Questions? (877) 643-7244
FutureNow Post
Tuesday, Dec. 4, 2012 at 5:40 pm

Search Engine Real Estate: The costs behind having a site on Google 5th Avenue

By Mariel Bacci
December 4th, 2012

How Much Does It Really Cost To Build a Website?

It is nearing the end of 2012 folks, and it is time to start appreciating a cold hard fact.  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.  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.  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:

Start-Up Costs:

Business Registration Costs

Storefront Development

Interior Design

Business Planning

Inventory

Monthly 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.

Now lets see how much it costs to set up and run a successful online store:

Start-Up Costs:

Inventory: Depends on business

Conversion Rate Optimization and Online Business Planning: $15,000

Copywriter:$2,500

Design Site: $3,000

Implement Site Design: $5,000

Monthly Costs:

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)

Costs of a relatively small online store:

Start-up: $35,000 minimum + Inventory

Ongoing: $11,000/month

So, as you can see, the numbers are very similar.  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.  You might also be wondering why you have to run tests on your website and if you can’t cut corners there somewhere.  Putting up the money to make sure your website is user friendly and actually has the ability to make  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.  They will either build your site using personas, or will do a lot of qualitative testing before they confirm any implementation on your site.  Or better yet, they will do both.

The World of the Interweb changes more quickly everyday.  You need part of your team to be expert in helping you increase your ROI.  If you have any comments on the price of obtaining a high quality website, please share your brains with us.  If you need help optimizing your website, we are here to help.

Tweet Button

Add Your Comments

Comments (104)

  1. Wow. Great article. I had now idea an online store was such a huge financial commitment.

  2. People who try and cut corners in online business pretty much ruin their long term results. You need to have constant testing and building of the site, otherwise it’ll never make progress in the online market. A lot of people just treat their website as a place for existing customers to shop online, but there’s so much more success to be found in working PPC and SEO. Shame though that most business folk are so far behind the times :( .

  3. Mariel great article. Sadly you are right. To many biz owners fail to see the investment needed.

  4. I have been doing this exact kind of research recently as I am looking to set up an online store. Indeed somewhere the costs are pretty similar to offline Vs. online store. How it looks an average business in medium term will have better benefits from online.

    Thanks for the artcile. It re-inforces my analysis.

  5. Initial costs may be very similar for building a brick and mortar store and a successful an online store, but on the long run I would say that the online option is by far the best you can choose.

    The ROI for a well designed internet marketing campaign is proven to be much higher than that of a conventional marketing campaign and the costs much lower. As such, I believe that on the long run, an online store will always be more effective than a real store and, as the internet world keeps developing at a very high pace, this fact will be more and more obvious in the future.

  6. Now lets see how much it costs to set up and run a successful online store:all cost for me-5000, but im still too little

  7. A lot of people don’t realise the financial commitments of starting any business. Good read, Great article.

  8. Great article, amazing how much money can go into a website, I also agree that getting to googles first page takes $$ or a surplus of free time…

  9. wow , I dont think that you spent that money on your blog ….

  10. Not a perfect article – just a well-organized information. And yes, I agree that starting any business demands financial commitment. If it doesn’t – you are a lucky one!!

  11. It’s not just money, you’ll need to spend a lot of time testing and tweaking until you get it right.

  12. great article, i like it,,
    amazing how much money can go into a website

  13. It’s not just money, you’ll need to spend a lot of time testing and tweaking until you get it right..
    amazing how much money can go into a website

  14. Great article, amazing how much money can go into a website, I also agree that getting to googles first page takes $$ or a surplus of free time…

  15. I found this article very informative, for me my website is the only shop window i have as i don’t have an office that clients call to. This reaffirms my belief that it is a wise investment if i am to survive in the wedding video market.
    Ronan

  16. Wow! It’s expensive but normal cause Search Engine need more cost maintenance for stability

  17. Wow! Great article. I had now idea an online store was such a huge financial commitment. Thanks for sharing good article in your blog.

  18. it is very true. There are many good websites but often it is hard to find them which makes them almost useless.

  19. Depends on what you’re selling on that website or with your business. I suggest you start with the sba.gov website and do your five year plan and include in that plan the cost of your website, and see if your business will be profitable and succeed, or not. After taking a good look at the plan you can determine if you can have the type of websites you’ve been looking at.

  20. Wow great article. Never knew it could be so expensive to have a good user friendly online store

  21. Well great article for start up. This is that point where a business makes its virtue or facing loss. Cost as above discussed may be reduced as we have to select best and cost-effective way to start up.

  22. Waouh, great article! I had no idea that an online store was that expensive.

  23. Copywriter? Design Site? There is a plethora of Cloud website services where you can save a lot and not spend so much? Great article but I kinda have to disagree with some of the services and numbers!

