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May 11, 2022 | 14 minute read
written by Kirsten Aebersold
This post was originally published on June 30, 2019 and has been updated for relevancy.
When it’s time to choose an eCommerce platform, everyone wants to know which solution will be the best one for their business. But more often than not, the next question is “How much does it cost?” Ideally, we all want the best bang for our buck, but it’s easy to get distracted by the displayed pricing on a website, or the lack thereof. Sometimes we end up jumping for a cheaper priced solution and shying away from those vendors that don’t display their pricing on the website, because we think it’ll be too costly. Only to find out, your “cheaper” solution is more expensive, because you were unaware of all of the additional cost you would incur.
At Elastic Path, we happen to be one of the vendors without upfront pricing because our pricing is truly customized to a business’ needs. However, to help you understand how your Total Cost of Ownership (TCO) would compare to other vendors on the market, we will outline all the factors that you should be taking into consideration when evaluating your eCommerce solution. We’ll also make reference to some of the top eCommerce vendors on the market such as Salesforce Commerce Cloud, BigCommerce, Adobe Commerce (Magento), and Commercetools to give you a better idea of where Elastic Path is positioned in comparison.
To get a true understanding of your total cost of ownership, and you will need to take into account both your first-year costs as well as your future costs. These costs include but aren’t limited to:
In this article, we will first dissect each category of cost you should be considering followed by a breakdown of the total cost you can expect over a typical contract period for the aforementioned vendors.
The base software fee or licensing fee is what we like to refer to as the “upfront” pricing. These fees tend to reflect either monthly or yearly licensing fees, which can be: Tier based, continuous revenue based or percent of sales based.
Tier-based means that there is a predefined price that your company will get locked into based on your current and expected revenue. Elastic Path and Commercetools are examples of microservices-based vendors that do tier pricing by revenue. The Elastic Path model is based on your transaction volume, which can be structured by Gross Merchandise Volume (GMV) or by the number of orders processed (used more regularly for B2B companies).
For example, our pricing starts at $50,000 for companies who are just getting started and have revenue under $10 Million. Our pricing strategy allows you to plan your estimated growth over the next three years, lock in pricing, and allow you to plan for your spend in the future. This promises guaranteed pricing and clarity year over year so you can make plans for the future, not to mention the economies of scale driving the unit costs down as your revenues grow.
By continuous revenue, we mean the strategy by which vendors price their customers based on the revenue tier that they’re in, but automatically bump them up to the next pricing tier as soon as they go over. We’ve seen vendors such as Shopify, BigCommerce, and Adobe Commerce (Magento) use this type of strategy.
By percent of sales-based pricing, we mean the strategy by which vendors take a small percentage of your Gross Merchandise Volume. Salesforce Commerce is an example of a vendor that uses this type of model. For example, Salesforce Commerce Cloud takes 1-2% of your GMV annually. So, at $10 Million in revenue, you can expect to pay around $100K to $200K. This type of model can be quite attractive because there’s no immediate upfront cost and it scales based on how your business performs.
However, there is also an additional annual fee of $150K that is mandatory to begin. This is a great example of hidden costs that you may not be aware of upfront. Generally, you can expect to pay a lower premium with modern Composable Commerce solutions than with an all-in-one solution like Salesforce Commerce Cloud. Check out our TCO guide to learn more.
The last component of the base cost is the hosting costs. With most modern cloud-based solutions, the hosting cost will also be tier-based on volume. Hosting costs are evenly comparable across most modern cloud-based eCommerce solutions.
Implementation costs are usually the most feared by businesses as it is perceived as the highest costs they will incur. These will usually be dependent on the cost of your developer and the time it takes to build the frontend and backend of your system. However, if you’re in the market for an out-of-the-box solution, the majority of your cost will be dependent on the changes and customizations you will need to alter your pre-built solution. For brands with a unique brand vision and requirements, there will most likely always be customizations needed, and therefore, we recommend working with an agency or systems integrator. Here are a few of the tasks you can expect an agency to complete, that will determine your implementation costs:
Increasingly, we see customers looking to adopt a modern Composable Commerce approach use a progressive replatforming approach. This essentially means replacing your existing commerce solution (usually an all-in-one legacy solution) piece by piece. The benefits are two-fold: first, you can replace the component that is causing significant pain in your current solution quicker than a full-scale replatform. Catalog management, or easily customizable cart/ checkout capabilities are common first steps. The second benefit is on the cost front, where the development and customization costs are lower than a complete replatform can be evenly spread across the progressive replatforming process.
