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Magento Pricing: How Much Does It Cost to Run a Magento Store in 2020?

Magento Pricing: How Much Does It Cost to Run a Magento Store in 2020?

Magento Pricing: How Much Does It Cost to Run a Magento Store in 2020?

Although Magento is one of the best choices for online stores, there are a lot of business owners who are afraid to move to the platform because they don’t know the Magento costs involved.

In this guide, we’ll describe what kind of launch expenses you should be ready for and talk about how much it costs to run a Magento-based store on a daily basis.

  1. Magento Pricing Explained
  2. Magento’s Biggest Launch Expenses
  3. How Much Does It Cost to Run a Magento Website?
  4. Total Cost of Running Magento Store

1. Magento Pricing Explained

Magento has the reputation of being one of the most expensive platforms for your online businesses. And it is true, to a point. The truth is that the platform itself is free of charge as far as most stores will run the Magento Open Source version. But in order to answer the question “How much does Magento cost?”, we need to take a look at all the different editions.

Magento Edition Description Magento Pricing
Magento 2 Open Source Free as in “free beer” – this Magento edition is 100% open source and free to use by anyone.

Developed with the help of the vast Magento community, it’s the most popular edition on the market with 83% of all the stores running everything from Magento 1.4+ to Magento 2.x
Magento 2 Commerce Previously known as Magento Enterprise, Magento Commerce is the “Advanced” edition developed by the Magento team.

You get more cool capabilities (advanced inventory and warehouse management, in-depth admin roles, business intelligence tools) and the tech support of the Magento team.

Magento Commerce is a great choice for large stores with huge workloads and complex business requirements.
Magento 2 Commerce pricing depends on expected annual Gross Sales Revenue (GSR).

As far as Magento Enterprise pricing are concerned, the bottom price is $22,000 for $0-$1,000,000 GSR and the max price is $125,000 for $25,000,000-$50,000,000 GSR. As you can see, the gap is significant. The more successful your store is, the more you will have to pay.

Magento 2 Commerce Cloud Basically the same as Magento Commerce but in the cloud. Sometimes it makes sense to go for the Cloud edition if you think you can handle the associated costs. Magento 2 cloud edition pricing is much higher than other options. That is because this time you will also get cloud hosting. We are looking at $40,000-$190,000 values which are also tied to annual Gross Sales Revenue.

Total cost: None. Most e-commerce businesses opt for the Magento Open Source edition. It’s fully capable to deal with even high-traffic spikes. However, if you miss some of the features Magento Commerce editions offer, most of the time you can use an extension to get them.

Now let’s move on to other Magento launch costs.

2. Magento’s Biggest Launch Expenses

The platform itself might be free but everything else is not. In our experience, there are 3 big cost factors that make Magento development cost grow:

  • creating a solid user experience and design;
  • buying and debugging extensions;
  • applying various frontend customizations.

2.1 User Experience and Design Costs

Magento store User Experience and Design Costs
Let’s start with the basics. You’ll need to create the UX of your store. Whether you migrate to Magento 2 or want to open a brand new store, you still have to build a solid user experience for mobile, tablet, and desktop versions of your website.

This means extensive wireframing, working with analytics and UX experts, figuring out ways to improve your sales funnel and conversions, etc. Even if you want something standard, it could be hard to find the solution that will satisfy you right from the start.

In addition to UX, you need to work out what kind of design you want. One option here is to go with a ready-to-use theme. In this case, your UX will have to fit the theme, not the other way around. This is a good thing if you want to save money but robs your store of any individuality.

Themes cost around $60-$100. But that’s what you get without any customization. If you want your store to look unique, get ready to spend a lot more money on custom UX and design. Magento theme development costs are high, however, you will find nothing as exclusive and functional as you can get. Look at these awesome Magento PWA examples created by famous eCommerce brands for getting some inspiration.

Total cost: Depending on your resources, prepare to spend from $50 for a ready-to-use theme to $2,400-$40,000 on custom UX and design solutions.

2.2 Third-Party Extensions Costs

Magento Third-Party Extensions Costs
There are a lot of free third-party extensions on the market. However, you need to spend a lot of money if you want the most useful ones. With the average price of $100, installing even 10-15 extensions will lead to $1,000-$1,500 just in extensions costs.

Another thing to keep in mind is that developers test their extensions on empty Magento demo stores. You, on the other hand, will have dozens of extensions on a busy online store that servers thousands of customers. Make sure you understand the implications of installing 10-20 unoptimized extensions at once.

If you want something special for your website, you may need the development of a custom Magento extension that would be a perfect fit for your business needs. With it, you can make your store more flexible, more user-friendly, more memorable by adding customized features to it.  Our clients often ask “How much does it cost to develop a Magento extension?”.  The pricing depends on specific functions, purposes, and use cases of custom modules. Thus, the price range for building the average Magento extension will vary from $2,500 to $5,000, excluding the cost of any design work.

Total cost: Get ready to spend $1,000-$2,500 to get all the Magento extensions you want. Make sure you also have 2x-3x of this money for installation, compatibility testing, and bug fixing. In total, the budget for this stage should be $2,000-$10,000.