  24. I tell clients to take what you would expect to pay in brick&mortar rent and spend on online marketing. Prime real estate is Google and it costs a lot to get your business seen there.

  25. great article. Website design can be purchased cheaper though, however I would spend more money on promoting the website once it’s created. SEO is a key to success and every online marketer should know about it. Thanks for the article.

  26. I perfectly agree. How many times I see cheap online stores go online one year later, they are off line. Or some end up doing aggressive SEO strategies, blowing up domain after domain. I doubt these will land any reputable, long term business. I agree the costs will definitely be the same!

  27. I spend way less on my online stores but I still like the article’s idea.

  28. Now this is real hard truth. It is almost the same

  29. Even if a company’s website isn’t an online store, the costs for maintenance and marketing can be steep. It’s the future though, and anybody not on the web will have a tough time from now on.

  30. Yes I agree. To get Google 5th Avenue, startup cost is nothing compare to marketing and optimization cost :)

  31. I agree. To get Google 5th avenue, start up cost is nothing compared to marketing and optimization cost

  32. I perfectly agree. How many times I see cheap online stores go online one year later, they are off line. Or some end up doing aggressive SEO strategies, blowing up domain after domain. I doubt these will land any reputable, long term business. I agree the costs will definitely be the same!

  33. great article! I had no idea that it could be so expensive.

  34. I believe it! It may sound surprisingly expensive to some, but to have any sort of success you need a big investment to back it up!

  35. I beg to disagree. For example, you don’t need to necessarily buy and keep inventory for an online store, you can simply do drop shipping. You also don’t need to pay $15,000 for Conversion Rate Optimization. You can read a book or hire an experienced designer (pay a bit more) and get them to integrate all the necessary features from the start.

    At the end of teh day, there’s many costs that can be avoided or reduced with an online store that cannot be avoided with a brick and mortar store.

    I would choose an online store any day.

  36. Yes, it’s true – you get what you pay for and this is a biggie for some small business owners. They think “good, now I’ve got a website the sales will come rolling in”. They have no idea about optimization, content strategy and link building and this all takes time and investment. I think the biggest problems lies in communication, or lack of, between the business owner and the web developer about the work to do once the website is up.

  37. Spending money and setting up a business is easier then to run it successfully. Its very difficult task to be successful in business. There are so many people who wants to be their own boss but only a few get success.

  38. what a great article, you need to learn how to plan, budget and and create and achieve goals through optmization

  39. You are absolutely right..to be successful in online business we need to invest some sort of money in it..but we also have to make sure the money is invested at right place and at a right time..

  40. unfortunately there are still people who think a shop on the internet is cheaper than a physical store, in some cases, work and expense are much larger

  41. While it is true that the price of maintaining a click-and-order company is increasing, I reckon that unlike brick-and-mortars, there are ways to reduce that cost by cleverly outsourcing and decentralizing tasks. Just my two cents. Neverheless, A good read it was!

  42. Great article, amazing how much money can go into a website, unfortunately there are still people who think a shop on the internet is cheaper than a physical store I also agree that getting to googles first page takes $$ or a surplus of free time…

  43. I did not understand the financial commitments of starting a business before reading this post. I am also astonished how much money you have spent for your blog? really impressive post.

  44. Great article. I agree that getting to google first page takes $$. That why I spent a lot of time a day to optimize the online store as a thread off to have lower cost.

  45. Wow, I was thinking that after few years I shall start an online store for gadgets etc, now I have to rethink and save huge money before doing any planning. Thanks

  46. Great article, always wondered what the difference in cost would be.

    We are expanding and one of our largest expenditures is premises/storage.

    To save money we outsource most of our online works to freelancers who don’t have large overheads.

  47. Thanks for your sharing. Actually, we also benifit from the GGAD and we will continue to use the service too.

  48. Yes, GREAT article…this is all so true and often overlooked or understated. Thanks

  49. Mariel, I believe you’re over exaggerating the costs on the online side. What you portrayed as a small to medium sized webstore is actually already a large scale e-commerce project which most on-line retailers do not want nor need at the beginning. No need for 3000$ designs, let alone 5000$ for the implementation. Also 4000$ a month for testing and optimization? A custom design store implemented on an open CMS solution should not set you back for more than 5000$ (that is the high end of the price range). Optimization & marketing 1500$/month, hosting 500$ per year, etc. Good read though.

  50. I think the online costs were over stated but you can really spend as much as you like on a website.

  51. Online Stores are quite difficult to manage in customer service, but still they are better because everything is in digital format..
    Great Article!!

