How Much Does Magento Cost in 2018?

Pricing Guidelines & Questions You Need To Ask

Choosing the right platform can be a hard and complex decision and even if you have already chosen, Magento pricing can be affected by many factors. So you need to learn everything about it in one place.

Are you thinking about launching a new online store to replace your old one? Or do you want to start a brand new eCommerce website?

You want only the best – the best for your business and your audience. You want your investment to yield profits on the long term.

From this article you will learn what the Magento cost consists of, what additional costs may arise on the way and what questions you should ask your potential developer partners.

You will also learn what you should expect from freelancers and agencies and how the complete development process looks like as these can greatly influence Magneto pricing and the stability of your financial plans.

This is a decision that will determine the path for any store you launch for years in advance. You need a solution without problems regularly popping up and costs rising through the roof. And we are here to provide you the information with which you can avoid that. And if you want to make sure you made the best decision for your business by choosing magento, read more and compare it with other sites with the help of our Magento vs. Shopify and Magento vs. Hybris articles. And now: 

Let us get started…

Chapter 1

Things to consider before you start a Magento project

Magento might be the platform that will finally take your business to the next level. It may have all the features and functionality you lack and make you able to grow faster. But it might also be a completely wrong solution for you.

First, before we even talk about costs, we have to determine if Magento is right for you – and we are even going to give you alternatives if it turns out is isn’t.

Is Magento platform the best eCommerce solution for you?

This is a very important question to ask yourself if you are even considering the platform, because the hard truth is: Magento is not for everyone.

It is a complex, robust platform. It’s greatest strength is that it is completely customizable: with a good developer team you can build any kind of online store with it.

But this also has a price. Expenses itself will be of course detailed in the article, but you also have to think about more than money itself. Development is going to take time, as it is a very complex process. And it is not a job you do once and than it is over. Development should be continuous, the system should be maintained, new features should be added along the way.

Magento is not the ideal platform for small businesses or stores that are just planning to launch. Middle-sized and large businesses where the directions are clear, the strategy is in place, the products and services are fixed and there is an existing target market and audience – these are the kind of businesses Magento is truly for. It is perfect for the top online retailers for example. And they are the ones who really need it in order to grow.

For smaller businesses other solutions may be more suitable like WooCommerce or Shopify. We also talk about these in the article and help you make a final decision.

Magento Open Source (Community Edition)

This is the freely available version of Magento, basically the platform the company started developing in 2008. Formerly known as Community Edition or CE, Magento Open Source is available for anyone and everyone to download, install and develop further upon.

There are thousands of extensions and adjustments available and a strong community behind it, which is one of the largest and most active even in the niche of open source software.

Thousands of developers and eCommerce professionals share their work, insights, advice and passion at the Magento Forum and there is even an official list of the greatest contributors, who are named Magento Masters every year. (For the most up-to-date list, check out our previous article on the 80 must-follow Magento influencers of 2018!)

The community itself is a great value of Magento and of course comes free with not only the professionals and their experience, but also a huge amount of free, integratable solutions like extensions and plus features that you can use.

What Open Source offers is freedom: you are given a platform that is suitable for the needs of large companies and the opportunity to build upon it and customize it as you want – of course with the help of professional developers. You are not locked down and don’t have to make compromises as in the case of most SaaS online store platforms.

The free version will give you a responsive eCommerce website, with a promotions engine, a customizable products and catalogs, a complete system for checkout, payment, shipping and ordering, and also a great site management system.

Magento Commerce (Enterprise)

The Magento edition aimed at large enterprise-level operations offers all the advantages of the Open Source edition and much more.

It can handle an extremely large amount of products, manage extensive databases and integrations with many different external systems and applications (see below). It will help you to reach your audiences globally, provide opportunities for fast and smart growth and scalability.

It also offers great user experience by streamlined processes, fast loading of pages and extensive shipping and payment options.

But of course this all has a price. Magento Commerce is a solution best suited for established, successful online businesses, and by no means aimed at those who are just about to launch their first store.

Magento 2 Features

Magento 2, released in 2016 was a complete rewrite of the Magento platform. It has an extensive list of new features and functions – here we are going to cover some of the most important ones.

Note that Magento and its parent company, Adobe aims at transitioning all existing Magneto stores to Magento 2.x versions – if you want to launch a new Magento store, this is definitely the version you should be using.

Magento 2 features:

  • Built-in search engine optimization
  • Site management
  • Catalog management
  • Catalog browsing
  • Product browsing
  • Checkout, payment and shipping solutions
  • Order management
  • Customer accounts
  • Customer service

Alternative 1: WooCommerce

WooCommerce is a free, open source webshop platform that is integrated into WordPress, thus offering a wide range of opportunities for leveraging content marketing. It is easy to handle and it is ideal for smaller online businesses with limited needs.

It is also easier to find experienced developers for WooCommerce. It is less resource intensive and can be set up and launched much faster than Magento. You also won’t need hosting as robust as in the case of Magento.

