The Smart Post

How Much Does an eCommerce Agency Cost?

February 25, 2021

If you enter a restaurant and want to know how much a sirloin steak costs, all you have to do is look at the menu. If you want to know how much an eCommerce agency costs, it’s not that simple.

While it would be great if eCommerce agencies offer a set menu for all their services, that’s never the case. Numerous factors affect the rates of an eCommerce agency. 

And, of course, if you’re an eCommerce retailer, it’s a no-brainer that you want to know how much an eCommerce agency will cost you. Nobody hires anybody without knowing the bottom line.

At the end of the day, the benefit has to outweigh the costs. To level-set, here are some defined metrics used to price out eCommerce agency services.

Putting a Price Tag on eCommerce Agency Services 

Before we dive into what really matters when it comes to the cost of working with an eCommerce agency, here is a range for how much you should expect to pay for different services:

Ecommerce Development—developing an eCommerce solution is the most expensive service that eCommerce agencies offer. Things like the design, functionality, and platform of your website impact the cost of such projects. In general, when working with an agency, you could expect to pay anywhere from $30,000 to $500,000+. 

Email Marketing—hiring an agency to handle your email marketing could cost you something in the range of $2,000 per month. The size of your list, frequency of campaigns, and whether template design is included or not will impact your monthly cost. 

Annual Retainers—an annual retainer agreement with an eCommerce agency covers everything you need to sell and market your products online. If you’re the owner of an SMB, this will cost you somewhere between $30,000 to $144,000+ annually.

Hourly Rates—charging per hour is the best choice for some projects. Sometimes, it’s even a necessity. And when that’s the case, you should expect to pay between $140 to $250 per hour for highly-skilled eCommerce agency team members.

What Factors Affect the Cost of an eCommerce Agency?

You’ve probably noticed that the prices for different services vary significantly. Anything between $30,000 to $500,000+ for an eCommerce website? Retainer contracts that cost anything between $30,000 to $144,000+ annually? Really?

While Salt Bae charges $1,000 for a Wagyu steak wrapped in edible 24-karat gold leaf, that’s hardly an indication for a range. You can’t say that a steak would cost you anything between $15 to $1,000. That’s definitely not true. So, what’s going on with those eCommerce agency rates? There is a truth, universally acknowledged, that you can apply to pretty much anything- including the eCommerce agency you choose to work with. They can be fast, good, or cheap – but they can only be two. Retailers should be aware of the selection criteria they use when choosing an agency to work with for their online store and most importantly, their livelihood. While you want a good and cheap product fast, that’ll never be the case. If it’s good and cheap, it won’t be fast. If it’s fast and good, it won’t be cheap. You get it.

Experience

Unlike steak houses, most eCommerce agencies serve a global clientele. There are agencies based everywhere around the world that offer different levels of work quality. In the end, you get what you pay for.

Location

Even though U.S.-based eCommerce agencies are more expensive than most overseas agencies, they’re the safest option. You’ll get to work with a team that’s in the same timezone and speaks your language (no locale/country-based restrictions and regulations to explain, zero corporate firewall issues to overcome).

Access

While paying U.S. salaries adds to the overall cost, it gives you peace of mind that if your website goes down during your working hours, the team will step in and assist almost immediately. You also know you won’t be assigned a development resource that doesn’t speak the same language once you sign the contract and send the first payment. 

Reliability

You know that a contract with a U.S.-based company is a real, legally-binding contract. There are just so many things that can—and probably will—go wrong with offshore agencies. If it gets bad (or worse), what is the legal recourse when working with a company that is headquartered in another country? Something to consider.

Is the Cost of an eCommerce Agency Worth it?

Just like with anything else, you get what you pay for when you work with an eCommerce agency. The value of working with an eCommerce agency is clearly there. A reputable agency doesn’t want to just build your website and slip into the background. They want to partner with you and become an integral part of your internal team. A good agency aspires to provide strategic guidance, and keep you up to date on eCommerce trends and constantly changing best practices. Ultimately, the retailers’ online success becomes fundamental to their own success. Is it worth it for you, though? That’s the real question. And luckily for you, it’s a question with a simple answer.

According to the U.S. Small Business Administration, you should spend 7-8% of your gross revenue on marketing if you’re doing $5 million annually in sales, with a net profit margin of 10-12%. True, your first year with a new eCommerce site may take a significant amount of that marketing budget but, if done correctly, will pay for itself and the ongoing maintenance and improvements you’ll need. This leaves a larger cut of future marketing budgets for other initiatives.

So, to determine whether working with an eCommerce agency is feasible for your business or not, all you have to do is check if their fees are within 7-8% of your gross revenue. Keep in mind that this number goes up to 20% for smaller businesses in more competitive industries.

What is the Cost of NOT Working With an eCommerce Agency?

Another thing that’ll help you decide if the cost of working with an eCommerce agency is worth it for your business is to calculate the cost of not working with one. For many eCommerce retailers, anything going wrong with their website is nothing short of a disaster. And that’s why the cost of an eCommerce agency is totally worth it.    

So, what can go wrong if you don’t work with an eCommerce agency? A lot. Aside from missing out on the benefits (technical expertise, a pool of resources, proven processes and procedures) of hiring an eCommerce agency, the cost you’ll pay will mainly be in the form of a lack of reliable support, and all the consequences that come with it. 

Technical problems will ALWAYS occur, it’s the nature of the beast and an eCommerce agency brings a dedicated team to the table to provide technical support. And when this happens, you’ll get site issues like slow page loads, errors on checkout, broken user interfaces, and an overall bad user experience that makes 88% of your online consumers less likely to return. You’ll lose conversions due to these issues and as a result, lose revenues. 

While that sucks, what sucks, even more, is not getting help when you need it most. You’ll have to hope that your freelance developer is available and armed with the experience of solving similar products for multiple customers when things go south. And they will. 

Whether your freelancer isn’t available because they’re sick, on a vacation, taking some time off, their cat died for the third time, there is one thing all freelancers have in common: they don’t have a standby replacement. An eCommerce agency, in contrast, is a team of highly-trained professionals who are available on-demand and have your back in every situation.

TL;DR

We have these prevailing beliefs about the world—for example, that something that can be bought for a very low price probably isn’t very great. So, if we believe this about most things in the world, why would a retailer rearrange this logic for their eCommerce website? If you’re the owner of an enterprise-level eCommerce business that wants to boost its revenues, working with a U.S.-based eCommerce agency is how you can get there. You’ll achieve the results you want faster, with minimum hassle and risk.

If you’re asking yourself whether the cost of an agency’s services is justifiable, that’s a question you already know the answer to. All you have to do is check if the agency has a proven track record and see if their fees fall within the acceptable percentage of your gross revenue. If the answer is yes, it’s time to ink that contract.