What Does It Cost To Run Magento? Is It Really Expensive?

In this article, we dissect all the Magento pricing questions and talk about the things to consider when estimating your Magento cost.

Magento, owing to its wide-array of functionalities, is the top choice for eCommerce store owners around the world.

However…

“With great power comes great responsibility”

In Magento’ case, it’s actually the decent amount of budget required that makes it ‘not so ideal’ for EVERY E-commerce store.

And despite a number of factors to consider for Magento projects, there’s one thing the clients care about the most… How much will it cost me?

But the answer for this is not in binaries. The complex architecture of Magento makes it an expensive framework to use, while other factors include the location of your Magento Partner agency etc.

In this article, we will not only cover the Magento pricing options but also educate you on the dynamics of Magento costing.

That way, you’re better equipped to estimate the budget for your Ecommerce store and can avoid getting ripped off from mediocre Magento agencies.

First and foremost, you need to decide whether your E-commerce store will run on:

1) Magento Community Edition: Free to install.
However, it comes without support and your customization requirements need to be performed by your Magento partner agency or individual Magento experts.

2) Magento Enterprise Edition: Not so free!

The decision for the Magento edition has a major impact on the final costing. You can see why here should you opt for the Magento Enterprise edition.

* estimated numbers as the final Magento Enterprise license price is negotiable.

As you can see from the table above, the Enterprise license cost varies with the amount of revenue your Magento store generates.

Note: To have Enterprise level functionality with Magento’s Community Edition, you need to install around 54 extensions!

If you choose to not renew your license, then then security patches, updates and further support needs to be done by your in-house or remote Magento developer agency.

To decide what extensions you will need for your Magento store, it is important to understand your requirements. The next step is to match them with the options available at Magento Marketplace.

Note: The complex nature of Magento means that installing multiple extensions can cause conflict issues.

Let’s say now that you’ve figured out the custom functionalities you need on your Magento store. On average, a medium-sized Magento store requires at least 10 extensions.

These 10 extensions can be installed by a Magento Certified Developer in around 3 hours per extension. And then there needs to be a quality assurance check to find any sort of extension conflicts in the Magento store.

As per the hourly rate of your developer or agency, installing as little as 10 extensions can cost you around $1500-$2000. The cost adds up if you need performance optimization to be done on the installed extensions.

Choosing the right Magento version also has an impact on your cost.

If you choose Magento 1, then M1 developers are relatively cheaper than M2 developers since Magento 2 has a complex architecture.

However, we don’t recommend that you start a new store on Magento 1. Rather, opt for Magento 2 and think long-term as Magento is going to discontinue support for M1 altogether.

Moreover, if you opt for the Enterprise edition, then Magento 2 is the only option for you.

Now, let’s come to the real elephant in the room.

Whether you’re going to have your Magento store built in-house or are you going to outsource the development to a remote agency.

This decision can have the single biggest impact on your long-term Magento store costs.

Let us break it down for you…

Suppose, you want to run a Magento business in USA and decide to hire an in-house developer. The average salary of a junior Magento developer is $85,000 per annum which translates to $40.7/hour.

This is quite the investment in itself, and in addition, a sole Magento developer can find it hard to operate an M2 store single-handedly. And if you opt for an experienced Magento Certified Developer, experienced with both front-end and back-end development, then the per annum salary will increase considerably.

On the other hand, if you opt for a remote agency in Asia or Central Europe, then this could turn out to be a cheaper option for you.

For example:

RLTSquare is located in Pakistan with a pool of talented Magento Certified Developers and we charge in the range of $30-$50 per hour. If you award your Magento project to us, then we are going to quote the number of hours required to finish it.

Once your project is completed, you can engage us when you site needs support or has technical problems.

This means that you do not need a Magento developer full-time as it will skyrocket your costs. The money that you save, when you choose to go remote, can be used to extend your website’s functionalities bringing in more revenue.

Hence, unless you’re looking to build a multi-million dollar business, it is wise to save on your costs and outsource your development work to a location where the cost is relatively low.

The answer to this question depends on a number of factors.

While, working with remote freelancers is the cheapest option, there are a number of reasons to opt for remote Magento agencies for your eCommerce project.

