What does it cost to host your NT storefront?

David Strom

It seems like everyone is putting up an NT web storefront these days. Trying to predict the costs of doing business over the web can be elusive since there are so many different kinds of fees and situations. I am here to help you sort it all out.

First off, you'll need some software to setup your store. Assuming you'll be running it on an NT server, you can buy a suite of software from Microsoft, IBM, Intershop and a few others. Or you can assemble your own set of shopping cart, catalog servers, and commerce pieces from a variety of sources. Budget about $8,000 for the software in either case. This seems like a lot of dough, and while you certainly can do it for less, this is about where the enterprise-level solutions will end up costing you.

An alternative to buying your own server is trying out one of the many commerce hosting providers that are popping up all over the Internet. Yahoo Store (formerly Viaweb), iCat Commerce Online, IBM and Mindspring are the four I would recommend to try: the costs vary from free (iCat will host your store for less than 10 items) to $300 per month, along with some setup fees. This is a good place to experiment with eCommerce, but eventually you'll probably want to buy your own storefront software.

With either scheme, you'll have to decide what forms of payment to accept at your store. Credit cards are an obvious first attempt, but your customers might also want to submit their orders via fax, with an electronic wallet (such as what Microsoft offers now with Windows 98) or call you with their credit card numbers over the phone.

Second, you have to process your transactions using some kind of payment gateway to the banking network. You can do this on your own equipment, but first you'll need to install and configure the software. Cybercash and HP/Verifone are leading providers here and both offer these products free. The bad news is that setting up the NT versions of both products isn't easy, since both came originally from the Unix world and were somewhat skimpy on user interfaces, to be charitable.

If you don't want to process payments on your own server, you might be able to work with a server located at your merchant bank, the people that handle your corporate banking accounts. If your current merchant bank doesn't have this ability, you'll have to shop around and find someone that does. You'll also have to make sure that your payment software that will work with your eCommerce suite or hosting provider.

There are setup fees (usually about $500) and monthly administrative fees (which can vary all over the place, but budget $150 per month as a good estimate) for these accounts. Some merchant banks also tack on monthly statement preparation or reporting fees on top of this, so you definitely want to make sure the monthly fee quoted covers everything you'll need to run your business.

Third, you have per-transaction processing fees. This can be anywhere from zero to a few pennies to ten percent of each transaction. Some banks also hold onto your funds for several months, to handle chargebacks (when customers either didn't receive the merchandize or claim they were billed incorrectly). Some tack on a fee of $25 for each chargeback situation, which can add up if you have many of them.

Still confused? A few places you might want to look are the listing of shopping cart services and products at www.poorrichard.com/freeinfo/shop.htm, which goes into prices and platforms. And Scambusters, at www.scambusters.org/Scambusters23.html, has eight steps you can take to minimize Internet-related credit-card fraud.

Adding everything up eCommerce doesn't come cheaply. Sure, you can cut costs and find shareware products and low-fee banks, but just make sure you aren't missing out on the service levels you'll expect. And good luck with setting up your storefront.