What’s Total?
- How to Calculate the Total Cost of Ownership for the Implementation of an eCommerce Platform
When making the critical choice to select an eCommerce solution, you want to ensure that there are no surprises or hidden charges before or after deployment. The cost of third-party apps and continuous maintenance, as well as solution partners, optimization, and other services, goes considerably beyond the license charge.
In this post, we’ll guide you through several components of your eCommerce solution and offer tips for lowering your total cost of ownership (TCO).
- What Exactly Is TCO and What Does It Entail?
The total cost of ownership (TCO) is the sum of all costs and expenses associated with purchasing, deploying, and operating an eCommerce solution. This comprises the licensing price, hosting, extensions, third-party apps, feature development, design, and continuous maintenance from a technical and monetary standpoint. Platform license fees are very unusual to fluctuate as a company expands. Inquire about each possible platform’s pricing structure and how it changes as online income grows.
From a resource standpoint, you must examine the skill set required to properly launch and manage the platform. Calculating the TCO for each prospective eCommerce platform can help you remain within your budget and avoid surprises later in the process.
The opportunity cost is equally important in the TCO study. The opportunity cost is a measure of the possible loss when selecting one platform over another. For example, one platform may be less expensive but has a history of downtime, resulting in revenue loss. Or you find a platform that works for your organization now but cannot scale as your company grows.
- Understanding Your Alternatives
When considering eCommerce systems, they will be classified as on-premise, cloud, or SaaS.
Open-source eCommerce solutions can be on-premise or in the cloud, whereas SaaS commerce choices can only exist in the cloud. It is the merchant’s responsibility to maintain the extension up to date for cloud and on-premise alternatives. We advocate incorporating important stakeholders, such as eCommerce, marketing, sales, and operations team members, in the platform selection process from the start. Working jointly to define the project strategy, feature needs, and platform requirements can help you prevent any surprises later on.
- Third-Party Applications vs. Standard Functionality
We frequently see businesses attempt to repurpose their original third-party applications without realizing what functionality is integrated into an eCommerce platform. In actuality, replicating the identical apps in your new eCommerce solutions may be more expensive. For example, Magento Commerce Cloud has out-of-the-box capabilities like wish lists, gift cards, and loyalty, as well as over 150 extensions to meet any company need.
Begin by determining which third-party programs you require depending on the amount of income they generate. This will assist you in deciding which ones to eliminate, combine, or replace with a superior alternative. Working with a certified solutions professional can assist you in understanding how native capabilities may replace the additional expenses associated with third-party apps or assist you in locating an application that fits with the eCommerce solution. Remember that reviewing third-party applications is an ongoing process. You want to make sure your apps don’t conflict with native functionality as ecommerce systems grow.
- Selecting a Certified Solutions Provider
Replatforming an existing eCommerce site or establishing a new eCommerce endeavor necessitates a distinct set of talents, including project management, front- and back-end development, UX, design, optimization, and business research. To calculate your TCO properly, you must first decide whether you will bring these talents in-house or employ a qualified solutions partner.
Working with a solution partner provides advantages. Partners who specialize on a certain platform, such as Magento Commerce, will have certified developers who are well-versed in the platform. They have built systems that will assist you in staying on schedule and within your budget. Finally, they often have years of expertise that they can draw on to provide both technical and strategic advice.
Choosing a solution partner only on pricing may end up costing you more in the long run. When screening partners, ask the following questions:
If you prefer to have an eCommerce team in-house but don’t want to spend a lot of time training them, you may cover front- and back-end developer and project management responsibilities with staff augmentation. Staff augmentation allows you to engage experienced workers who can swiftly ramp up and provide value to your project. Your TCO will be affected by either choice, personnel augmentation or a solutions partner.
- Long-Term Planning
Finally, you must describe your five-year goal and how the eCommerce platform fits into it. Will the platform be able to scale if you want to increase online revenues and visitors over the next five years? Is the platform adaptable enough to shifting client behaviors? How frequently does the platform add new features? If a platform does not correspond with your long-term goal, customizing or replatforming will cost you more in the long run.
After you’ve picked your platform and launched your new website, consider what resources you’ll need to improve the consumer experience. Optimization is a continual process that necessitates the regular evaluation, testing, and upgrading of the UX and design. You may require an A/B testing platform or the assistance of a partner to conduct tests and evaluate results.
TCO for an eCommerce system is more complicated than comparing license rates. By shedding light on all of the factors that go into determining the cost of establishing and maintaining an eCommerce system, you can minimize unknowns and make wise decisions.
