Operating an online store, or ecommerce business, is a way to market to the world while keeping costs to a minimum. You save money not having to pay for a physical building and the merchandise to fill it. Many people are able to market their products online who would not have the means to start a business otherwise. However, operating a business over the internet is not free. There are many factors involved that determine the price. In fact, the average cost of operating an online business has not yet been determined due to the number of influencing factors.
One initial expense of operating an online business is paying a web hosting company to host your site and register your domain name. Competition among hosting companies keeps the cost relatively low. You can generally expect to pay somewhere between $5 to $90 per month for these services. Many hosting companies have features that can save you money in other areas such as free design software and credits towards advertising.
Another expense when opening an online business in designing the web site and installing a shopping cart program. People pay hundreds, even thousands of dollars to have site developers design and compose their sites for them. However, the best way is to be self sufficient. There are shopping cart programs designed for those with no previous programming experience, little programming experience, or those who don’t mind taking the time to learn. Shopping cart programs can come free with your hosting package, free shopping carts can be downloaded from the internet, or be purchased for a monthly fee that can add up quickly or a single upfront fee. Purchasing a shopping cart program often costs several hundred dollars and if charged monthly, over time, it can really ad up.
In addition to the initial expenses of an online business, one must purchase merchant account services to accept credit cards and other forms of payment. You will have to obtain a payment gateway and pay to authorize credit card payments. Merchant accounts charge you by a percentage of your total sale. On average, you can expect to pay between about 3% – 7% of your total income. On top of that, merchant accounts may charge a set up fee and a fee per each transaction.
Another item that is highly suggested to obtain when selling items online is an SSL certificate. This is a credential that shows your customers that you are who you say you are and that they are using a secure site. SSL certificates can often be found for free online or included in a hosting package. However, for added security or for a non-shared certificate, you may purchase an SSL certificate for a price ranging from $50 on up.
Finally, one of the greatest expenses in selling products online can be advertisement. Driving traffic to your site is important. However, the amount spent on marketing is a personal decision and varies greatly from business to business.
Operating an online business does have some expenses. However, if you are willing to shop around and do a lot of the work yourself, you can cut back on a some of the costs and see a larger profit.