Alternative 2: Shopify and Shopify Plus

Shopify has a subscription system, the three plans they offer look like this:

  • Basic Shopify: $29/mo
  • Shopify: $79/mo
  • Advanced Shopify: $299/mo

There is also an enterprise version, Shopify Plus where pricing varies greatly depending on exactly what features and resources you need. Monthly fees start from $2,000.

Shopify is a simpler choice: it offers less flexibility and possibilities than Magento, but can be ideal for smaller businesses, those who are looking for a stable, trustworthy platform to launch their first store on.

Shopify is an out-of-the-box solution and you will need no deeper knowledge or experience to manage it – and you don’t even need a dedicated hosting service to run it.

In-house vs. Third-Party Development

If you have decided to use Magento, your next step is deciding whether you want to hire developers for the job or outsource the job to an agency. Both has its pros and cons of course, which we are going to tackle right now.

Having your own developer or developers in-house is a handy solution: they are constantly available and you know with certainty their only focus is your project. But one of them will likely be not enough.

You are going to need someone who can professionally deal with the front-end and the back-end, which is already two separate jobs. You will also need someone with experience in UX and a professional designer.

You have to find and then pay these people – and salary-wise we can say that building a team in-house is truly a profitable solution when your yearly revenue is in the millions. A junior developer with less than a year of experience will require a salary of $60000-80000, but a for a senior you will have to pay at least twice as much.

For a medium-sized company it is better to hire an agency for the job, where you will have access to a team that is already experienced and has been working together for years.

Magento Agencies vs. Freelancers

It is cheaper to work with freelancers, no questions there. But it is also no coincidence that agencies are more expensive. Let’s look at a few aspects that are important to consider before you make a decision:

Reliability. This may be one of the greatest weakness of freelancers in general. If something happens to them, you will lose your developer – if they fall ill or can’t work on your project because of personal problems, there will be no one ready to replace them.

At an agency this won’t be a problem: if a developer falls ill, there will be another ready to step in and continue the work, and because there are multiple people working on your project to start with they will also have the know-how at hand.

We are not saying that freelancers, in general, are not reliable – what we are saying is that they physically can’t be as reliable as a professional team.

Quality. There can be a great difference between one freelance and another. Let’s have a look at their pricing.

The cheapest developers only require $10-20 an hour for their work. They typically can be found in South-East Asia and Pakistan. In Eastern Europe, the average hourly rate is $20-60. In Western Europe and the United States a freelance will ask for $150-200 hourly.

Price is often an indicator of quality – it is your call to hire someone who will work for $10 an hour, but don’t expect miracles from them.

If you hire an agency, however, building a webshop with Magento (with basic functionality and design) will cost somewhere around $20,000-60,000. Even a freelance can launch a webshop for you for a couple thousand dollars, but that will be a platform without deeper development, based on templates – an agency will likely give you something you can build on the future and that can set you apart from the competition.

Experience. A freelance may very well be a renowned professional on their field. They might have great experience and an impressing list of references – but they are still one man.

If you want developers who can see the bigger picture, you need a team, as we have already mentioned, where professionals from multiple fields (like development, UX and design) come together and can create a system that is functioning and competitive in every aspect from the ground up.

Agency Magento pricing

We can’t really name an average price even for agencies as there are multiple practices applied in different countries and regions and even there can be great differences in pricing.

Setting a project minimum is a common practice globally and especially in the US. According to a 2016 research conducted using the database of CommerceHero.io the minimum can be anywhere between $3,000 and $80,000. West European agencies tend to set higher minimums ($40,000-80,000) while in the US it is typically lower (~$23,000) because there are many Magento specified companies on the market and the competition is greater.

It is also a common practice for agencies to set a fixed monthly price define what services are included for that. For long-term projects this might be the best approach.

Smaller teams specializing in smaller projects usually don’t set a minimum, but you should always check carefully what is included in the quote they send you.

Magento hosting prices and requirements

Magento can be as complex as you want and you can customize it as you want as we have discussed. If you have thousands of products, great traffic and customized features, you will also have a system which is very demanding of resources. You must provide powerful and stable hosting for it to run perfectly smooth.

Magento earlier had a hosting service of its own, that however is no longer available. (It was only an option for Enterprise Edition clients before 2014.)

Running a Magento Commerce store (previously EE) will require at least one dedicated server if you want to keep downtime at a minimum and site speed at maximum.

It is important to consider hosting costs as a part of the project in the long term, and also finding the right company that can provide what you need is a vital aspect.

For those who use the Open Source edition a hosting service with prices starting at $150 may be perfectly suitable. For more resource-intensive projects that need dedicated server cluster hosting it can cost as much as $4,500-5,000 monthly.

