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Originally published at Internet.comThis is one in a series of columns on the open-source commerce (OSC) industry.
A free, open source shopping cart may sound really attractive in these economic times, but how free is free? It's not a trick question. If you add in the cost of the technical degree required by some free, open source carts, or technical support to get others to work, as well as the value of your own labor and the supporting services needed, your free shopping cart may not really be free at all. Here we will examine the range of full costs of operating an Open Source, online store such as osCommerce, Zen Cart, CRE Loaded, or osC-MAX.
What are the True Costs of Running an Online Store?
If you already have a technical education and own the software programs to run it, meaning that you will be your own technical support guru, then you may be able to run a free online store for close to free, by hosting it yourself, customizing it and doing your own graphics, and so forth. But the majority of users will need to pay for or locate the following: * Software and Customization * Template or Custom Design * Domain Names * Web Hosting * Technical Support * Credit Card Processor * Security - SSL Secure Certificate * Supporting Computer Programs and Upgrades * Your own Education * Your own Labor
We'll take a look at the range of each of these items in turn so we can get a better picture of the whole costs.
Software and Customization ($0 to sky's the limit)
It is rare for an online store to contain exactly the features that a business requires. Once you have your business idea, you will do a lot of research to find the program that is best suited for your industry, and then have that program tweaked for you. One option is to go with a program that is loaded with many features, hoping that it will contain most or all of the features you need.
That store will need to be installed and set up by a Web programmer to meet your custom needs. You may already use a program such as Quickbooks, and need to have your sales downloaded into that program for your financial tracking. With most open source shopping carts, even though a "contribution" or plug-in code is available for free, programs such as Quickbooks integration requires special customization to make it work with your particular situation.
Template or Custom Design ($50 to sky's the limit)
If your online store looks exactly like every other online store, you will not get many sales. To make your store look unique and to give your programmer a map of what you want them to program for you, you will need a template or custom Web design to be made by a Web designer.
The Web designer will create a picture of what your store will look like, called a "mock-up" so you can easily change it before investing in any programming. It is rare for a Web programmer to also be a graphics designer, but these two often work together to give you a seamless project.
Asking how much a custom store design will cost is a bit like asking how much it costs to design a house. It depends on how much customization you want, or whether you are willing to work from existing stock plans. A custom design can run from several hundred dollars for a very simple design, to several thousand.
If you do not want to hire a graphics designer to do a custom design for you, there are pre-made templates available for many open source e-commerce stores. You can find the template most similar to what you had in mind, and simply have a few graphics made such as your own logo inserted into the header.
The quality of these templates varies widely. Templates are available for aroundd $50 for a non-exclusive design that is licensed to a handful of other stores, generally fewer than a dozen; to around $1,200 for a template that has never been used on another store and which is never resold again. The customization charges are generally hourly.
Domain Names ($8 to $35 a year each)
This may be one of your smallest expenses, but it is important to the success of your store. If you can include "keywords" in your domain name that customers will use to search for you, such as the name of your product, then your search engine work later on will be cheaper, because most search engines list the site with the search term in the domain name higher than those that do not.
For example: if you choose the domain name for your store AcmeLightweightChainsaws.com, your later search engine work will likely be cheaper and easier because it will "organically" catch searches for saws, chainsaws, lightweight chainsaws, and Acme chainsaws. A tip: if you cannot fit the search words into your domain name, or if they are all taken, it is next-best to put them in your file names.
Don't skimp on domain names - you can have several domain names for your store all "pointing" to the same Web site, though you should choose one domain name to be your "main" domain name. Register your main domain name for more than one year at a time to tell search engines you mean business. And don't forget to renew it, or put it on auto-renew with a credit card that has an expiration date far in the future.
Web Hosting ($5.95 to $300 a month or more)
Web hosting is one of the most crucial aspects of your online store, and one that all but the most technically-elite must purchase. All other things being equal, if you have a good Web host, you will probably be a satisfied Web store owner. An unsupportive Web host, or one that performs poorly, will make running your store a living nightmare, as you will never know if your store is online, being backed up properly, your pages load slowly for customers and worst of all, if the security of your store is being compromised. This makes a cheap host very expensive when you consider the full costs.
In general, the cheaper the Web host, the less technical support they provide. The cheapest Web hosts include no support and make it very difficult to file a legitimate trouble ticket even if your Web site is down. A moderately-priced Web host will include some support, perhaps via chat so that they can support up to 8 customers at the same time. A Web host that includes full support for your online store is rare, but some can be obtained for approximately $35 a month. This is downright cheap even if you have only one question a month, which is of course what they are banking on. A Web host that provides telephone support, or even toll-free telephone support, is a wonderful thing and should be treasured.
I do recommend using a Web host that specializes in e-commerce hosting, and most preferably one that specializes in the e-commerce program that you use. This will be cheapest in the long run. (Continue to Page 2 for Details on Tech Support, Credit Card Processing and More)
Technical Support ($0 to $100/hr or more)
No matter where you rank on the technical scale, there is always someone who knows more than you, and someone who knows less. Even the most technical types know someone they can call on in a pinch when a question has stumped them. This may surprise non-technical folks, who often feel that if they just tried harder they could find the answer themselves.
