. It assumes that solutions for brands are predictable and prioritizes technology over business needs.

In fact, when clients in their early stages approach us with the question “How much will an ecommerce website cost on X platform” we don’t provide them with a cost up front at all. Instead, we ask a series of qualifying questions which are combined with a formula to provide an accurate range of what it would cost for an ecommerce store to be effectively built.

By Budgeting For Effective, Not Affordable

In most cases, your ecommerce store redesign will require a higher budget then you would guess. Now, the reason I preface “effectively built” is because an ecommerce website is meant to drive direct sales. In most cases, it goes way beyond the capabilities of a non-commerce website and incorporates substantial features that impact multiple facets of how a business operates.

This provides the business and owners with huge opportunities for financial advancement. As a business scales in complexity you must be sure you’re building a platform that’s aligned with your needs. You also must be sure that the platform aligns with the customers expectations of the brand.

 

What's The Ecommerce Budget Formula (EBF)?

Rather than looking at ecommerce website cost as something fixed, we break things down in a formula focused on ROI. We’ve dubbed this “The Ecommerce Budget Formula”. This formula has been used internally for years to align ecommerce brands and their needs effectively.

So let’s get down to it. This is how you should estimate your ecommerce budget in 2017 with EBF.

 

Before Proceeding, Please Read If You're A Startup Or Brand New Ecommerce Website!

If you’re a startup, or an established brand that hasn’t had any ecommerce presence, the approach I’m about to present won’t be a good fit for you.

In fact, heavily investing in a costly ecommerce website as a start up won’t really make sense for you at all.

When businesses in this stage approach us to build a platform, we suggest going the minimum viable product (MVP) route instead. This will provide you with the opportunity to test the market and your positioning within it with relatively low risk.

Base level Shopify plans are a great opportunity to get a store up and running quickly. Their base platform without customization is pretty simple to work with, even if you’re not a developer. Feel free to try Shopify out yourself with a trial subscription.

 

 

Establishing A Project Base Cost - Start With A % Annual E-commerce Revenue

If you’re going through an ecommerce website redesign, the best place to start for determining your budget is by taking a look at your annual ecommerce revenue.

This is not to be mixed up with gross revenue. If you own brick and mortar locations, the revenue driven by those stores should be separated out from direct online sales.

3% of annual ecommerce revenue (AER) is a solid starting point to create your base value for your redesign budget.

 

Factoring In Average Product Value

The next item we focus on is what the average product's value is. Generally speaking, higher ticket price product require a longer sales process, and often times, an elevated overall website experience.

In the example above, you'll notice the widget spinner only has two photos, where as the adjustable desk has multiple photos spanned across detail shots as well as lifestyle products. Also worth noting, the adjustable desk has a video where you can see the product in action. Source: Walmart.com & Poppins.com

If you’re a very well established luxury brand, such as Herman Miller or Dior, you can get away with charging a lot for your products without having to do a ton of convincing online because you already posses established brand equity.

Everyone else has to try pretty damn hard to sell higher ticket products online. Because this effort stems into both the strategy and planning of the site, one should expect to spend more on their ecommerce efforts if their products are worth more. Here are the values we present for brands based on Average Product Value (APV)

• <$50 = Equal to (BASE)
• $51-150 = 10% of (BASE)
• $151-250 = 25% of (BASE)
• $251-500 = 50% of (BASE)
• >$500 = 75% of (BASE)

As you can see, as the products average value becomes more expensive, the investment in the overall platform must scale up. Brands need to do more to prove value when their products are a higher ticket price.

You not only should invest more money in the product assets themselves (photos) but also in how you present the products. Providing customers with the ability to interact with products beyond a simple slideshow is usually a great start.

 

Are You Migrating Platforms Or Versions?

If you’re creating a new theme for your existing platform, I wouldn’t worry so much about data cost.

If you’re migrating platforms (For example, from Magento to Shopify) then handling of data will become a big factor in your project's overall cost. This also applies for version migrations (Such as Magento 1.X to Magento 2) where the platform is drastically different than it’s predecessor.

Estimating The Cost Of Migrating Product Data, Customer Info & Order History

The size of your product library directly affects the amount of data that will need to be handled.