But how do you find the ideal hosting? By asking the right questions, starting with the most important ones which we are going to list for you right now:

  • How many visits per day do you expect?
  • How many sessions per month do you expect?
  • What is the highest expected (or existing) number of sessions during peak periods?
  • How many of these peak periods do you expect to occur within a year (what is the incidence rate)?
  • Where are your target market and audience located geographically?
  • How many concurrent sessions can be expected (on average and during peak periods)?
  • Do you need Magento Payment Bridge?
  • Do you need SOLR, ElastiSearch or Sphinx search on your site?
  • Which version of Magento are you going to use?
  • What external and/or third party applications and systems will your site be communicating with? (Eg. billing softwares, CRM, ERP etc.)
  • Will you be using tools like Pingdom or New Relic to monitor the performance of your site?
  • How large the SKU (Stock Keeping Unit) is going to be on your site?
  • Will you be using a CDN (content delivery network)?
  • Will shared hosting be sufficient for you or will you be needing a dedicated server or server cluster?
  • What are your current hosting specifications?

 

Why should your Magento store be on AWS?

Along with offering famously fast shipping for any product you need, Amazon is a leading provider of cloud-based web hosting services. Amazon Web Services (AWS), their cloud services platform, includes compute power, database storage, content delivery, and more.

AWS can help optimize your Magento store by increasing the speed and performance of your site. Slow page load times, payment breaches, or a website crash can negatively impact your business and push away potential customers.

With AWS, you can be confident that your Magento store will be able to handle growth – and scale along with it.

Here are the top five reasons why using Amazon Web Services for Magento hosting is best for your e-commerce store:

  1. Reliability. You want your Magento customers to return – and when they do, you want them to have a consistently good experience. AWS helps ensure you provide a good customer experience by way of cloud backups and protection. In fact, the Amazon EC2 Service Level Agreement promises 99.95 percent uptime.
  2. Affordability. Running a small business isn’t easy – especially when everything seems to cost more and more money! Fortunately, AWS is cost-effective because they offer on demand, pay-as-you-go pricing. They only ask you to pay for the services you’re using within the time period needed.
  3. High-quality global performance. AWS has the best infrastructure in their data centers, with a lot of resources in case anything goes wrong. Their web hosting performance is fast and reliable – and they let you host your store in multiple locations around the world. So, if you ever want to expand your business to other countries, you can rest assured that AWS can support that growth.
  4. Security. This is always a big concern in the world of e-commerce. Security must be a critical component of your Magento store. Amazon is a well-known, reputable company with a lot of security power behind it. Similarly, the AWS cloud computing environment has secured access, built-in firewalls, encrypted data storage, and private subnets.
  5. Scalability. We believe this is the primary reason to move to AWS: It’s easily scalable to keep up with changing business needs. If you need more server power, space, or memory, for example, it’s a simple switch for our team of Magento experts. All of our AWS solutions are integrated and flexible.

Amazon Web Services clearly offers the best option when it comes to Magento hosting. Although AWS is user friendly, it still requires some technical skill to maintain.

Chapter 2

Breakdown of a Magento Development Project

In this chapter we are going to break down every phase of a typical Magento development project and tell you approximately what portion of your budget will the different phases will be needing.

This way you will be able to actively participate in the planning and see if your project is developing the right way over time.

Discovery Phase

This is the part every complex project starts with. The discovery phase is practically a small project itself. It’s purpose is for the team you hire to get familiar with your specific needs and expectations. This phase will account for approximately a tenth of your overall budget and is absolutely necessary to provide the best results.

First step: assessing your needs. Do you have a website? How does it work, what is it like, what needs improvement? What are its shortcomings? How can growth be ensured for the future? What extra functionalities and features are going to be necessary to develop?

This is followed by an analysis of your competition. The assessment will reveal what areas are they doing great and what are they missing, what best practices may be worth to learn from and what mistakes of theirs should you avoid. And of course the most important: how can you get ahead of them.

The last part is setting a roadmap: identifying the individual tasks and setting deadlines. This is vital if you want project management to run smooth. A detailed roadmap will streamline processes, define the roles and tasks for the members of the team and it also makes sure that the client can track progress.

Design and UX

Both integral parts of any online store. If your site lacks logical structure, if it doesn’t have simple and clear microinteractions the user experience can be seriously degraded. It is also important how your site affects the subconscious of the user, how you guide them through the purchase process, how do your product pages look like.

Professional design and an easy-to-use user interface will encourage users to purchase and increase conversion rates while reducing bounce and cart abandonment.

However if your site is not easy to use, the interactions are confusing and it is not aesthetic, users will be more likely to abandon your site before purchasing anything.

Creating a streamlined design can cost anywhere between $5,000 and $35,000. Of course you can choose to use free templates to reduce costs – but this way you are also acknowledging the fact that your site will look like hundreds if not thousands of others out there.

Magento Theme Development

One of the great strengths of Magento is its community, and its members are developing hundreds of templates for it. So why do you need a custom one developed? Why can’t you use a template that costs a few hundred dollars or one which is free?

First: Magento is not a simple product. It’s not like WordPress where you can find free templates that are easy to apply and are still of high quality.

Many Magento templates have problems with low quality, the coding is sometimes problematic and compatibility with custom-developed systems can be a deciding issue.

It is better to build a custom template that you know will work without causing problems and is easy to modify or develop further in the future by the team that made it.