  52. I try to comprehend why online business so expensive with the offline one. My suggestion is use the two method offline and online. So you can maximize your profit doing the same thing minimize the cost by try and error

  53. I thing in the beginning online store can start with minimize cost, and the maintenance also, as long as you can do the all thing that necessary by yourself. You just invest on learning the basic and then mastering the skill on online business.

  54. Yes its cost an average for online store. But it is necessary to maintain our online business store in search engine. Without a good position in Search engine , it wont provide you visitors and ultimately affect the business.

    Mohammed

  55. I have to agree with this last comment from Anze. From my experience on the European market, on a niche market i will advise to spend way less on design (although as you said it is really important I just think 15K is way to much)and focus more on Seo and online marketing. with 10 K euro investment you should be fine. But as I said I’m talking about a small business and in Europe it may only apply in this particular case. Anyway interesting to share this with us. I definitely think that in the future, owners will need to invest much more to enter the online ecommerce market, or even to maintain their position. google is pointing us all into this direction…

  56. I agree with Anze, at least in europe you can go live with less than half of this initial investment. 1O k euro should be enough; and i personally won’t put so much money on design athough i agree it is really an important thing

  57. If you’re not spending the money, you may not see the results. That’s pretty accurate. You may have a cheap wordpress site that you designed and poor copy that you wrote and word of mouth advertising and all that may cost you close to nothing, but the results from that kind of effort won’t take you far. Spend money to make money seems to be the theme here.

  58. I agree with you completly. Of course, you can have a shop “home-made” on Prestashop or Osscommerce, for example, but you also have to assume that you are going to spend a lot of time (time that you have to take from another activity).
    Even doing that, you have to pay for marketing, SEO, Hosting, etc.

  59. Thanks a lot for this interresting article. A few questions came up in my mind though while I was reading. Such as will a brick and morter store really make a profit? And ofcourse as you mentioned allready, is it really necessary to pay that much for Conversion Rate Optimization and business planning?? But defenitely some things to think about here thank’s to this read.

  60. While it’s true that you can’t get an online business off the ground if you intend on cutting corners, I have to disagree with your numbers. I don’t think that an online business has to cost as much as a brick and mortar. Point well taken though. And great article!

  61. Mariel great article. Sadly you are right. To many biz owners fail to see the investment needed. Thanks for Sharing

  62. Great article, thanks for putting that together. I think it could be done for less if you have the right knowledge base. But it is still quite a commitment that most people do not understand.

  63. Great Post! Now i had no idea that an online store was that expensive!

  64. Great post, and I must say the costs with google have only been growing… it leaves small business’s out of the ball game.

  65. Anyway interesting to share this with us. I definitely think that in the future, owners will need to invest much more to enter the online ecommerce market, or even to maintain their position. google is pointing us all into this direction…

  66. Great Article, that in order to build an online store it takes time and money, and it takes even more resources to maintain your site for the long run

  67. I also agree that getting to googles first page takes $$ or a surplus of free time I believe you’re over exaggerating the costs on the online side.

  68. great article, it will help many people who are searching for the same thing. well i think every business is going to be online today, so if you have a business then you must ready yourself for all of these expenses.

  69. Oh Wow.. quite surprising for me. Never knew that an online store could cost that much. Interesting article.

    Thanks,

    Terry

  70. One cannot forget how important traffic is for you to excel online so i recommend search engine optimization because it is a great source for traffic.

  71. It’s always best to start out small, regardless of a brick and mortar store or e-commerce website, then build from there. An owner who already has an established, successful offline store should build an online store. Newcomers, need to focus on one or the other (online or offline store) first because both will be challenging when starting out the gate.

  72. Actually this is possible with a lot less money, by outsourcing employees for example.

  73. Great article! I had now idea an online store was such a huge financial commitment. Quite surprising for me

  74. Now lets see how much it costs to set up and run a successful online store:all cost for me-5000, but im still too little :) ))

  75. Wow, I am really taken back with how much it costs to operate on Online Store. I guess if you want a top quality site with high Google search placement, you have to pay the price :)

  76. Really interesting comparison. Never quite thought of it like that and you generally think online to be a lot cheaper than real world but at the end of the day it all still costs money. Competition is also radically on the rise online, so it makes sense that you have to throw money there to make an impact.

  77. You can always “test the waters” so to speak in the beginning. I am referring to is a free sub-domain with a free hosting and website creator. Everything is free and if all goes well, you could always upgrade or hire somebody to do a professional site. Your online business can slowly increase while your wallet slowly increase as well. I also agree with another comment, spend more on the marketing aspect instead of the design – you want and need the traffic.

