(Reading time: 3 - 5 minutes)
eCommerce Transaction Charges Explained

eCommerce Transaction Charges Explained

Featured
Tony Cooper  
Comments (0)
eCommerce transaction charges explained
Last Updated
May 17, 2016

You've made the decision to build an eCommerce site but how do you know that transaction charges are not going to eat up a major share of your profits?

Finding the best payment gateways for your eCommerce solution can save you a stack of cash.

To show you what you are likely to be paying in transaction fees I've put together several different scenarios to give you a ballpark approximation of running costs.

If you haven't considered the impact of eCommerce transaction charges then this could be a real eye opener for you!

There are two types of transaction charges in this guide. The first is the cost of keeping your eCommerce store open for business and the second is the payment processing transaction cost.

In the case of open source products like Magento or Virtuemart we need to factor in the cost of hosting, maintenance and general upkeep. This is going to be a general figure because everyone will have different hosting costs and/or retainer fees.

For this guide I'm going to use the Magento Community edition as our price point because it is free and compares favourably with a cloud based solution.

For cloud based eCommerce stores like BigCommerce, Shopify or Lemonstand then maintenance and hosting is all part of the plan and gets included in the monthly cost. I'm going to use the most popular plan from each provider as our reference point.

I've converted $ to £ at 1.44 the exchange rate at time of writing.

Using Paypal

100 Transactions Per Month @ £10 Per Transaction Using Paypal
 MagentoBigCommerceLemonstandShopify ProWeeblyWix
Monthly Hosting/Software Cost£65£55£103£55£17£10
Number Of Products50GBUnlimitedUnlimitedUnlimitedUnlimited20GB
Transaction Fees0%0%0%1%0%0%
Transaction Cost£0£0£0£10£0£0
Payment Transaction Fees3.4% + 20p2.2% + £0.203.4% + 20p3.4% +20p3.4% + 20p3.4% + 20p
Payment Transaction Cost£34 + £20£22 + £20 £34 + £20 £34 + £20£34 + £20 £34 + £20
Total Monthly Cost £119 £97 £157 £109 £71 £64

 Notes:

  • The Magento hosting cost is based on a survey of specialist Magento hosting providers. Nimbus Hosting was my benchmark
  • The average transaction cost is £10. 100 orders @ £10 = £1,000 revenue where Paypal's first volume break point is £1,500
  • Shopify claims zero transaction fees, but only if you use their payment gateway. Deduct £10 if you want to use Shopify payments.
  • The Paypal offer from BigCommerce looks very good value
500 Transactions Per Month @ £10 Per Transaction Using Paypal
 MagentoBigCommerceLemonstandShopify ProWeeblyWix
Monthly Hosting/Software Cost£65£55£103£55£17£10
Number Of Products50GBUnlimitedUnlimitedUnlimitedUnlimited20GB
Transaction Fees0%0%0%1%0%0%
Transaction Cost£0£0£0£50£0£0
Payment Transaction Fees2.9% + 20p2.2% + £0.202.9% + 20p2.9% +20p2.9% + 20p2.9% + 20p
Payment Transaction Cost£145 + £100£110 + £100 £145 + £100£145 + £100£145 + £100 £145 + £100
Total Monthly Cost £335 £265 £348 £350 £262 £255

 Notes:

If you are going to be building an eCommerce store that processes around £5k per month in transactions then Lemonstand is clearly excellent value for money considering the ease of development over Magento.

Processing 1,500 transactions per month  

1,500 Transactions Per Month @ £10 Per Transaction Using Paypal.
1,500 Transactions @£10 Paypal £15,001MagentoBigCommerceLemonstandShopify Pro
Monthly Hosting/Software Cost£105£140£350£125
Number Of Products1TBUnlimitedUnlimitedUnlimited
Transaction Fees0%0%0%0.5%
Transaction Cost£0£0£0£75
Payment Transaction Fees1.9% + 20p1.9% + £0.201.9% + 20p1.9% +20p
Payment Transaction Cost£285 + £300£285 + £300 £285 + £300£285 + £300
Total Monthly Cost £690 £725 £935 £710

Notes

  • I've removed Wix and Weebly from this table because their platforms are not designed for this level of processing.

Sagepay transaction charges

100 Transactions Per Month @ £10 Per Transaction Using Sagepay Flex (350 Transactions Max Per Month)
 MagentoBigCommerceLemonstandShopify Pro
Monthly Hosting/Software Cost£65£55£103£55
Number Of Products50GBUnlimitedUnlimitedUnlimited
Transaction Fees0%0%0%1%
Transaction Cost£0£0£0£10
Monthly Fee£19.90£19.90£19.90£19.90
Total Monthly Cost £84.90 £74.70 £122.90 £84.70

 

500 Transactions Per Month @ £10 Per Transaction Using Sagepay Plus (500 Transactions per Month)
 MagentoBigCommerceLemonstandShopify Pro
Monthly Hosting/Software Cost£65£55£103£55
Number Of Products50GBUnlimitedUnlimitedUnlimited
Transaction Fees0%0%0%1%
Transaction Cost£0£0£0£50
Monthly Fee£45£45£45£45
Total Monthly Cost £110 £100 £148 £140

 

1,500 Transactions Per Month @ £10 Per Transaction Using Sagepay Bespoke
 MagentoBigCommerceLemonstandShopify Pro
Monthly Hosting/Software Cost£105£140£350£125
Number Of Products1TBUnlimitedUnlimitedUnlimited
Transaction Fees0%0%0%0.5%
Transaction Cost£0£0£0£75
Monthly Fee£100£100 £100£100
Total Monthly Cost £205 £240 £450 £300

Summary of eCommerce transaction charges

Summary Of Monthly Transaction Charges Paypal vs Sagepay
Transactions per MonthMagentoBigCommerceLemonstandShopify ProWeeblyWix
100 Paypal£119£97£157£109£71£64
100 Sagepay£84.90£74.70£122.90£84.70  
500 Paypal£335£265£348£350£262£255
500 Sagepay£110£100£148£140  
1,500 Paypal£690£725£935£710  
1,500 Sagepay£205£240£450£300  

Clearly these examples show that using Paypal is a very expensive way of doing business. For low volumes it is the perfect partner but when you start scaling up the cost really hurts. See my Paypal review for more details

BigCommerce's deal with Paypal for the fixed entry level 2.2% is good value and BigCommerce scores well across the board for transaction charges. For low volume sites then Wix scores well but mid weight sites are well served with BigCommerce and Shopify.

Lemonstand proves to be incredibly inexpensive considering the amount of power you have underneath the hood and the ease with which you can customise the customer journey.

Of course there are many other third party payment gateways and Stripe looks like a very good alternative to Paypal with a fixed rate of 1.4% + 20p although its rate moves sharply upwards if you want to process European cards at 2.9% + 20p

Cardstream is a viable alternative to Sagepay for UK users and although it's third party integration is not as well developed it is supported by Shopify as an "off the shelf" integration.

Nochex is another candidate for Shopify users with no fixed contracts and no monthly costs. Rates start at 2.9% +20p. Nochex is 3D secure enabled.

Comments? Add them below!

Save

More Blog Posts

Use Emotion To Sell More Product
Last Updated: October 22, 2016
There is a fantastic scene in the series one finale of “Mad Men” where the Kodak guys turn up for a presentation by Don to show them how they can market their “wheel”. It’s certainly the finest 3 minutes of television in the first series and...
Payment gateways explained
Last Updated: March 09, 2016
In my last blog I explained what an Internet Merchant Account (IMA) is and why you need one if you are going to accept credit cards as a payment option. This article is going to walk you through what a payment gateway is, why you need...
Wix v Weebly, Drag and drop website builders compared
Last Updated: January 03, 2017
Life is too short for endless comparisons. You want to build a website and you want it built today. Forget about using one of the free website building tools that came bundled with your hosting plan. They are exactly what they suggest they are; cheap, tacky...
The Website Promotion Technique That Will Light A Fire Under Your Ass!
Last Updated: May 20, 2016
"I'm getting too many orders" "We are running out of stock fast" "The servers are overloaded with traffic" All statements you would love to be able to say. All problems you would like to have. But how do you get these problems on a regular basis? You've read every...
Are You Quitting On Me Private Pyle? Never Ever Give Up
Last Updated: September 09, 2016
Quitting Is For Wimps Stanley Kubrick died in 1999 shortly after completing his final film “Eyes Wide Shut”. Most of the films he made were nominated for Oscars, “The Shining”, “2001: A Space Odyssey” and of course my favourite from where the headline...
SSL Certificates Explained
Last Updated: September 06, 2016
When your Web Developer tells you that you need an SSL certificate to make your eCommerce store fully operational your eyes will probably glaze over and you'll wonder when the spending money bit stops and the making money begins. The SSL Certificate is the final piece...
21 Tips That Will Transform Your Joomla Website Into A Marketing Machine Powerhouse
Last Updated: September 10, 2016
Wordpress is a fantastic blogging tool and it kicks sand in the face of Joomla for blogging ability. It is designed to get articles published quickly and as a blogging platform it can't be beaten. But sometimes you need more than just a blog and Joomla...
Designing Your Company Logo
Last Updated: September 20, 2016
A well designed logo sets the tone for your business so making a logo in five minutes and calling it done is a big mistake. A logo lives with you long into the future assuming your business makes it that far and redoing it can get...
How to find an eCommerce product idea
Last Updated: November 07, 2016
If the idea of sitting on a beach in the sun sipping a Pina Colada whilst your eCommerce website rakes in the cash appeals then you are not alone. Thousands of new eCommerce websites are started every day, but only a select few succeed and go...
How to write amazing copy
Last Updated: September 09, 2016
Writing compelling copy that rivets your audience to their seats and guarantees their full attention for the duration of your piece is a finely balanced high wire act. Too many clever words obfuscate and bewilder the audience whilst keeping it too simple runs the risk of...

Ways To Contact:

Twitter Photo ID Tony2Want to chat about your next website project or requirements? If you call now you can speak to me directly: Call 07963 242210 and ask for Tony.

email
twitter
facebook
  icon-contact-Linkedin-1

Search Storebuilder

Category:
Keywords:
Editor Rating:

Thank You For Reading

Please Share

Website Builder Reviews

Now It's Your Turn!

I love hearing what my readers have to say about the products I review here at Storebuilder and I've made it nice and easy for you to leave a comment or a review if you have first hand experience. Don't be shy! - your experiences help other people make an informed decision.

If my website builder reviews have helped you or you think someone else might benefit from them then please share! It's the biggest compliment you can pay and so easy to do.

Why not introduce yourself on Twitter, it's always nice to put a face to a name!

LiveZilla Live Chat Software