2.3 Frontend and Backend Costs

Let’s see what frontend work includes:

  • implementing your custom design and layout,
  • integrating extensions into the current design,
  • developing new functionality if needed.

The amount of effort you need to invest depends on your design complexity, the number of extensions, and other unique customizations that you couldn’t find on Magento Marketplace and need to develop yourself. It also takes a fair amount of work to implement your layout and make the store work smoothly on phones, tablets, and desktops.

Have you ever heard of headless commerce and progressive web apps? Headless eCommerce is a trendy methodology which means splitting the store’s frontend from the backend. Sounds promising? Well, it is. Such an approach provides grounds for developing a flexible architecture. With it, you can model the system according to your business needs. Besides, the headless approach allows you to deliver a perfect UX for your shoppers regardless of the device they use.

Total cost: The more extensions and design features you have, the more expensive it gets. Based on our experience, it takes between 2-4 months to complete frontend and backend work. Depending on your developer rates we are talking about $5,000-$67,000.

2.4 Overall Magento Launch Costs

Since all stores are different, it’s kind of hard to estimate what your expenses will be like. Anyway, get ready to pay between $7,000 and $140,000. This is a rough estimate and should be treated just like that. If you want to get a real quote, your individual costs will be vastly different.

3. How Much Does It Cost to Run a Magento Website?

Once we understand what kind of expenses you are going to have during the launch period, let’s take a look at how much it costs to run a Magento 2 site. Our day-to-day expenses will include hosting and development support.

3.1 Infrastructure Costs

Magento hosting is a complex theme. We created an entire Magento hosting guide on how to choose the best hosting provider.

You have 4 basic options for your Magento store:

a) Shared Hosting

This is when your store is sharing server resources with other websites that are located on the same machine. This option is reserved for lightweight sites that don’t require a lot of CPU and RAM to function: think blogs, simple landing pages, portfolio showrooms, etc. Using a Magento 2 shared hosting is not the best idea if you want your website to work seamlessly and expect acceptable performance. Be ready to pay $10-$25 for shared hosting per month.

b) Virtual Private Server

VPS is the golden middle in terms of value for your money. It’s the best option for small to medium Magento stores. Great for high flexibility and high-performance hosting. It also sports better security than shared hosting. Optimal choice to start your Magento store. VPS hosting will have different prices based on your needs. In 2020, expect to see VPS Magento hosting pricing between $60 and $300 a month.

c) Dedicated Hosting

The largest stores will need to own custom-built machines in order to deliver the best performance to their customers. Dedicated servers were created just for that. It’s a great solution when you need to control every aspect of your server: from hardware to firmware to software. Literally everything. Expect to pay up to $2,000 a month for the comfort, though. Buying the machine is also a big up-front payment. Server hardware is expensive.

d) Cloud Hosting

The largest stores might consider buying a dedicated server or even hosting in a cloud. It’s a good idea for dealing with huge workloads and user spikes. Both solutions offer almost complete independence in server configuration which is important for advanced setups. Expect to pay up to $4,000 per month for cloud hosting, though.

Answering the question “How much does it cost to host a Magento site”, we would like to outline the basics:

  • Magento cannot function well on shared hosting, it will be too slow;
  • choose a VPS (Virtual Private Server) for your first Magento run and upgrade to the cloud or dedicated server later;
  • look for a specialized Magento hosting provider, this way you can get better tech support and host on servers optimized specifically for Magento stores;
  • don’t save on infrastructure, in eCommerce faster store = more sales.

Total Infrastructure Costs: Get ready for $10-$4,000 per month based on your hosting plan. A more realistic estimate for an average store will be something in the range of up to $600.

3.2 Costs of Third-Party Services

Magento can work pretty well by itself. You get the store, the hosting. Everything works. But after a while, you decide you want to deal with workload spikes better, install a faster search, investigate dips in performance, or integrate an SEO service inside the store.

Every third-party service is going to cost you money. From getting a new email server to working with a new business intelligence tool for BI insights – get ready to pay. New Relic, Algolia, AWS Simple Email Service, and Magento Business Essentials will make the lion’s share of your monthly budget. Get ready to dish out $100-$3,000 per month for the luxury of being the best-equipped store on the market.

3.3 Development Support Costs

Your mileage may vary but most stores continue to develop new features after the release. There’s always something to do in a busy store. From Magento performance optimization services to troubleshooting and new feature development, Magento stores require at least one developer to be ready to solve new issues on a monthly basis.

If we are talking about costs, it could be anywhere between a full-time commitment of 40 hours per week to random assignments like installing security patches and fixing bugs 5-10 hours a month. Costs will also vary from $150 to $5,000 depending on the workload.

4. Total Cost of Running Magento Store

Here’s the big picture. We can sum up all the costs of starting an online store:

Type of Expense Minimum Cost Maximum Cost On Average
Hosting $10 $4,000 $600
Third-party services $100 $3,000 $500
Maintenance and development $150 $5,000 $1,000
Total $260 $12,000 $2,100

Want to get an accurate Magento pricing quote in 2020?

Or maybe you are worried you pay too much for your current setup?

Let’s see if we can help you with Magento website development without spending a fortune on eternal tweaks? Contact the Onilab team for a no-obligation quote.

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