— Last Update March 6th, 2015
It has been almost two years since we posted this article on Magento website cost. A lot has changed since then. Besides the Magento Enterprise Premium Edition released in 2013, in December of 2014 Magento released the Magento 2.0 Developer Beta as an incomplete release, and since last month Magento Go is no longer supported by Magento.
This update includes a detailed description of what Magento Enterprise entails, a comparison chart between Magento Enterprise and Magento Community edition, Magento license cost, Magento Hosting cost, and what we believe, from our experience, the rates are for a Magento website.
The number one question we get asked from new clients who are looking to develop a Magento store is “How much does a Magento website Cost?”. While Magento is a very powerful, feature rich eCommerce application, there are a number of expenses associated with setting up a Magento store. Most of these expenses occur when your requirements go beyond the out of box Magento Community or Magento Enterprise edition functionality, for the Magento Enterprise license, development, design and customizations.
In short, as of March 2015 the Magento licensing costs as posted by Magento it self are:
• Magento Community (CE) – Free to download and use, small-medium size businesses
• Magento Enterprise (EE) – $18,000 per year (enterprise business solution), large size businesses
• Magento Hosting – Shared and dedicated hosting
• Some Facts and Reality Check
If you don’t feel like reading the whole article, click on the version of the Magento above and you’ll be taken to that section of the article. Yet I recommend reading it all as I will also go over some the differences between Magento versions and some advice on choosing somebody to work with.
The price of a Magento store can vary as much as the price of setting up a physical store, which often depends on what is the square footage, how many stories, what equipment/furniture is being used, who is the company building it, what is their experience, etc. Therefore, coming up with a price tag is not that easy. The final price of a Magento eCommerce website varies greatly and depends on what your goals are and how will you know when the expected results are achieved. Doing extensive research and preferably putting together an RFP prior to contacting a Magento provider is highly recommended.
Lets first start with the different versions of Magento that will significantly affect the final cost of a Magento store:

Magento Community

Magento Community is the most popular version of Magento. It is open source and free to download. To set up a store merchants need to contract a Magento developing company or a single developer. Businesses using Magento CE to run their stores don’t have access to technical support for this software. Answers to many technical questions are available on the Magento user forum.
Provided that you have found a Magento developer or a Magento agency, there are endless possibilities of customizing the store with additional features and functionality by installing extensions from the Magento Connect marketplace or other third party companies who specialize in Magento Extension development.

Magento Enterprise

Whereas Magento CE does not come with professional support, only a message board, the Magento EE version offers professional reports for businesses and their tech support team to ensure everything runs smoothly. This option is for businesses who make most of their revenue through eCommerce. The biggest reason, however, is the customization Magento Enterprise allows. This will help your eCommerce store be much different than any other store in your industry. If you have a large catalog that has special requirements or you wish to accept gift card payments or even offer private sales, it can all be done with Magento Enterprise. In addition to that, the Enterprise platform allows for multiple admin levels and an easy to manage CMS. This option creates a seamless process from order to accounting to shipping.
Due to Enterprise’s strong commitment to creating a platform where customers can purchase goods fluidly and seamlessly, regardless of which device he or she is using, as well as it’s plethora of options to give the business owner the greatest dynamic with their website, Enterprise is the height of Magento’s possibilities.
Enterprise allows the business owner to optimize complete control over everything that the customer could ask for. Automatic functions that are standard in the field, such as email notifications, are complemented by even more specific tasks. These functions include:
recommended products
automatic additions to wish lists/shopping carts
reminders
Customer segments are created to help the business owner distinguish between a demographic area, first time, and repeat visitors. Customer shopping carts and buying histories are also recorded to show where their interests lie. Segments also help match special content, promotions, and pricing. These segments can be used to suggest similar products, increasing order values as it does so.
Allows product reviews to be written, which increases attention and interest of customers. With easy searching and navigation, and with more filters to choose from, customers can find exactly what they’re looking for with little to no hassle.
A one page checkout option, along with multiple payment/shipping choices, enables greater ease and comfort for customers who want to buy products without a mess of computer nonsense to sort through first. Wish-lists and payment plans can also be implemented to make things even easier.
There are also several incentives that can be managed to help bring more customers back such as special VIP sections where only certain prices are revealed to specific customers with valid codes.
Gifts have never been made easier. Whether its a gift from you to your customer in the form of a gift registry, or a gift card purchase by your customer directly, any type of gifting is made accessible to all parties. Store credit can also be offered in lieu of any product returns. Coupons can also be created to target specific customer segments, products, categories, dates, and times. Unique codes can be added to emails, newsletters, or promotions in order to track coupon effectiveness.
Enterprise also generates SEO-friendly URLs, a Google site map, customized meta keywords, and descriptions. New content, videos, and rich media can all be easily entered into the system creating the place for dynamic widgets that can showcase specials and promotions.
It’s also designed specifically to allow seamless computer to mobile device transitions. With swipe and zoom technology throughout the mobile device, customers can drag and drop products into their shopping cart. The HTML5 interface supports multiple devices and browsers, but you can also create a branded native storefront for iPhone, iPad, and Android.
Enterprise is built to manage tens of thousands of transactions every hour. It features full-page caching and persistent bandwidth for fast loading times. All transactions are configurable for multiple currencies and tax rates. You can use it to maintain a list of accepted countries, site registrations, shipping destinations, billing addresses, and more. A strong data encryption for secure transactions is set in place to protect not only you, but your customers’ information.
The business owner can also manage multiple stores from one account if they have more than one business they want to keep track of. Hundreds of applications and extensions are available to make your site entirely unique and customizable. These can include: CRM, ERP, accounting, payment processing, shipping, call centers, and much more.
There is also a secure testing area where you can test your site before going live with it. You can test the site, modules, customizations, back up systems, databases, and media prior to ever revealing it to the public. With this feature, there is no concern for excess downtime or undue burdens placed upon customers who wish to purchase your featured products.
Since we went over a simple overview of what each option of Magento does, here is a simple functionality guide that you should be looking for when getting a quote for a Magento website. The proposal must address such issues and discuss if not all, most of the features with each associated package.

Magento Hosting

While Magento comes with a ton of prebuilt eCommerce features, it is a well known fact that Magento is a resource hog when it comes to the hosting environment needed to run the application at optimum performance. Everyone who uses Magento CE can host their website at their preferred host. Before 2014 Magento would offer hosting under the EE annual license fee. They don’t do that anymore and when using Magento EE you’ll need at the very least a dedicated server.
Hosting is a cost that many people do not take into consideration when putting together a budget. Finding the right Magento hosting company is then paramount to your project’s long term success. Usually, our customers pay around $150 for shared Magento hosting and up to $4500 for multiple dedicated servers or cluster hosting environments.
There are a number of companies in the market that claim to specialize in Magento hosting. We have worked with most of them at one time or another. One of our favorite hosting companies, however, is Nexcess.net. They offer great product, super fast customer support and have very knowledgable and personable stuff.
Some questions you need to ask your self when choosing a Magento hosting company are:
– Will you need shared hosting, dedicated or multi-server environment?
– Where is your target market located Geographically?
– How many unique visits / day do you expect?
– How many concurrent Magento customers do you expect?
– How large will your catalog be (SKU count)?
– Will you be using SOLR search within Magento?
– Will you be using the Magento Payment Bridge?
– Will you be using a service to monitor your websites performance (e.g Pingdom, New Relics)?
– Will you need a content delivery network (CDN)?

Basic Magento Website Cost: $20,000.00- $42,000.00

This option is for companies who are moving from a hosted platform or starting up from scratch. There are two ways that you can get a basic Magento website started. The first is by choosing a prebuilt theme, which is cheaper but some time limiting as to how much customization can be done on the theme. We will not get into details here because this can be its own article. The second option is converting a PSD design into a Magento store which doesn’t limit you on how your website should look and functionality wise. Nonetheless, both options require a good deal of time to set up, configure, customize and test. Hence the above cost.
– Under 6000 SKU’s
– Install the Latest Community Magento Edition
– Integrate/Install a chosen Theme into the latest stable version of Magento
– Simple Design Implementation
– Set up Transactional Emails with Logo
– Inventory System or POS Integration
– Integrate Payment Processor such as Authorize.net and alternative payment methods from PayPal, Amazon, Google etc.
– SSL Set Up
– Product and Category Setup and Configuration
– No Integration with Back Office Systems
– Testing
– Basic Shipping & Tax Configuration Set Up
– Internal quality assurance (QA) to ensure cross-browser compatibility and functioning of all features

Custom Magento Website Cost: $42,000.00 – $100,000.00 and Up

This option is for bigger, established retailers who do most of their business online and are either moving from a different eCommerce platform or are upgrading their existing Magento websites. It provides a complete solution to online selling and with a business continuity plan in place for growth.
– More than 6000 SKU’s
– SEO Advanced Package
– SEO Starter Package
– Inventory System or POS Integration
– Multilingual Store Front
– Advanced 301 Redirects
– Custom Home Page Design, Check Out Page, Product Landing Page Etc
– Custom Banner/Graphics
– Different Pricing for Wholesale, Partners, and Retail Customers
– One Page Checkout
– Address Validation at Checkout
– Advanced Reviews
– Auto-Complete Search
– Gift Registry
– WordPress Blog Integration
– Social Media Sharing Option
– Facebook Login
– Connection With Back office Accounting Systems, Sales Force, Rewards Program, and Other Affiliate Marketing Systems
– Testing/ QA
– Code Documentation
– Warranty and Support
– Data Migration
– Advanced Shipping Configuration

Magento Enterprise Cost $100,000-$250,000 and Up

Along all the features included above in the Custom Magento website cost, Magento EE comes with the following additional features:
– Mobile Commerce
– Multiple Stores
– Full Page Caching
– Free Professional Customer Support
– Built in Modules
– Large Amount of SKU’s
– Private Sales, Wholesale, Gift Registries
– Hosted By Magento
– Search Engine Optimization
– Customer Segmentation
– Targeted Promotions & Merchandising
– Custom Coupons
– Return Management Authorization

Here is a fact check on Magento pricing:

1) Designing, building and configuring a Magento website requires time and advanced PHP development knowledge. If somebody tells you they can do it in a week, it probably won’t happen.
2) These numbers refer to what the industry prices for a Magento website run on average. Take in to consideration that proper web design companies have overhead and full-time intelligent people with salaries who will work on your project.
3) If the price of a Magento website sounds too good to be true, it probably is. Remember the saying “You get what you pay for”.
4) A college student or just a PHP developer alone can not build a Magento website. Such a project requires multiple people with different technical skills such as SEO, Analytics Expert, Web Design, Graphic Artist, Front and Back End Development.
5) Offshore developers can certainly create your website for much cheaper. When will the website be completed and will it be completed as promised is a matter of hit or miss.
6) Come up with a budget and a project scope or RFP before requesting a quote. Submit it to multiple companies and then compare apples-to-apples.
7) Building a Magento website and thinking that it will magically layout golden eggs is not a norm. As in the real world, selling on the web is very competitive. You need to constantly update and put a tremendous amount of work on the website in order to get a return on your investment.
8) You need a serious company that will stand behind what they do and become your long-term partner.
9) Hourly rate for Magento development can range from $95 – $250.
10) Due to the size and changes that happen in Magento project scope, it is difficult to predict and estimate the exact cost of a Magento website. Most companies will give out an average price estimate and will bill actuals. That’s a bit of a gray area for both parties involved. The client wants to know what their Magento website will cost, while the provider can not commit to it, then not deliver and go bankrupt. The solution is to try and have them give you a high and not low end estimate.

Best,