  78. Spend more on the marketing instead of the design aspect – you will need the traffic. You can start with the free hosting and web creators with a free sub-domain and take it from there.

  79. Indeed somewhere the costs are pretty similar to offline Vs. online store.
    And yes, I agree that starting any business demands financial commitment.
    Great article, i like it.

  80. I partially agree with what you say. I see two major differences between the two businesses:
    1 – The cost for the offline store is not scalable, with two employees there is only so much you can sell. In the online store, one IT guy can scale the website to serve a massive amount of customers.
    2 – You can create an online store with a very small amount of money, and some knowledge about how to build a website. Of course it will not be so professional, but it may still sell something at the very beginning. However, the setup costs of a small store cannot be lower than that.

  81. I spend more money on promoting the website once it’s created. SEO is a key to success and every online marketer knows about it.

  82. I guess it is worth spending money on SEO..but I am skeptical as well.I heard google may ban your website if the hacks used for SEO are not upto the google policies

  83. Yeah, its getting tough out there to make an impact. Competition is getting fierce.

  84. I build my own website and I’m doing my own SEO while I subcontract websites for a company. So the costs are considerably lower for me.

  85. Keep in mind that it is easier to cancel a web hosting package than to cancel your lease contract for a brick and mortar store! Having a site is not that expensive, if you know how to barter your services. I have traded my services with others for FREE! Promoting and doing the SEO – well, I would rather do that on my own.

  86. Interesting that online can be as much as bricks and morter. However I would imagine the incremental cost of an additional site is less than adding another shop.

  87. The costs may be the same for one physical store but I don’t think this article takes into consideration what the costs would be if you wanted to open a nation-wide chain of brick and mortar stores.

    Obviously doesn’t even nearly compare.

  88. These figures belong in an extremely large ball park!

    If you wanted to, you could easily spend twice those quoted above for both a brick/mortar shop and a website.
    And you could also halve them and still get a similar quality store/site.

  89. Keep in mind that it is easier to cancel a web hosting package than to cancel your lease contract for a brick and mortar store! Having a site is not that expensive, if you know how to barter your services. I have traded my services with others for FREE! Promoting and doing the SEO – well, I would rather do that on my own.

  90. Hi there,

    This was a great read, and I have to say that I was a bit shocked at the figures, especially when it comes to the price you have to pay for conversion. I just set up a small ecommerce website to sell virtual goods, an I noticed that my conversion rates went through the roof when I integrated the site with Pinterest. What are your thoughts on social media integration to improve conversion rates?

  91. I agree with you Mariel that staring an online store is not a kid`s game but you can do this in $20,000 also.

  92. On the one hand it would be difficult to dispute these numbers, but the draw for me to earn money on the internet is that there are many ways you can make a profit without making an investment. It may mean you’re not building a store, but you can create a niche blog for internet marketing by investing in a $10 custom domain on the Blogger platform. So, opportunities online still do exist in my opinion, even for those without much capital to start out with.

  93. It’s really nice article! I know about online marketing store. But i don’t know about such a huge financial commitment I am surprised

  94. Have been working on my website since my last comment. I have read a lot of material about the importance with getting signed up with MapQuest and other local search directories. This is also a very important website/business task.

  95. I respectfully submit that the online store figures – particularly the ongoing $11,000 per month – are unnecessarily high. The same quality and results can be accomplished for considerably less.

  96. Interesting idea to compare offline vs online store.

    I think you can decrease expenses with a litle bit of research.

  97. Spend it to get it!! For start-ups, it’ll always be a hard beginning. Nice post title!

  98. I’m glad someone has taken the time to go into detail on this subject. All I have seen up to this point is very shallow writings. I can use this.

  99. I am a little blown away by the 11k monthly maintenance figure. I suppose in the example above we are talking about a MAJOR e-commerce site.

  100. Wow! This content is deep. Thanks.

  101. Well I am looking forward to set up a business of my own and I never knew where to look at as far as as logistics and other amenities is concerned. I will definitely make sure that I keep the mentioned points above in my mind while setting up my office.

  102. Yes i agree with the author. If you invest a good amount and time in online business, then only you can achieve the required goals. Nice tutorial and comparison which gave a clear picture between the physical and online store.Thanks.

  103. It is obvious that the cost is nothing compared to marketing and optimization cost. You have to very carefull to calculate all the cost before you decide to start a business

  104. Specially in Spain People think thath building a web site is very cheap but it comes to build a professiona site then the cost fires up. I will translate this article and link to my site.

Add Your Comments

 

Print this Article
Share

Mariel is a GA certified analyst at FutureNow, Inc.

More articles from Mariel Bacci

Marketing Optimization Blog
FREE Newsletter Sign-Up
send it once every: