Costs and budgets for ecommerce (lecture 9)
Written by: Jonathan Briggs
December 4, 2008 [3047 views]
It is hard to estimate how much a project will cost without analysing the specific requirements and the environment in which the project is being implemented.
In this session we will explore the steps often found in a project and discuss the time involved in executing those steps
- Project planning including creative, technical, integration, budgeting, testing and promotion
- Setting and agreement of project goals and constraints
- Assembling and briefing the project team
- Brainstorming creative ideas
- Competitor and market analysis
- Analysis of business logic (selling, fulfilment, returns)
- Wireframing/diagramming of processes and functionality
- Agreement of functionality, specifications and plan within budget
- Selection of platform, tools and hosting environment
- Graphical design (within brand guidelines)
- Conversion of design into templates and style sheets
- Product modelling and database design
- Promotion design and logic
- Design of decision support tools to help shoppers select, choose and experience
- Writing of all text pages (Terms & Conditions, Privacy)
- Design and implementation of CRM integration
- Design of customer service processes and systems
- Design of testing regime and tools
- Implementation within shopping software, CMS or from scratch
- Integration with stock and ordering systems
- Integration with payment partner
- Photography
- Collection and manipulation of content
- Testing of business logic
- Testing with users
- Testing for DDA compliance
- Cross browser and platform testing
- Delivery and training (editorial and CMS)
- Promotions and shop management
- Design of reputation campaign
- Implementation of reputation campaign
- Design of PPC campaigns
- Implementation of PPC campaigns
- Integration of Google analytics and monitoring software
- Monitoring of SEO and PPC
- Support and management of problems and issues
- Changes in requirements following feedback and experience
Not included
- Marketing
- Selling
- Contract negotiations
- Project management
- Meetings and reviews
- Iterations
- Client changes of requirements
- Technical roadblocks
Questions about budgets
- How long would you expect each of these steps to take?
- How many people would you expect to be involved with each step?
- Do less experienced people cost you less?
- What would you expect each person to cost per day?
- Is it possible to leave any of the steps out?
- Which parts of the project could be outsourced?
- How significant is the choice of software tools to this process?
- Which of these steps would you expect to be the most expensive?
- How can you make the project cheaper?
- How can you ensure that you make money on each step (if you are a supplier) or keep the budget under control (if you are a client)?
- What would be a typical budget for this sort of project?
- Which parts of this process are omitted by clients who choose to use systems such as OScommerce, Actinic Catalog and Amazon Marketplace?
How accurate is this budget?
The following is a fictitious budget open for full discussion but assumes integration with moderately complex back-office systems, strong branding guidelines and the need for an excellent customer experience. No software, database or other licensing costs are included and ongoing costs have not been included.
The budget is shown in person days.
Project planning including creative, technical, integration, budgeting, testing and promotion | 9 |
Wireframing/diagramming of processes, logic and functionality | 5 |
Agreement of functionality, specifications and plan within budget | 2 |
Graphical design (within brand guidelines) | 10 |
Conversion of design into templates and style sheets | 5 |
Product modelling and database design | 2 |
Design of decision support tools to help shoppers select, choose and experience | 2 |
Design of customer service processes and systems | 5 |
Implementation within shopping software, CMS or from scratch | 15 |
Integration with stock and ordering systems | 10 |
Integration with payment partner | 2 |
Collection and manipulation of content | 10 |
Testing for browsers, platforms and DDA compliance | 10 |
Delivery and training (editorial and CMS) | 2 |
TOTAL person days | 92 |
How much did Market Quarter cost?
http://www.marketquarter.com has been created entirely in my "free" time and is a rough prototype of basic ecommerce store. It is cheaper than a fully designed shop because it uses a basic template, basic product modelling, basic copywriting etc.
Design - 4 days
Implementation inside Shopify - 5 days
Photography - 3 days
Copywriting - included
Marketing, management and optimisation - 2 days per month (20 days so far)
Training market staff - 1 day
But note: no order integration, manual availability, PayPal, basic product modelling
Total so far - 33 days
Ways of making the project cheaper
- Initial costs to get Market Quarter running < £2000
- Get the client to do as much of the project as possible
- Accept a share of the revenue (or the business) instead of fees
- Adapt templates etc from other sites
- Use low cost solutions such as Shopify or Magento
- Do additional work as revenue starts to flow
- Consider outsourcing tightly defined parts of the project
How much does a day cost?
Suppose a member of staff costs £25,000
National insurance adds 12.8% (£3,200)
Recruitment adds 15% (£3750)
Share of rent adds £2,500
Share of bandwidth, computer, desk etc adds £2,500
Other costs (stationary, telephones, travel, entertainment) adds £2,500
Total other costs £14,450 (57% oncosts)
Total cost per day around £200 (and remember that billing for every day is hard)
Most people cost much more: sales (£60k), programming(£40k), design(£30-40k+), creative director(£60k+), sys admin(£35-45k), project managers (£30-40k), account managers (£35-45k).
What do most companies charge?
Blended rates (across all staff) range from £600 - £1200+ per day
What do you think?