For a more detailed break-down of implementation costs, check out our blog post.
Third party costs are a little bit more intricate. When we think about this cost, we think about either plugins that are supplied by your platform as an application, or API integrations from third party vendors. The purpose of these integrations are to essentially extend your existing platform with other functionality. Some of the core third-party integrations include: content infrastructure, search engines, sales tax management, product information management (PIM), and shipping solutions. These costs will differ from vendor to vendor depending on if you leverage the third party as a plugin to your out-of-the-box solution, or buy a specific vendor solution for your Composable Commerce solution.
This can be a significant factor for brands that are looking to tailor their commerce solution to their needs with a Composable Commerce approach. They will not need to pay for components they do not use or need compared to an all-in-one solution. In some cases, brands that are already on an all-in-one solution like Salesforce will also add on higher performing third-party solutions to replace the out-of-the-box offering. Search is a good example of this, where brands will choose to implement a leading AI-driven search solution but ending up having to pay for both the third-party solution and the unused native solution from their monolithic provider.
One of the most important costs that are often neglected or forgotten are the costs associated with making changes to your solution. Most times we tend to plan and make decisions for “now,” but when the time comes and you are faced with costly changes that you weren’t prepared for, it can be very detrimental to your fiscal budget planning. In addition, if you’re the type of brand that wants to keep up with the ever-changing times, updates and changes are inevitable and therefore it is imperative you understand what those costs will look like in the future. Typical changes you will need to prepare for include:
These changes can become costly very quickly with traditional legacy platforms, as their rigid structure makes changes more difficult, thus driving up developer costs. Composable Commerce solutions on the other hand are more flexible by nature and therefore will end up lowering your overall total cost of changes in the future. As each business’ requirements will be different, we will not be able to provide an estimate of these costs across each vendor.
However, from feedback from past customers, on average, Composable Commerce solutions like Elastic Path and Commercetools, lower cost of changes by 40% when compared to rigid legacy platforms like Salesforce Commerce Cloud. Learn more about the expected cost of changes in our TCO guide.
Now that we've dissected the various cost categories, we have provided an overview of the total costs you can expect either on a monthly or annual basis for a few of the top legacy and Composable Commerce solutions on the market.
BigCommerce positions itself as an eCommerce platform for high volume brands, with two main payment plans: Essentials Plan and Enterprise Plan.
BigCommerce Essentials
Plan
BigCommerce Standard
BigCommerce Plus
BigCommerce Pro
Yearly Sales
$50,000
$180,000
$400,000
Monthly Pricing
$29.95
$79.95
$299.95
The pricing represents their upfront license fee. At these rates, you get your average out-of-the-box store with zero customization, providing you with all the features you need to get a basic store up-and-running. Keep in mind the additional costs you may not be considering when choosing BigCommerce, they automatically bump you to the next tier if your actual sales exceed the threshold.
BigCommerce Enterprise
BigCommerce Enterprise offers all the core features, along with the addition of some premium features including unlimited API calls, price lists, and support. Their pricing widely varies based on the average order value and the average number of orders processed per month. Based on conversations from some of their sales representatives, the pricing plan ranges anywhere between $400 and $20,000 monthly.
To learn more, check out our comparison between BigCommerce and Elastic Path.
Shopify is the market leader for SMB customers looking for an out of the box eCommerce website. Shopify customers give up flexibility, meaning that they'll need to be comfortable running their eCommerce website according to Shopify's templates and structures - but for many companies, that is fine because they're just looking for a standard website.