In addition to the sometimes raucous, occasionally peevish online bulletin boards or forums, there are also e-mail support groups that can be found on Yahoo Groups or other mailing lists. Each e-mail group will have a different audience and a different charter, but in nearly all cases they are free. Members of the e-mail group can post their questions to the group, and those members who respond also post their replies to everyone. In this way, everyone learns at once, and for free.
When you absolutely, positively cannot wait for free e-mail support from your group, a sympathetic techie is good to have lined up. You may want to just surf the bulletin boards or e-mail groups until you find someone whose posted responses you trust, and contact them off-list. If necessary, and if the bulletin board or e-mail group allows it, post a message asking for a recommendation to a technical support person.
Your Web host may also provide technical support on an hourly basis, or be willing to recommend someone who does.
Credit Card Processor (About $20/month plus per-transaction fees)
Of course the point of selling online is to accept payments via credit cards, and the banks make money whether you are buying or selling. Many credit card processors have upfront fees such as application fees (you do have to apply for a credit card processing account, just like applying for credit), setup fees, monthly fees and statement fees. In addition, for each transaction you will pay a fee ranging from the low two to five percent or more, though the most common fees are in the two-and-a-half-to-three percent range.
Once you have decided on which online store program you want to use, find out what credit card processors they support and select one from that list. Note that many credit card processors will waive some or all of the upfront fees, and the only way to know for sure is to ask them to do it.
If all these fees have your head spinning, you may want to start with a simple, third-party off-site processor like PayPal. With no up-front or monthly fees, their per-transaction fee is a bit heftier, but you have no monthly overhead. Once your sales volume starts getting above say $1,000 a month or more, you will want to research other vendors to see if you can save a little.
A bonus of using the third-party off-site processor is that they provide all the security you need to complete the transaction, as no financial information is gathered on your Web site. This means you can skip the next annual expense, the Secure SSL Certificate.
Security - SSL Secure Certificate ($75-$300/year if needed)
If you accept credit cards in your store as opposed to on a third-party Web site such as PayPal, you will need the files that store that credit card information to be encrypted to prevent hackers from stealing it from you. An SSL or Secure Socket Layer Certificate, indicated by the "S" in the httpS:// that precedes your store's address, tells visitors that the information they enter on that page will be encrypted by the server.
Please note that some Web hosts claim to have a free shared certificate. However, shared certificates will pop up a warning saying the name on the certificate does not match the name of the store, and this is of course because the Web host's domain name is different from your domain name. This stern-looking warning, which appears when customers go to check out, will cause most of your customerss to abandon their shopping cart.
Your Web host probably sells and installs secure certificates that are compatible with your store, so contact them about it for the smoothest install. If they don't, ask them for a recommendation. You will need to renew this each year.
Supporting Computer Programs and Upgrades ($0 to $1,000 a year)
If you are a technically-minded person, you may be able to get by just with Microsoft's Notepad program for editing the HTML and PHP files in your store. There are also free editor programs such as Mozilla Seamonkey, which includes the most excellent Netscape Composer (full disclosure: I was once the producer for the Netscape Composer Web site). There are also a number of free and Open Source PHP editor programs for serious programmers. But many moderately technically-oriented store owners will choose an HTML editing program such as Adobe Dreamweaver, which runs hundreds of dollars and must be upgraded every few years, because they have so many useful and time-saving features.
If you will create and/or edit graphics or photos, you will also need a photo editing program. While there are also a number of free graphics editor programs, as well as many low-cost graphics editing programs, most moderately technically-oriented store owners will choose to learn the standard Adobe PhotoShop, which also runs into the hundreds of dollars and likewise has so many useful and time-saving features. Note that Corel's Paint Shop Pro is priced proportionately less and has nearly the same features as PhotoShop.
There are also many smaller programs you can use, ranging from free file transfer programs such as FileZilla, to code comparison programs such as Beyond Compare ($30), to password management programs for the many passwords you will have. Most have a free trial period which can reduce the risk of trying them out.
Your Education ($0 to $1,000 a year)
In order to measure the true costs of running your online store, you must include the cost of your own education. You may consider your previous education a sunk cost, in other words something that you invested long before you decided to get into this venture, in which case you might say the education component of your online store costs you zero.
However, for most folks, you will need to calculate in the cost of purchasing user manuals (full disclosure: I write many of these manuals), tutorials or training manuals if available, and occasional technical manuals such as books on HTML, PHP, e-commerce and/or the Internet to help give you background information. You may also need books on online advertising and/or marketing, search engines, security, and books to help you understand the computer programs you use, the digital camera you use to take photos of your product, photo or graphics editing software, and books on subjects such as video or audio editing if that is part of your store.
Your Own Labor (Priceless)
Last but not least is the value of your own labor running your store. Will you spend one hour every day, five days a week? Will this become your full-time career? How much is your hourly rate worth? Your job satisfaction may be hard to quantify, but investing in the proper software and tools listed above will actually minimize the cost of your labor, and over time your labor will ultimately become your largest single expense.
The Bottom Line
When we consider the full costs of running an online open source e-commerce store, only a few, highly technical people can run a store that is truly free ( the value of their own labor notwithstanding). The rest of us need to be realistic about the true, full costs, because we will invest a good deal of cash into developing the online open source store of our dreams.
Kerry Watson is a consultant and author of 10 books
Author: Kerry Watson
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