When it comes to individual freelancers, a major worry is the human element of it. Imagine having a sole developer dedicated to your project, and he faces an unforeseen circumstance. This could cause your project to come to a halt.

Compare this with an agency. your project doesn’t come to a half if one developer is unavailable. The knowledge pool of an agency is vast with multiple developers ready to step-in when needed to deliver the project timely.

As for the work quality, it is understandable that a single Magento freelancer can’t produce the kind of quality work that an agency can.

A Magento agency is a compilation of experiences from multiple expert Magento developers and is ready to tackle any bug, problem or challenge.

Whereas a Magento freelancer is the sum of his past work experience only. There are various pricing brackets for Magento freelancers

South Asian Magento developers: $10-$25/hour
Eastern/Central Europe developers: $25-$60/hour
West Europe/USA: $60-$120/hour.

Looking at the pricing, you can make your decision whether you want to employ individual freelancers or go for Magento agencies that can potentially provide you with high quality work in Magento at a moderate cost.

With agencies, the pricing usually follows a project minimum that can have a wide range depending on the location and experience of the Magento Agency as a whole.

However, there are other Magento agencies that specialize in delivering smaller projects with no set project minimum criteria.

Such projects usually start from $5,000 and this model is ideal for long-term custom Magento projects.

One thing to note when you receive the project quote should be the level of detail in the estimation.

It is quite difficult to estimate a project cost accurately, however the level of detail gives you a fair idea of the Magento agencies’ work ethic. The estimation should include: front-end, back-end, responsiveness, quality assurance, SEO etc.

Note: RLTSquare is a Magento Solution Partner in Pakistan and charges $30-$50/hour.

You can have a better idea for hourly rates and annual costs for freelancers/agencies via the famous Magento hiring website, commercehero.io

Summarizing the results here, freelancers and agencies charge differently depending on the region and expertise.

If the developer is experienced and/or certified, then this could mean an additional $10-$20 per hour regardless of the location.

As mentioned previously in the article, the North American developers charge the highest hourly rate, followed by Western Europe, Central and Eastern Europe and Asian developers respectively.

Some other considerations with Magento pricing and project quotes.

First things first, no matter how great the agency or freelancer, know that you can never get a fully accurate estimate to your project.

An agency can only give an estimate but the final invoice is based on the effort done on your Magento project.

Now, this can be problematic for some merchants…
The merchant would ideally want to know the exact budget he needs to commit to his E-commerce website.

On the other hand, the Magento agency or the developer doesn’t want to commit to a cost that turns out to be an unfair price for the Magento work done.

The best scenario in this case, for both the client and the developer, is to set a range of estimate and then the developer must finish the work within that estimate.

Note: Be wary of developers/agencies committing to small estimates in lesser time. Magento development is a time-consuming job requiring advanced PHP knowledge.

Sometimes developers/agencies promise quick delivery/completion in an attempt to secure the project contract and fall short of it. So, you should be vigilant when judging their expertise.

Any customization you desire in your Magento website would lead to an addition in the scope, eventually causing an increase in costs.

Tip: Do NOT compromise on skill and choose a junior Magento resource to save money. It will cost you more in the long-run.

Moreover, a single Magento resource can’t build a Magento store from scratch.

Successful Magento websites are a result of teamwork between front-end and back-end developers, UI/UX designers and SEO & conversion experts.

However, if the task is to install extensions, fix bugs or develop a module, then it will be less costly and feasible to seek the services of an individual freelancer.

Note: Check references and contact them when selecting your agency to be absolutely sure that you’re dealing with a professional team.

Creating a Magento website doesn’t mean you’re going to incur a one-time expense. The on-going maintenance is necessary in the ever-changing nature of the E-commerce industry.

You will need to spend regularly to stay up-to-date to the recent Magento versions, security patches, speed optimization, SEO and much more.

Note: Do not base your decisions on price alone. The lowest price would also mean mediocre quality. Invest the required amount in your E-commerce store to guarantee a sophisticated customer experience leading to increased revenue.

You can get a store up and running in a couple thousand dollars but this wouldn’t ensure that you stand out in your industry and are equipped for growth. So, don’t shy away from investing money or re-investing profits in your business.

