Choosing the right platform and a good understanding of all potential expenses can have a lot to do with the success of your online store. Unforeseen costs when choosing or changing a platform mean that you have to choose away or lower the priority of other aspects of the company to cover the extra expenses. If you are unsure whether to choose Magento or BigCommerce, Total Cost of Ownership (TOC) is an important part of the calculation. Here we will take a closer look at the price differences between the two platforms.
Total Cost of Ownership: What is the real cost?
It is important to form an accurate and good overview of the total cost in order to be able to choose which platform suits you best. This way, you know which services and offers you want to accept, and you run your online store with good control over expenses. TOC is the total sum of all direct and indirect costs, including operating costs, additional services, further development, training and the like. Although a platform may seem cheap when you only look at what it costs to invest in the product itself, it can still be more expensive in the long run.
Forrester Research conducted a study in 2012, where they discovered that one of the biggest challenges for companies was comparing the exact costs between different platforms. Many found it challenging to obtain a good and predictable overview of expenses, which resulted in almost half of the online stores in the survey ending up with a higher TOC than estimated. It was often the operating costs that were higher than expected, including:
- Costs for hosting
- Expenses for payment
- Licensing costs for third parties
- Further training of employees
- Advertising and marketing
Now we will focus on Magento and BigCommerce to see who has the lowest TOC. We thoroughly go through all the details, so you can come to a decision about which platform best meets your budget and needs.
A closer look at expenses and ROI
Although Magento may seem like the best choice at first glance due to its good reputation, flexibility, popularity and large ecosystem of developers, it is important to take into account that more expenses may be incurred in the long run. Among other things, you have to pay for both a license and hosting to use Magento. You also need a larger team such as a developer for upgrading and security patching. This means that you either have to hire more people or you have to use an agency to handle both day-to-day tasks and larger projects. Magento is quite advanced, and you need skilled people who are experienced with the platform.
BigCommerce – SaaS solution
BigCommerce is a SaaS solution that includes many services and solutions. You don’t have to buy in infrastructure and spend money on maintenance, hosting and software. As a result, BigCommerce has one of the best ROIs in the industry. In short, the end user gets the necessary software directly online, which gives increased flexibility and potentially lower costs. SaaS solutions have many advantages such as easy scaling, low TOC and reduced maintenance.
You pay a fee to BigCommerce that includes both license and hosting, as well as other services necessary to run the online store. In practice, this means that the platform itself can carry out upgrades and security patching. It’s easier for front-end developers to work with Big Commerce, which means projects can be completed faster and with a smaller team.
The platform is upgraded with new functions at no extra cost or integration costs for you. You are guaranteed good performance and security, and you get continuous access to the latest developments. As mentioned, you have to pay for professional help with updating Magento, as well as license costs associated with third parties. Instead, your team can focus on important projects, rather than wasting time on updates or trying to fix broken features.
You can handle all integrations, software and services in admin, instead of being a middle man and coordinating the work. Not only does it free up financial resources to spend on e.g. to improve conversions, UX and the like, but you can save considerable time. The system can be easier for you who want to start an online store or start selling products on your WordPress site, as well as users who want a scalable solution with low operating costs.
Advantages and disadvantages of SaaS
Although SaaS solutions have a lower TOC, you still have to consider which solutions are best suited for your company. Magento can be good for established businesses with a big enough budget to take full advantage of the platform, and that involves, among other things, hiring a team or agency to maintain, update and fix bugs in the software. You must also have enough resources for administration and security. Magento can also be more flexible for businesses with needs that extend far beyond what a normal e-commerce platform can offer. As mentioned, many choose Magento due to its reputation and the huge ecosystem of developers.
It should be said that BigCommerce has made great strides when it comes to functionality and customization, and the platform is also a good option for medium-sized businesses and enterprises in the commerce sector. Companies that have chosen to migrate to SaaS platforms have noticed advantages such as shorter time to develop and launch projects, no downtime even with increased traffic and that it is easy to update both the website and the product catalogues.
BigCommerce has the lowest TOC
BigCommerce has a significantly lower TCO than Magento, which frees up important resources needed to further develop your business. The benefits are significant for small and medium-sized businesses that want to scale their online store, and rather invest money in conversions. It should still be mentioned that the exact number can vary by project, and it is recommended to develop a TOC model that lasts approx. 3-5 years ahead in order for it to be as realistic as possible. It pays to spend time developing a thorough and accurate TOC model to increase the chances that your online store will be successful.
How Think Commerce can help
We at Think Commerce have helped many large online stores analyze their needs against different platforms such as Magento Commerce , Shopify Plus , Salesforce Commerce Cloud and BigCommerce Enterprise . Together with our customers, we establish what they want to achieve by moving to a new platform and what is important to them, then we use our knowledge and experience with the major online store platforms and compare them in several sections such as functionality, flexibility, stability, security and total cost. As part of the report, and together with our assessment, we provide our customers with a thorough analysis of the Total Cost of Ownership so that they can make a decision on the best possible basis.
Here are some useful links that provide more information about TCO and choosing a platform:
- Paul Rogers: eCommerce Total Cost of Ownership (TCO) Guide
- BigCommerce: Total Cost of Ownership calculator
- Paul Rogers: Shopify Plus vs BigCommerce Enterprise: Platform Comparison