When you are in the market for a new car, you probably consider a number of factors before you buy. These include the car’s features and how they might benefit you, how it looks, how it drives, gas mileage, the sticker cost, and whether that car will raise your insurance rates.
If you are a savvy car shopper you also consider the cost repairs and standard maintenance as well as how much you can expect to pay for each tank of gas at the current rate. Once you know these figures, you can add them to the bottom line price of actually buying the vehicle (sticker price, delivery, tax, plates, and any other fees) and determine the total cost of ownership for that vehicle.
Why is total cost of ownership an important consideration when buying a car?
Simple. It gives you a clear understanding of what it’s going to cost to run and maintain the car as well as to buy it. Total cost of ownership analysis provides you with a way to choose the best model for your budget and makes sure that whatever you drive off the lot, you can handle the payment and the repairs.
For example, your monthly budget might be able to swing a payment on a sweet little Italian convertible coupe, but total cost of ownership analysis might expose the fact that this car will increase your insurance rates (too much temptation to floor it), fuel costs (bigger engine burns more gas plus a tendency to drive faster than in a grocery-getter), and that you will only be able to repair the car with imported Italian parts (expensive). Knowing ahead of time that the repairs and maintenance are likely to be expensive would allow you to make an informed decision about purchasing or not purchasing the car.
What does total cost of ownership have to do with buying an e-commerce platform?
Everything—unfortunately, many organizations make their buying decision based on sticker price alone which can be a costly mistake. Like buying the imported coupe unaware of the cost of engine repairs using foreign parts, enterprise organizations can make decisions based on emotion (read: this one looks cool) or sticker price (read: the sticker price on this one is cheaper) alone.
To come up with the total cost of ownership for an ecommerce platform, consider the following:
- Upfront sticker cost. This is the price of “driving it off the lot.” Don’t let this number influence you until you have completed your total cost analysis for all options. Compare those bottom line numbers—not sticker price.
- Development costs. If you are building your own ecommerce platform using open-source software or by building a site from the ground up, there will be significant development costs associated with the build. Allow a healthy budget for them.
- Customizations—any changes made to the standard offering when buying an ecommerce platform from a vendor.
- Site repair and debugging. Like it or not, technology fails from time to time and buggy things can pop up. These fixes should be included in your ecommerce platform purchase. Building-your-own? Make sure you budget for these fixes.
- Site maintenance. Whether you build your own platform or buy someone else’s, there will be maintenance fees to consider. If you buy your platform from an ecommerce vendor, you are likely to have a maintenance package as part of your purchase or as an add-on to your purchase. If you are building your own site, be sure to include developer time in your budget.
- Upgrades. Ecommerce technology changes very quickly. If you’re building your own platform, you will need a budget to pay for developer time on site upgrades. If you are buying your platform from a vendor, will upgrades be included or will they cost an additional amount? How much?
The key to any major purchase is to make an informed decision. Performing a total cost of ownership analysis for each of the ecommerce platform options you are considering will ensure that you aren’t swayed by emotion or sticker price alone and that you have a clear understanding of what it will take to run and maintain your site post-launch.
To learn more about how to maximize the success of your B2B ecommerce initiative, download the white paper, B2B Ecommerce Success – Seven Questions to Consider When Beginning an Ecommerce Initiative.