A hand full of luxury products vs thousands of sku’s require completely different approaches from a data management perspective. In addition to product data, you must also consider your order history.

If you’ve amassed thousands, or tens of thousands of orders over the course of running your ecommerce store and want to migrate that data to your new store, there’s going to be a significant time investment to do so. On average, these are the costs we see associated with data migration:

Estimated costs for Product Data

• <50 Products - 1% of (BASE)
• 51-500 Products - 2% of (BASE)
• 501-2,500 Products - 3% of (BASE)
• 2,501-5,000 Products - 5% of (BASE)
• >5,000 - 10% of (BASE)

Estimated costs for customer data

• <100 Customers - 1% of (BASE)
• 101-1,000 Customers - 2% of (BASE)
• 1,001-5,000 Customers - 3% of (BASE)
• 5,001-10,000 Customers - 5% of (BASE)
• >10,000 Customers - 10% of (BASE)

Estimated costs for order data

• <100 Orders - 1% of (BASE)
• 101-1,000 Orders - 2% of (BASE)
• 1,001-5,000 Orders - 3% of (BASE)
• 5,001-10,000 Orders - 5% of (BASE)
• >10,000 Orders - 10% of (BASE)

 

The Cost Of Logistics And Integrations

Almost all ecommerce websites require some level of third party support to run smoothly. However, not all third party software is built the same, and costs can vary greatly here.

Many popular shipping, fulfillment, payment, POS, and 3PL integrations already have pre-built connectors with leading ecommerce platforms. If that’s the case, your overall investment in integrations should be pretty nominal.

That being said, we still often find the need to create custom APIs on behalf of our customers.

On average integration costs usually break down to:

• 5% of (BASE) for small ecommerce stores*
• 10% of (BASE) for medium ecommerce stores*
• 20% of (BASE) for large ecommerce stores*

We advise gaining a good understanding of all the necessary technology your current platform requires prior to engaging with any development partner.

Based on the required technology and available integrations, it may make sense to migrate over to new technology as part of this redesign, or make the bigger investment for custom integrations where necessary.

We realize small, medium and large can be subjective. However, in general, web break down stores for ecommerce website cost purposes by defining small ecommerce stores as having less than 50 products, and a limited site map. Large ecommerce stores have greater than 1000 products and expansive site maps. Medium sites fall in between.

EBF In Action

Now that we just ran through the whole process and thoughts behind the various factors, let’s put EBF in action for how much a hypothetical ecommerce website cost would be. To re-cap, let's lay out all the values.

Now, let’s start by laying out some hypothetical business details.

• Annual Ecommerce Sales: $1,000,000.00
• Average Product Value: $695.00
• Total Products (Including Size Variations): 150
• Total Orders: 1500
• Total Customers: 1000

Ok, now let’s start to apply the formula to these values.

• Discover Your Base: ($1,000,000.00) * 3% = $30,000.00
• Calculate Product Multiplier: $30,000.00 * 75% = $22,500.00
• Calculate Product Data Migration Cost: $30,000.00 * 2% = $600
• Calculate Order Data Migration Cost: $30,000.00 * 3% = $900
• Calculate Customer Data Migration Cost: $30,000.00 * 3% = $900
• Calculate Integration Cost: $30,000.00 * 10% = $3,000

Ok, now last step, we need to add up all the values we've collected. ($30,000 + $22,500 + $600 + $900 + $900 + $3,000).

Looks like the estimated ecommerce budget should be $57,900, and this should be inclusive of:

• UI/UX Design
• Front + Back-end Development
• Product, Order, & Customer Data Migration
• 3rd Party Software Integration + Set Up

To easily calculate your ecommerce website cost, use our calculator below.

Wrapping Up

"How much does an ecommerce website cost in 2017?" does not have a 1 size fits all answer.

The key to a successful redesign is accurately matching the complexity value of your business with an ecommerce budget that will allow your development partner to create the best end product.

This formula is meant to help ecommerce directors, marketing directors, and store owners establish a budget for their upcoming ecommerce redesign. It's not meant to provide you with a final cost, but it definitely should give you an idea of what investment you'll need to make in order to see a positive return in value.

This article was originally posted on the Huemor blog post "how much does an ecommerce website cost in 2017?"