Your E-commerce store requires a brand color scheme, logo and visuals to stand out from the competition. Likewise, you also require top-quality visual images for your products, sliding banners on homepage, category banners and more. This is necessary to establish your brand as an authority and persuade visitors to become your customers. For this, you need to hire the expertise of a designer typically at $20 – $30 per hour.

Tip: Product videos are known to boost conversion rates and are currently a leading way to promote your products.

Product images play a crucial role in improving the traffic and sales of an online store. A high-quality image (several images are always better) presents the finer details and increases the level of trust that eventually results in a sale.

Another crucial thing when it comes to launching your Magento website is to select the right hosting platform. Choosing the right hosting is important for a few reasons:

• You need a managed Magento hosting solution that deals with server management and security so you can focus on the important stuff. “Growing Your Business & Revenue”
• Secondly, you need to choose a hosting solution that provides on-demand scalability so you can increase the server resources during let’s say, Christmas season when the traffic load on the website is high.

We recommend our customers to go for Siteground’s Magento solution as we’ve had the best experience with them in terms of technical support, uptime and speed.

Merchants can also choose to go for Magento Cloud hosting that ensures 24/7 support by Magento itself. However, their plans also start with XXXX$ per month.

If you choose to go for Magento Community edition, then shared hosting can be an option for you as well. However, it’s not recommended if you expect to receive considerable traffic.

These Magento stores are low-quality Magento stores that can be setup in as little as $1000-$1500.

You can have a fully functioning Magento store without spending tens of thousands of dollars on creating it.

For these kind of stores, you can find cheap freelancers who can setup a basic store for you with no budget left for features and enhancements.

Note: You need to understand that if you’re not willing to allocate a budget of at least $10,000, then perhaps Magento isn’t the right fit for you at the current stage.

Many small-sized business do use Magento as their go-to platform for eCommerce, however the reason for using Magento is simply the possibilities of advanced features and functionalities it puts at your disposal.

Hence, if you have this budget then it’s best that you choose other eCommerce platforms to start your online endeavors.

For small to medium-sized businesses, this is the minimum budget we recommend to get you up to speed to all the necessary features that should be present in an ecommerce store.

These tier-2 stores pricing would depend on the complexity of requirements and will include the latest version of Magento Community Edition, a customized theme as per your design requirement and all the necessary features and extensions installed in your store.

Magento stores in the tier-1 category are typically large Magento Enterprise stores with custom functionality to meet all your expectations.

In this budget, you can freely build Magento Enterprise stores with features tailored to your specific product line and industry with special emphases on UI/UX and conversion optimization tactics.

Moreover, you can have performance optimization done for your store with round-the-clock Magento support to ensure zero downtime.

Who is this for?

A Tier-1 Magento Enterprise store is typically for well-established physical stores looking to expand online or online stores earning online with a different platform and want to migrate to Magento or they want to upgrade a running store from an obsolete Magento version.

So far, you might have figured out that Magento development isn’t cheap.

It is definitely not a go-to choice for micro-enterprises

Magento is not the best choice for small and micro enterprises expecting to generate less than $0.5 million in revenue per annum. For such stores, there are other platforms available to better suit your needs.

The small ecommerce stores don’t use the maximum potential that Magento has to offer, on the other hand, the bigger businesses need to focus on long-term thinking to stay ahead of competition by spending on Magento development to address changing industry trends and consumer behavior.

Hence, if you’ve a less than $5000 budget for a custom Magento store, then it’s probably not the right platform for you.

The ecommerce stores with basic functionalities in Magento can be created by working with individual freelancers, however it would be unfair to expect considerable profits with such a store.

Investing in an online store is similar to investing in a physical store. With rising competitions, and the competitors investing more in their business to maximize user experience means that your store’s performance be above par as well.

Customers don’t waste a second and bounce off your website if they are confused or the store’s experience isn’t up to their standards. Hence, you need to make sure that you build a Magento store that outperforms your competitor.

At RLTsquare, we carefully analyze the leading competitor in your industry and consult on the functionalities that can help you seize a significant market share and hence increase revenue.