Planning

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5.0.1.2 The costs involved in starting up E-Commerce

This section outlines some of the costs involved in developing an online trading capability.
Computer plus an Internet Connection:

An Internet enabled computer may be bought for less than US$1,500. Additional software packages are normally included in this price. However business users often discover that a more sophisticated machine offers a degree of versatility and potential unavailable in a cheaper package.


Web site Design:

A basic web site with limited applications will cost less than US $2,000 and includes design, hosting and search engine submissions for a year. Such sites however are capable of storing simple informational details only, and consist of a handful of pages containing text and images. Shopping facilities are a noticeable absentee from these sites and about US $600 of the initial fee relates to design costs.

An additional benefit such as a database, linked to a glossary, is used to store and manipulate customer or sales information and costs about US$2,000 extra. A customised website geared to online selling and with some form of content management system, costs in the region of $6,000 to $12,000 and builds flexibility into business transactions.


Hosting:

The provision and maintenance of hardware and software, which is required to store the site and allow access via telephone or other connections, is referred to as hosting. All websites require this service and costs include:

  • A once off fee to a hosting company plus an annual subscription.
  • Credit card authorisation costs
  • These payments are dependent on the expected number of visitors (referred to as traffic) to the site.

When choosing a hosting company, reliability and speed matter. Downtime (time when your website is not accessible due to maintenance or some system failure) is expensive and costs more than replacement parts and labour. The lost business opportunities and eroded company prestige is not quantifiable.


Servers
This is the piece of equipment that houses a website, so it's worthwhile taking advice on whether to have your own dedicated server or use one shared with other websites.


All in One Packages

Some companies offer turnkey solutions. These are all in one packages used to create various websites for companies with no programming or computing background. They eliminate the need to find specialist companies supplying different Internet services. Advantages and disadvantages include:

  • Having a single vendor.
  • An affordable and reliable package.
  • It's a low cost option.
  • Turnkey solutions are limited with regard to website design.
  • Due to the generic nature of such packages the websites which they define have similar characteristics.


What goes up on a web site?

The core ingredient for any website is content. It's twin components are a mix of text and graphics, but the skill rests in creating an engaging, entertaining and relevant site, and this is where the client plays an important role. The presentation and content is worked out between customer and developer. Graphics cost extra and while they may enhance a site, the bottom line is does that enhance the visitor's experience. As for costs, the more work involved for the web developer the greater the expense.


Web Maintenance:

An interesting site will attract curiosity, but it is important to upgrade the content regularly. Maintenance costs should be taken into account if they are factored in at the design and development stage.
A number of choices exist when it comes to developing a company's web site. The first option is to train a staff member to look after the web site; a second alternative is a service contract with the web development company and thirdly, content management systems. This software allows a user to enter the site and amend text without specialist knowledge.
It is available as an off-the-shelf package or may be developed for the company by a firm of specialist advisors.


Marketing:

Website promotion is about letting people know what you do. As consumers browse online through a product range, they tend to associate the site with the company brand, so an engaging website helps build brand image and company prestige.


Networking:

Connecting computers so they can communicate with each other, creating a free flow of information and reducing business overheads. It's advisable to hire network professionals when setting up a system, as structural problems may not be apparent in the early operational stages.