Comparing different eCommerce pricing models.

Posted in Before You Start on January 14th, 2009 by admin

Anyone looking to sell goods and services online needs the following elements.

A merchant account (the place where funds are collected and then transfered into your bank account)
A payment gateway (the interface between your web site and your merchant account that automatically authorizes credit cards)
A shopping cart (Software to hold product information, calculate price, shipping, tax, discounts and allow users to check out)
A Web site (A place to display the product information)
Someone to fullfill orders (the person who actually delivers the goods)

There are a number of variations and some solutions allow customers to forgo the need of certain elements above. But, in general these are the basic pieces for most retailers. So, where do the costs come in.

Merchant Account fees. All credit card companies charge transaction fees (and often other fees) in order to accept credit card transactions online. Generally, when setting up a merchant account Visa and Mastercard are automatically accepted and have the same fee structures. Usually you have to opt in in order to accept Discover, American Express and other card types. Each of those additional cards usually carries their own fee structure.
Shopping cart License. There is a huge array of shopping cart solutions out there. Most charge either a one-time fee, transaction fees, monthly fees or some combination thereof.
Developer. If you are having a developer build your web site and online store you are likely paying them either a flat fee, hourly fees or in some cases a revenue share.

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