Requirements, specifications and individual needs can greatly affect the price of developing a custom template. It can be between $10,000 and $100,000.

Custom Magento Functionality Development

As with the case of templates, there are many modules and extensions available freely or for a certain price thanks to the work of the community. However these are out-of-the-box solutions. Usually they work well with the specific iteration of Magento they were developed for, but there can be a great many problems if you try to integrate them into a custom-built version.

This is not to say that available extensions, modules of functions cannot work with a custom build – but if you want to integrate one, you need a professional developer to check if it will.

If you can’t find an extension that provides exactly what you need (or one that is compatible with your custom version), you will have to develop one. We can’t really name prices here – custom extension development may have an hourly price or it may be included in the monthly fee you pay for an agency or even a fixed price.

Integration with third-party solutions

You will almost certainly need some kind of integration with third-party applications if you want your online business to run smoothly. This can provide you the capability of offering more payment solutions, run more detailed analytics or extend your toolbox of online marketing solutions.

Let us detail the different kinds of applications that can be integrated with a Magento platform.

Consumer Experience Applications

These provide feature, tools or services that can greatly enhance the UX in your store, increasing conversion rates and average order value, reducing cart abandonment and so on.

Payment options for example offer the opportunity to widen your market and audience. In different regions and countries customers prefer different kinds of payment, and not all of those will be available to you from the start.

Site search and recommendations are also important: you have to be able to show your customer what they are looking for to provide the best experience and offer them things they might not even realize they need to increase profits. These applications can provide autocomplete, dynamic filtering, predictive recommendations or even the dynamic reordering of product listings based on customer behavior.

Product catalog tools can show your products to customers in more engaging ways than the standard built-in solution and will help you customize the featured products, their order and prices and so on.

3D and other visualization tools can create another layer of the user experience by extending the methods of how they can interact with and view your products. Tools like this may include 3D rendering applications, animations, dynamic customized views of products, virtual mannequins that the customers themselves can customize and so on.

Applications for Marketing, Analytics and Performance Measurement

These are the applications that will help your business thrive from behind the curtains: they will analyze customer behavior, performance of your website and hosting service, provide new channels to communicate with your customers and leads.

Business intelligence & analytics applications will help you know how you can increase performance of your store, fine-tune your sales funnels, how customers behave and how exactly are they using your site. You will have a chance to look at the exact paths they take, where they spend time, where they leave the site, and so you will know where should you place offers, relevant products, content or pop-ups a engage them more effectively.

Email marketing applications will give you the opportunity to communicate with your leads more effectively. You can send welcome and reorder messages to them, tell them about their orders, help them use your site or track shipments. If you want to manage the list of subscribers and the emails sent from the same interface as your store, you are certainly going to need an integration.

Point-of-Sale (POS) solutions will make it possible to track your inventory across multiple online and offline platforms. If you have a brick-and-mortar store or sell your products in other ways offline (at events for example) and would like to streamline business and financial processes, this kind of integration is a must.

Business Operations Management Applications

These are the applications that will help you extend the back-office functionality of your store by making the management easier for you and your colleagues.

Inventory and supply chain management will help you manage a complex supply chains and even automate certain processes. If you have multiple online or even offline stores you can also synchronize your inventory, avoiding confusion like online customers ordering products that you are out of at the moment.

Administrative tools will help you track and evaluate how your store is performing if you meet the set goals for your key metrics and how is the business plan and campaigns you set in motion is performing over the course of the year.

Customer relationship tools (CRM) are a must even for a middle-sized business as they provide the opportunity to track, segment, analyze your customers and the relationship you have with them – previous orders, behavior, demographics and much more.

Finally, accounting applications can make administration easier for you and for those who deal with the books and financials of your company, and they also minimize the chance for human error.

Quality Assurance, testing

When the system is ready it does not mean it should be deployed right away. It should be tested and retested, developers must look for bugs, loopholes and make adjustments. It should be evaluated if the system does what it needs to, it meets the previously set requirements and so on.

Testing can be automated or manual.

Automated testing

It is fast and effective for checking parts of the site and the system that rarely change. Core functions and feature, static pages and so on. They can be run anytime you need and require little work other than analyzing the results and making the necessary changes. After the tests you get detailed reports and of course you can run multiple tests at the same time.

Manual testing

A great method when you are in the stage of developing customized features. You can find the discrepancies in UX as you will have actual people testing the system and seeing for themselves how it works. It’s a more flexible method than automation, however it is slower.

Magento Hosting setup

We have already discussed the costs of Magento hosting, so let’s have a look at the opportunities you have.

Managed Hosting Solutions

This means that hardware and software maintenance – which you will most certainly need – are the part of the price you pay for the hosting itself. It usually also includes monitoring and backing up data. These services guarantee that downtime will be minimized and that your most important resource (your data) will not be harmed and lost even if there is some kind of error or accident. If you have a smaller company without its own IT department, this is the kind of hosting you should choose.