Shopify has 5 primary offerings:
There are also gateway fees, which range from 2.4-3% + $.30 per transaction. Similarly, they charge an extra 2% transaction free for purchases not made through Shopify Payments.
Check out our comparison page to learn more about the major differences between Shopify and Elastic Path.
Magento Community Edition positions themselves as an Open Source eCommerce platform that provides businesses with a flexible, digital commerce solution to successfully sell online. We’ve already written a more detailed post on our blog that digs into Magento’s TCO. To give you a brief overview of their pricing structure, we’ll focus on Magento’s two main plans: Magento Open Source and Magento Enterprise.
Magento Open Source
Magento’s “FREE” Open Source plan proves to be a more customizable option when compared to BigCommerce. Be careful - the only thing free about this option is their licensing fee/download. There are few costs hidden in the background:
I know what you’re thinking, those added up pretty quickly! To be upfront, the price for a more customized store than BigCommerce is going to start somewhere between $30,000 and $100,000 upwards.
Connect with an Elastic Path expert to answer all of your questions, set up a demo, access a free trial, or discuss pricing options.
Adobe Commerce (Magento Enterprise) is the premium paid version of Magento, designed for those stores that need more than the community edition offers, based on the size of their company, and the level of customization they’re looking for. However, with this option, you have to empty your pockets for a much higher licensing fee. Based on your revenue, Magento displays their upfront price between $22,000/year and $125,000/year.
Of course, this also includes access to more advanced features such as security, mobile commerce, and free professional customer support. However, in addition to including all the core features that the open source version consists of, the same features tend to come at a higher price for this plan. Some of these higher feature costs include:
Overall, this comes with more customization, but still lacks complete control over your content. The price for this package starts between $100,000 and $250,000.
Overall, Magento Enterprise comes with more customization, but still lacks complete control over your content. The price for this package starts between $100,000 and $250,000 upwards! These are high costs and to make it even worse, Magento’s performance has not been up to standard either, especially when comparing site speed. You may want to consider the costs associated with their slow performing stores when considering your total cost of ownership as well.
Check out our comparison page for a detailed look at each solutions’ capabilities.
Commercetools is a Headless Commerce Platform. To be completely frank, there are no signs of Commercetools’ pricing anywhere! They seem to be a bit secretive, but we have done our best to provide you with the most accurate information based on feedback from our customers, who shared what Commercetools has proposed to them. These costs include:
Click here for a more detailed look at a side-by-side comparison with Elastic Path.
Elastic Path offers Composable Commerce-as-a-Service, an API-First headless commerce microservices solution. Composable Commerce is a modern approach to eCommerce that is built on the concept of composability, where core commerce functionality and partner integrations can be selected and assembled in various combinations to satisfy specific business requirements, at the speed digitally driven brands need to succeed. Composable Commerce were built on three main tenets:
And it’s with these tenets that Elastic Path has been able to reduce business’ overall total cost of ownership by up to 50%.
As mentioned before, Elastic Path provides a tier-based pricing based on Gross Merchandise Revenue. Overall based on a $10 Million revenue, pricing would be around $50K for Elastic Path. Elastic Path also offers Composable Commerce Experience Assurance that de-risks the management of multi-vendor solutions by providing an expert 24x7 global support team for all issues. This cost of the feature will be 25% of your annual contract value and capped at $25,000 USD/ year.
Additional costs will include: implementation costs, hosting costs and third-party costs which will lie in the same range of costs for Magento. Where you will end up seeing the greatest cost savings are in the phases of customizations and changes. To get a better understanding of how cost of changes can be 5x lower compared to traditional legacy platforms and Composable Commerce solutions visit our Total Cost of Ownership Guide.
If you have more specific questions regarding Elastic Path costs, please refer to the pricing page here.
Understanding your total cost of ownership is not straight forward and often times we prioritize certain categories of costs and lose overall sight on our expected total cost in the future. As each vendor has different offerings, it will never be easy to compare them across the board. However, if you follow the guide of assessing each category of cost, this will give you and your team a good understanding to make an informed decision. If you have any questions, we are always happy to help - Just reach out to us.
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