It is nearing the end of 2012 folks, and it is time to start appreciating a cold hard fact.Â Your online store costs as much to build and maintain as a brick and mortar store. If it is not costing you that much, you are not likely finding success.Â Maybe you already realize this and are allocating a proper budget for the success of your online business, but others might need a wake up call: Creating and maintaining online real estate is real work that costs real money.
Let’s look at how much you you need to be spending on your site in order to actually make some money-and not waste your time and resources. Just like a retail store, online business start-up costs have an infinite range, depending on who your demographic is, where your market is, and what your inventory costs will be. The best way to determine your costs will be to develop a business plan; The research your plan puts you through will reveal your online business’ start up costs
In this post we will examine the cost of a opening a brick and morter store in Southern California to the price of creating a successful online business.Â Some people would argue that setting up and maintaining an online store is much cheaper than an actual brick and mortar store-but we are going to realign your perspective.
While the range of start up and running costs is different for every business, we will examine some low to average numbers because we will be comparing it to a small to medium sized online business.
Costs for a small store in Southern California:
Business Registration Costs
Rent: $2,100 a month
Fixtures, Displays, Etc:$200 a month
Utilities: $500 a month
Employees: $2,5oo a month for 2 minimum wage full time employees
Advertising on and offline: $500 per month
Insurance, Permits, ETC: $400 a month
So we are looking at about $90,000 in start-up costs and $8,000 a month in maintenance for a brick and mortar store.
Inventory: Depends on business
Conversion Rate Optimization and Online Business Planning: $15,000
Design Site: $3,000
Implement Site Design: $5,000
Server and Site Security: $150/month
Continuous Testing and Optimization: $4,000/month
Employees (Customer Service, IT): $6,000 per month (1 full time customer service and part time IT)
Online Advertising: $500/month (we all know that it can cost much more to get ranked on the first page of Google results for both Organic and PPC traffic)
Start-up: $35,000 minimum + Inventory
So, as you can see, the numbers are very similar.Â To put together a respectable online store, you have to be prepared to make a financial commitment.
You might be wondering why you have to spend so much money on Conversion Rate Optimization and business planning.Â You might also be wondering why you have to run tests on your website and if you can’t cut corners there somewhere.Â Putting up the money to make sure your website is user friendly and actually has the ability to makeÂ money it the most important place you can put your money.
If you are wondering how to find someone who can help you create an online business strategy and optimize you site, we suggest looking at visitor centric CRO specialists.Â They will either build your site using personas, or will do a lot of qualitative testing before they confirm any implementation on your site.Â Or better yet, they will do both.
The World of the Interweb changes more quickly everyday.Â You need part of your team to be expert in helping you increase your ROI.Â If you have any comments on the price of obtaining a high quality website, please share your brains with us.Â If you need help optimizing your website, we are here to help.