Unmanaged Hosting Solutions

Only contains hardware maintenance, which of course makes it cheaper – in theory at least. But all the other tasks we listed will fall on your company, so you will have to employ IT professionals for the purposes of maintaining the software, monitoring the hosting services and website performance and securing your data. If you have an IT department (and want to retain more control over the processes) this is the kind of service you may be better off with.

Chapter 3

Additional Costs

Apart from the initial costs of development there can be additional expenses that you have to prepare for.

Some of these we have already mentioned (like inventory management integration), and now we are going to have a closer look at them and some other factors.

Inventory System

Efficient inventory management is vital for any large business: if you extend the number of warehouses or the number of stores you have, you also have to take supplementary costs into account – you are going to need workforce, manage the inventory, maintenance and so on.

If you have multiple stores or offer your service in multiple areas, regions or countries, your processes will be complicated: you have to make sure that orders are completed from the nearest warehouse, that you have the sufficient amount of products everywhere and you must organize complex supply chains.

It is the best to have a system in place that can sync your inventory real time, so you can avoid mistakes like a consumer ordering a product online that is in reality out of stock in your warehouse. This system should be able to handle not only your Magento stores’ inventory but other selling points as well – Amazon, eBay or even brick-and-mortar stores.

For professional Inventory Management you have plenty of Magento Extensions available both within Magento 1 and Magento 2. Their price ranges from a couple hundred to thousands of dollars. One crucial factor to estimate costs is the number of warehouses that you have.

Another factor that significantly increases the costs is the number of domains you use for Magento webstores. In case you want to synchronize your stock with some sort of unique inventory management system you will need to provide the system specifications for the developers. Based on this they will be able to define the costs.

POS Integration

Advantages of a Magento POS System Integration

If you sell products online and offline you cannot hope to run smooth business processes without integrating a POS system with your Magento platform. Otherwise you may have to use multiple systems at the same time which will only lead to confusion and errors – if you don’t separate them completely, which will increase costs and will be much less convenient.

Innovative POS solutions will give you the opportunity to synchronize what happens in your offline and online stores, helping your inventory system. But in order to achieve this, you are going to need custom development.

We also have to mention that an integrated POS system will likely be cheaper to use as traditional ones. As the latter usually need specialized hardware to work, with a Magento integration all you need is a simple PC, tablet or smartphone to sell your merchandise offline. (And some other cheap tools like a barcode reader or card reader.)

Best Magento POS (Point Of Sale) Integration Solutions

Here we are going to have a detailed look at some of the solutions available for integration and discuss what types of businesses they might be ideal for.

PayPal In-Aisle Selling

Provides you the opportunity to sell your products any time, anywhere – in a store, at events, conventions and so on. All you need for it to work perfectly is a smartphone. Purchases are routed through the Magento platform and processed by the system online, this way your inventory will always be in sync.

You can choose multiple payment options: PayPal, credit card, cash or even check.

However it has some bugs based on customer reviews. The service itself is free to use, but updates and patches are very rare and you will also need a direct online connection for it to work as it routes all transactions and purchases through the online store.

MicroBiz

The user interface here is very similar to that of Magento’s, intentionally. This way it is easy to use for those who are experienced with the platform. Preferences, customer databases, attributes can be easily transferred between the two systems and of course you can set which should be the primary one, avoiding collisions in data.

It can be used on iPads, iMacs, PCs and Android-based smartphones, therefore you can use it basically anywhere.

 

It tracks inventory in real time and even reorders certain products for you if it is running out of stock. It can also provide reports containing purchases and transactions of the previous 12 months. Synchronization with the database of Magento happens instantly.

 

It has one great disadvantage: it is not compatible with Magento Commerce, only with Open Source, and even in the case of the latter you will face a series of limitations, one of which is that you can only sync it with one online store. It is also not free: if you want to use it it will cost you $900.

Modern Retail

QuickBooks POS integration by Modern Retail is a tool for businesses that used the QuickBooks system before and don’t want to switch to another one. Integration will transfer data from the system to Magento and make it possible to easily edit them there. Purchases and transactions happening in Magento will be synced with QuickBooks and inventory will be up-to-date.

There are however a limitation to its use as it is only compatible with Magento Community or Enterprise 1.7.0.2 versions or higher, or with Magento 2.0 API with a version 5.3 PHP or higher. Also the server running your store must have at least 1 GB memory.

Integration itself costs $2000 and there is also a monthly fee of $75.

Vend POS, VortexHQ

Vend POS here is the POS system and VortexHQ is the integration it requires to work with Magento. Vend can process nearly any kind of payment online and offline, therefore it might be a great choice for those who want to make sure they can sell their products offline without routing everything through the online store.

It is also highly customizable, you can set taxes and even loyalty points to a certain degree. Naturally it tracks transactions in real time and synchronizes the inventory accordingly, and also send you notifications if you are running out of a certain product.

It can provide reports about purchases, inventory, payments and so on. It is ideal for small and medium sized businesses and it is pretty easy to use, especially as there are many tutorial videos available for it online.

If your store is not in Australia, you have to pay a monthly fee:

  • With manual synchronization: $15
  • With scheduled synchronization: $25
  • With automated synchronization: $20

LightSpeed

A fairly complicated system that will take a little practice to get used to. It can create reports of purchase trends and can be connected even with Google Analytics and MailChimp.

LightSpeed will constantly monitor your inventory and notify you if you are running out of products, or it can even reorder them for you depending on your preferences.

 

It stores all information in the cloud safely. However it is only available for Mac and iOS systems, there is no version that works with Android or PCs. Also, while it can be integrated with Magento, it provides no real advantage as it is primarily a POS system where eCommerce is only present as a secondary option.

X POS

The greatest advantage of the system that it can be integrated with Enterprise Edition. It also works without an internet connection: it syncs the data of course, but can also process and store transactions when offline. It’s online database can store card payment information, therefore making the lives of returning visitors easier.

It also has an auto-find feature which makes management more convenient as you can find any product, name, barcode almost instantly. It monitors inventory and can compile reports for you.

To use it you have to pay a one-time price of $599.

IWD Magento POS

It can be integrated both with Magento Community and Magento Enterprise Editions. Integration itself is very easy: it is designed in a way that it happens almost by itself and has no additional cost.

It can process card and cash payments has a very user-friendly interface and can even assign the purchases to employees, therefore providing more detailed statistics of offline sales.

It works on both Mac and PC and supports the multi-store system of Magento.

If you want to use it you have to pay a monthly fee of $45/user.

NCR Counterpoint & Center Stage CPMagento

Counterpoint acts as both an inventory and POS management system and has features that give you the opportunity to better leverage email marketing methods, automated sales, segmented pricing or even loyalty programs.

CPMagento makes it possible for products, customer information, orders, invoices and inventory to be tracked and synced with the online store. It works both with Magento Community and Enterprise Editions.

It has many advantages, however it is aimed at medium sized businesses as it is most ideal for merchants with a yearly revenue of more than $500,000.

Data Migration to Magento

Migrating data means that you move an existing website (and all the data with it) from a previous platform to another one. It is crucial for data to be preserved and stay useable during the process.

This usually includes:

  • Categories
  • Product attributes
  • Images
  • Product descriptions
  • Visual content
  • User accounts
  • Personal information
  • Payment information
  • Passwords
  • Shipment information
  • Orders
  • Transactional data
  • Content on the site (eg. blog posts)

Magento does not support design or plugin migration, but other data can be migrated very effectively.

Migration of data can be real simple, let us take a look at the Cart2Cart solution. In case we want to migrate from a system which is supported by Car 2Cart technique (more than 80 e-commerce platforms), we could easily calculate the costs of data migration by adding our products, customers and received orders together with the calculator available at their site.

This would cost a few hundred dollars for a smaller webstore with a couple thousand products and customers, whereas for a client with a customer and product base of ten thousand it would surely cost more than a thousand dollars. 

Magento ERP Integration

It is very important that you choose the right ERP integration provider who can fulfill the needs of your business. Designing the right data flow and features is key but there are some other factors to be considered.

Integrating an ERP system and Magento is a complex and time-consuming task. It requires careful planning and analysis in order to create a scalable, reliable system with good support and manageable costs.

You can choose out-of-the-box solutions for $200-900 but these are likely to have limited functions compared to a solution developed for the Magento API. A custom solution can be much more flexible and versatile, but it can also be more expensive as it requires development by professionals. Agencies usually charge $5,000-10,000 for a custom ERP integration.

Custom Shipping Method Integration

Shipment is one of the most important aspects in your store – in fact one of the most common reasons for cart abandonment is not offering some kind of express shipment option. This itself can lower conversion rate by double digits on a market where getting what you order online is an important factor – the US for example.

The shipment methods you offer will have an impact on a great many things:

  • The complete logistics of your company.
  • How and when customers get the ordered products.
  • How you manage inventory and reorders so that sales processes can run smoothly.
  • Costs. It matters a lot if you use couriers or the postal service, if you pack the products or outsource the jog and so on.
  • Customer experience.
  • If your products are heavy or fragile you also have to consider using special methods of delivery, packaging and storage.

In the case of Magento you can choose from 8 basic methods of delivery. It is vital that you give a fair amount of thought to which kinds you are going to offer before launching your store as it will fundamentally affect your processes and budget – and also customer experience, marketing communications, long-term goals and so on.

It also affect development of the store. If you only ship to certain areas in one country there won’t be much problem – but if you have multiple stores aimed at different countries, each with its own dedicated warehouses, serving different markets, it can get a very complex task to streamline everything.

The 8 basic methods you can integrate are:

  • Live shipping rates from different carriers.
  • Freight shipping for larger products.
  • In-store pickup.
  • Free shipping (for promotions).
  • Override live rates.
  • Custom rates.
  • Dropshipping.
  • Dimensional shipping.

It is also possible to integrate shipping methods with excellent extensions available on the market like Amasty or Mageworx. Their cost in the case of Magento 2 ranges between $200-300.

Other than the one-time-fee extensions, there is also the service-based, professional shipping management platform with a monthly fee: ShipperHQ.

eCommerce Marketing

It is a common mistake among smaller businesses to not take into consideration the marketing budget when starting an ecommerce website project. An eCommerce website without marketing budget lacks a competitive edge: customers will not find your shop on their own unless it offers something very unique that people want and no one else offers but you.

You can expect the following costs.

Content Marketing & SEO

The aim of content marketing is to create interesting, valuable and relevant content on your site for your target audience. These pieces of content should solve problems of your potential customers, offer them insight or entertain them.

If you create valuable content you will be able to organically reach audiences without selling them anything right away, which can be a game-changer in your relationship. You can convince them that they should return to your site. You can write about your products, but also publish deeper, detailed articles about certain topics to strengthen your personal brand as a professional.

With content you can create communities, nurture brand evangelists, lure those back to the site who haven’t purchased from you in a long time and even direct strangers to your site as relevant content will help you reach better positions on search engine result pages.

Costs of a content marketing strategy and its implementation can greatly vary depending on a lot of factors like what kinds of content would you like to publish, how frequently, whether you want to create them yourself or outsource the job and so on.

In general content marketing will likely cost you $2,000-6,000 a month.

PPC Advertising (Google Ads, Facebook)

With Google Ads your initial budget should be at least $800-1,000 a month, but it goes without saying that a $2,000-3,000 budget with the right campaign management agency could multiply its value via the increased website traffic.

With a Facebook campaign the budget should be focused on retargeting. A professional, effective Facebook campaign with a $3,000 budget should return your investments and of course generate a reasonable profit margin.

Magento Support and Maintenance

It is hard to get an estimate of costs here as there are no two businesses and online stores alike. You may think that if you have the best developers you are not going to need maintenance and cut these costs – well, this is not how that works. You can of course lower these costs with good developers, but along the way you will unavoidably have new needs, problems will arise that make it impossible to all together cut maintenance.

A good example is the installation of patches. Magento is a system that gets patched very frequently, but, and especially in the case of a custom build, it requires a professional developer to install them properly.

You may also need training for yourself or your team so you can use the system you are given to its full extent – which is something you absolutely want to do. Magento is not a particularly easy system to manage – it’s not impossibly hard, but complex, and with custom features it gets even more so.

You may need new functions and features in the future. Maybe you will have a new category of products for an entirely new segment of customers or implement online marketing methods you did not use before.

Also, you will need bugfixes. It is natural that development never breeds a perfect system. During test and everyday usage bugs, smaller errors can come to light which need fixing.

There is no real average number here. If you only want the developers to install patches for you, you may pay $1,000 a year and be done with it. Continuous innovation, development, bugfixes, monitoring and so on – that can cost you $50,000 or more a year.

 

 

Chapter 4

Magento Pricing

Magento 2 license cost

Magento 2 Enterprise Edition or Commerce pricing varies depending on the hosting you choose and your gross sales revenue. So the question “how much does Magento cost per month” can really only be answered by someone with knowledge of the financials of a given store.

Magento monthly and yearly costs are as follows:

Gross Sales Revenue Magento 2 Enterprise Edition

(EE or Commerce) Cost

Magento 2 Enterprise Cloud Edition

(ECE) Cost

$0 – $1 million $22,000 $40,000
$1 – $5 million $32,000 $55,000
$5 – $10 million $49,000 $80,000
$10 – $25 million $75,000 $120,000
$25 – $50 million $125,000 $190,000

 

Basic Magento Store Cost

This is a solution for businesses that are only launching their online services or are migrating to Magento from some other platform and have no need for more complex processes.

You have two options if you want to launch a basic Magento store:

  • Choose a ready-made template. This is a relatively cheap solution (as we have discussed it will likely only cost you a few hundred dollars). It also greatly limits what you can do and how you can customize your store.
  • Convert a PSD design into a Magento store which does not limit the design and functionality.

Launching your store however will not be a quick process in either case, and you also cannot skip configuration and testing. (Well, if you want a store that is functioning perfectly, which I assume you do.)

What does a basic Magento website include?

  • Under 6000 SKU’s
  • The latest version of Magento Open Source (previously Magento Community Edition)
  • Integrate or install a chosen theme
  • Simple design implementation
  • Setting up basic transactional emails
  • Inventory system or POS integration
  • Payment Processor integration and alternative payment methods
  • SSL setup
  • Setup and configuration of products and categories
  • Testing
  • Basic shipping and tax configuration
  • Internal quality assurance

Basic Magento Store Cost: $20,000-40,000.

Magento Commerce (Enterprise Edition) Cost

In addition to the features and functions listed at the custom store, Magento Commerce offers you:

  • Mobile commerce solutions
  • Multiple store management
  • Full page caching
  • Professional customer support
  • Built-in modules
  • Private sales and wholesale solutions
  • Customer segmentation
  • Targeted promotions & merchandising
  • Custom coupons
  • Return management authorization

Magento Commerce Cost: $100,000-250,000 and up.

