How much does it cost to start an e-commerce business?

According to the Office of National Statistics (UK), the country’s e-commerce revenue was already reaching £688.4 billion in 2018. And now, in the wake of COVID-19, an e-commerce business is beginning to look like the only safe option; physically and financially.  

But everybody has to start somewhere. And if you’d like to start your own e-commerce business, there are a few questions you’ll need to ask yourself. 

• What is an e-commerce business? 
• What e-commerce platform should I use?
• How much tax will I have to pay?

An e-commerce business sells goods and services over the internet. Think of sites like Ebay and Amazon; obviously the heavy hitters of e-commerce, but they can be set up and run by just about anybody.

If you decide to take your business into the digital world, you should be aware that there are significant set-up and running costs that you’ll need to plan for. But there are so many different options and pricings out there, it can be difficult to pin down an exact figure.

In an effort to do just that, let’s talk about e-commerce businesses.

This is the first big choice you’ll have to make when setting up your e-commerce business. The answer will depend on what your needs are, and how much you’re willing to spend. 

Let’s start at the lower end of the market. Sites like Wix, Squarespace, and Etsy pride themselves on offering a quick and easy set up for small businesses and sole traders, for a bargain price. 

They help you set up with some premade templates – basic designs for your site’s aesthetic. They’re pretty easy to use but are from a limited supply, meaning there could be hundreds of other sites out there with the same look and feel. 

Wix pricing starts from £13 per month for a “business basic subscription”, going up to £22 per month for their “Business VIP” subscription.

Squarespace pricing starts from £10 per month on the lowest end, going up to £30 per month for their “advanced commerce” subscription. 

Etsy advertises free subscription. Instead, they charge you fees on transactions, ads, and product listings. 

On that last point, most of the cheaper sites have hidden fees for operational costs. They’re a good option for small operations with a lower budget, but those transaction fees can really limit any significant market growth. 

Moving up, there are some medium priced ecommerce platforms like Ecwid. 

Ecwid pricing starts from £0 per month for their basic subscription. Functionally, the basic subscription seems to do a lot of the same things the cheaper site builders do, but they say there are no transaction fees so there’s some room to grow there. 

Alternatively, their “unlimited subscription” is £99 per month. For that you’ll get a whole bunch of extra features like:

• Omnichannel marketing – so you can advertise on other well-known sites
• Cross platform functionality – so your site works on mobiles, IOS, and androids. They’ll even help you make an app for your store.
• SEO tools – to help your site appear on search engine rankings. 

Of course, there are other features we won’t cover here but ECW seems pretty flexible with what they offer at different prices. Medium priced sites like these seem like a good option for small businesses, giving them room to grow online at a reasonable price.  

Finally, at the higher end of the ecommerce platforms you’ve got sites like Shopify plus and SAP commerce cloud.

Shopify plus pricing starts at £2,000 per month and will probably be higher depending on the size of the Ecommerce business and the extra features you want. 

SAP cloud commerce pricing is slightly elusive. Both their “standard edition” and “professional edition” prices are available on request. Again this will probably depend on the scale of your business and the number of bells and whistles you need. 

These platforms are for large businesses that will see loads of online traffic, so they’ll need dedicated host servers to run properly. 

Aside from that, you’re usually paying for integration and scaling capabilities, ground-up site design and guidance, SEO capabilities, tech support, customer support, and basically every other feature you could possibly need if you’re willing to pay for it. 

All three price ranges offer different features and extras, so it can be a little confusing. The good news is the lower-mid priced platforms offer free trials, and the higher priced sites let you talk to an expert to help you figure out the set up and running costs. 

Have a browse, ask some questions, read some reviews, and find out what you really need your ecommerce business to do before spending any money. 

An ecommerce business is still a business, so you’ll still have to think about taxes. This will vary depending on whether you’re self-employed or a limited company, but both may have to register for VAT.

If you’re self-employed, you have to complete a Self Assessment tax return to pay your National Insurance Contributions and Income tax. 

Limited companies will have to pay corporation tax.

If your annual turnover is more than £85,000, you’ll have to register for VAT (Value Added Tax).

These aren’t costs, necessarily, but it’s worth taking into account when you’re planning to start up your own e-commerce business. 

Moving into the modern online marketplace requires an equally modern method of financial management. 

Countingup’s business current account comes with a handy all-in-one app that makes it easy to keep on top of your business finances from the start. The app comes with free built-in accounting software that automates the time-consuming aspects of bookkeeping. You’ll also be able to create customised invoices in seconds, saving you time to focus on running your business. 

Find out more here and sign up for free today.