Top Ten Tips for Estimating E-Commerce Startup Costs

December 17, 2020 Published by: Minesh Doshi

ecommerce website development

The eCommerce sector is thriving at a rapid pace across the world. It is one of the few sectors that have done exceptionally well in this pandemic age. However, it is fair to mention that eCommerce is highly challenging and throws many obstacles in the way of new players. Startups have to face difficulties arising due to the changing expectations and shopping patterns of their customers. Apart from these problems, they have to withstand tremendous competition.

In such a scenario, it will be a great help if they know the estimated cost for eCommerce startups. Here we mention the top 10 tips for measuring the cost for your eCommerce startup. But, before moving forward, let’s make a list of the cost-determining factors for your startup.

Cost-determining factors for Your E-Commerce Startup

  • Cost of property, equipment, and resources
  • Marketing and business promotion
  • Asset and warehouse maintenance
  • E-Commerce website development
  • E-Commerce app development
  • Certificates, License, and Permits
  • Integration of payment gateways
  • Other expenses like R&D and employee salary

Here we give the top ten tips you can consider for estimating the cost of your startup. We hope that the tips mentioned here will help you initiate the journey in the ever-increasing eCommerce sector.

1. Consider working space– Even if your business is online, you need a working space where you can collaborate with your team members, store products, and even run a help center for your customers. As a startup, you can start with rental property and consider the rent as a monthly expense. If you have bought a property that needs maintenance, then you should add its maintenance cost.

2. Web development cost– You need to choose a reputed and reliable eCommerce web development company to make a user-friendly website in line with the requirements and expectations of the target audience. Hiring an offshore software development company can be a good option especially if your headquarter is in the USA or Europe. The website development cost depends on various factors like the number of pages, content writing, CMS, and payment gateway integration.

3. Delivery network cost– It is imperative for startups to establish and maintain a robust delivery network. It can help them deliver orders on time and gain the trust of customers. These days, people prefer on-demand delivery of products, so it is better for startups to come up with customized, on-demand apps. The digital network consists of computers, telephones, and a high-speed Internet connection is essential to manage the operations of a customized website and a feature-rich eCommerce app.

4. Packaging and shipping costs– Amid intensifying competition, startups need to provide free delivery to their customers. Therefore, they should essentially consider the packaging and shipping cost in their estimate. But then, the shipping cost relies upon multiple factors like package size, weight, country of origin, and destination. At times, you need to consider the insurance of packages. Many eCommerce business owners provide an order tracking feature on their websites and apps. You need to integrate this feature into the business website and app to gain the trust of customers.

Also Read- Future Trends of E-Commerce Industry to Watch Out for in 2021

5. Employee salary– In the beginning, you will have a limited staff, but it is a herculean task to figure out their salaries. You need to offer the proper salaries and wages to early employees by considering the budget and salary trends. You need to define the salary structure in a way that it becomes a motivational factor for your early teammates.

6. Taxes and Overtime– You need to add overtime pay for hard-working employees. Ou can calculate the total overtime hours by Another sizeable expense is a payroll-related tax or TDS (Tax Deduction at Source). You need to consider local and national taxes if you want to expand your business beyond borders.

7. Marketing and Promotion costs– Even if you have a user-friendly website and a dedicated, feature-rich app, you need to promote your eCommerce business online to remain firm amid growing competition. A reliable eCommerce app development company or a reputed IT consulting company can give you valuable advice on this matter. It is better to calculate costs related to promoting your website and business online prior to establishing an eCommerce startup.

8. Insurance costs– While ensuring on-time delivery and product quality, you need to keep the security of property and your business operations in mind. You can have insurance against any damage or business interruption prior to establishing a startup. Insurance offers liability coverage and protection for product damages, employees, and property.

9. Utility expenses– These are the most overlooked charges. Utilities like water, electricity, and phones incur charges every month, and there should be provision for them. Also, it is better to keep some amount aside for maintaining your website and app to ensure their seamless performance.

10. Legal expenses– The eCommerce sector is one of the highly regulated sectors globally. You need to ensure that your startup complies with all prevalent standards and laws. With this, whenever is necessary, you need to take permits and licenses. All such expenses are added in the operational cost.

Apart from these tips, you need to keep some other points in mind like finding the approximate cost of monthly Internet charges, segregating recurring and one-time costs, website hosting cost, and other expenditures.

Concluding Lines

There is no exaggeration in mentioning that the operational cost for an eCommerce startup takes a toll on the owner, at least at the initial level. Be it eCommerce website development or inventory management, every process needs money and effort. The initial phase of the eCommerce website and business requires hard work, research, and working capital. We hope that the top 10 tips mentioned above will help you estimate the cost for your startup.

At Semaphore Software, we offer IT consulting services to startups and SMEs. We also assist entrepreneurs to come up with a user-friendly website and a feature-rich mobile app to grow their eCommerce business quickly. Our eCommerce web development services are designed to assist startups and small-scale retailers to leverage the benefits of advancing technologies.

Simply drop us a line at info@semaphore-software.com to know more about our offshore software development services.