Chapter 5

How to choose the right Magento Development Company?

In this chapter we are going to give you guidance on how to choose the best development company or agency if you have decided this is the best course for your online business.

Here are a series of things you should do and ask before committing to any partner.

Ask for references

Don’t just believe what a developer or agency tells you, get proof of how they work and what previous projects have they worked on. Ask for contacts to their previous clients and ask them some questions – like how they are setting the roadmap for a given project, how they communicate, if they can keep themselves to the set deadlines and of course how the stores they developed work.

You can also be satisfied if they present you with their own custom built Magento store that can handle larger traffic and more complex processes.

If you are not provided with references there can be 3 main reasons for that:

  • They don’t have them, which means they have little experience.
  • They have no good references, which means they are not as good as they say.
  • They are bound by confidentiality.

In the latter case however they must have some projects they can present their work on.

Never commit to any company without seeing their references first and getting answers to the questions above.

Clarify the development process

Ask them how long the complete development process will take, how the roadmap will likely look like and exactly what steps you can expect along the way. If you ask for a quote, it should be detailed enough that you can see the prices of the different phases and steps. (And if you want to determine if they are realistic, just open up this article again.)

If they are an effective and experienced team this should be no problem: they must have their processes in place, they must be able to tell which one of their professionals will work on your project and so on.

You should pay attention to a few little details too. For example: Magento developers never ever work through FTP. They work with version control to avoid overwriting each other’s code and damaging developed functions and features.

Have they carried out a complex Magento integration project?

It is vital that they have detailed knowledge of the complete integration process – this is what guarantees that at the end of the development process you will get a product that is capable of supporting your online business and suits all your previously set goals.

From this article you have learned that you will definitely need to integrate at least a couple of different applications, third-party services, and if they don’t work perfectly with Magento, than you basically don’t have a working system at all.

Integration is a very complex process as every experienced Magento developer will tell you – this is another reason why you absolutely should ask for references.

Have they carried out migration projects from other platforms to Magento?

If you have an established online store running either on a different platform or on a previous, outdated version of Magento, you must commit to developers who are experienced with data migration.

Otherwise you risk losing the most important resource you business can ever have: your data.

Migration is no small or easy task, even the planning phase is a project in itself. Mistakes can lead to losing customer data and subsequently revenue or losing your hard-earned position in search rankings – it may take months or even years to recover from a loss like this.

Will you get continuous support?

Support is a very important in the aftermath of the initial launch. You will have to learn how to use the interface, the different integrations and modules and so on.

Based on if you get support or not you can also have a clue about how important long-term partnership is for a given company. Real professionals know that they can only acquire satisfied returning customers by helping and assisting them even after the development project has been finished.

Are they experienced in Magento hosting setup?

Magento is a system where developers must closely work together with hosting providers to achieve success. Both of them must understand how Magento works and developers must have knowledge of server side requirements and features. Complete coordination, DevOps is essential in this case.

If you want to be sure about the experience of the developers you are considering, ask them the following questions when you ask for a quote:

  • Do they have in-house hosting services?
  • What elements of hosting are they going to be responsible for and what elements are going to belong to a third party?
  • Do they have an infrastructure for testing?
  • Do they use automated tests?
  • What kind of performance measuring test do they use exactly?
  • Do they themselves use hosting services?
  • Do they have trustworthy partners for hosting?
  • What is the expected uptime of the store?
  • Do they use software like Capistrano, Jenkins or Gitlab CI?
  • How do they handle log files of Magento?
  • How do they launch a store, what is the exact process? What software do they use? Can the process be automated?
  • What kind of version control infrastructure do they use? How do they integrate that with ticketing system, testing infrastructure and testing mechanism?

Summary & Takeaways

Investing in an online store is just like investing in a brick-and-mortar shop. If your store is filthy and depressing, if the equipment doesn’t work and customers get confused by even finding the directions to what they need – well, you will lose your customer base fast.

You must set aside the adequate amount of budget to create an online store, a webshop that works perfectly in every way and resonates with your target audience in every level from navigation to subconscious satisfaction during the checkout process.

Keep in mind: you will have a large competition and your customer only needs to click once to get back to the Google results page and choose one of your rivals.

If you have $100,000-200,000 for the development of a Magento store while you can still keep your inventory full, pay your employees and even have budget for expansion and growth, there is really no question: do it. It is very likely that Magento is the perfect system for your business.

Think about it this way: if the extended functionality, the custom feature and improved UX helps you just by achieving a 10% growth, your investment returns mid-term – and with Magento, as you can see from this article, a 10% growth is not an impossibility or a dream, but a likely scenario.

Alex Schreck
eCommerce Solution Specialist

Alex is an eCommerce Solution Specialist with a deep understanding of the overall operations of an eCommerce business. By putting a great emphasis on optimizing business and eCommerce, he helps web stores align business goals with functionality and recommends the most effective options to meet objectives, while avoiding unnecessary customization and costs. Alex loves working out and watching sports.