What Are the Costs to Operate a Magento Store in 2020?

Posted by Norma Stratton on

Have you been considering making the switch to Magento, but not done so because you are unsure of the costs involved? Magento is one of the best choices for online stores, so you might be concerned that it is expensive, but let’s take a look at what you can expect from a Magento launch, as well as what would be involved in running a Magento-based store.

Understanding Magento Pricing

You may have heard that Magento is one of the most expensive platforms available for your online business. While there is some truth to that, it is probably more correct to say that it can be expensive, depending on your needs. Below, we will look at the different editions of Magento, and what they offer.

  • Magento 2 Open Source. This version of Magento, as the name suggests, is 100% open source. It is available to anyone, and the Magento community at large helps to develop it. This version is completely free and is being used by 83% of all stores to run Magento 1.4 through Magento 2.X.
  • Magento 2 Commerce. This edition was previously known as Magento Enterprise. Developed by the Magento team, this is a more advanced, paid version of Magento. It includes capabilities not found in the open-source version, such as business intelligence tools, in-depth management roles, and advanced management for inventory. It might be suitable for you if you are dealing with complex business issues or an exceptionally large workload.

Pricing is based on your expected annual Gross Sales Revenue (GSR) and starts at $22,000 if your anticipated GSR falls between $0 and $1M. The maximum price is $125, 000 for businesses with a GSR between $25M and $50M.

  • Magento 2 Commerce Cloud. This version of Magento is essentially the same as Magento Commerce, with the difference being that it is cloud-based. This is a much more expensive option, as you are also paying for cloud hosting. Like Magento Commerce, pricing is based on expected GSR, and ranges from $40,000 to $190,000.

As you can see, in more than 4 out of 5 cases, those using Magento opt for the open-source version, which is entirely free. It is more than sufficient in most cases, and able to handle high- traffic spikes. Even if you find yourself wanting some of the extra features in Magento Commerce, you often have the option of using an extension to add them in.

What are Magento`s Launch Expenses?

The actual Magento platform may be free, but that doesn’t mean everything else is. There are three cost factors to be aware of, as they can raise your development costs. 

  • User Experience. Whether you want to migrate to Magento 2 or open a brand new store, you are going to have to create the UX of your store in order to provide a proper user experience on the mobile and desktop versions of your site. Even if you are only interested in the very basics, it may take a bit of work to get things just how you want them. This will mean working with UX experts, improving your sales funnel and conversion—and more.

Beyond the UX, you will need to determine what sort of design you want. You may decide to go with a ready-to-use theme, which will save you some money, but at the cost of personalization. You will also need your UX to fit the theme, rather than the theme fitting the UX. You can expect to pay between $60 and $100 for the basic theme, with no customization. If you choose to create a custom design, anticipate between $2400 and $40,000.

  • Third Party Extension Costs.As mentioned above, there are a variety of extensions available, but there is a significant investment involved in obtaining the most useful of them. At an average of $100, simply adding 10 will bring you to $1000. It is also worth noting that the extensions created by the developers are tested on demo stores. Community-made extensions may not be fully optimized, and installing several of them at once may have unintended consequences.

You can also have custom extensions created for your specific needs, giving you greater flexibility, and providing clients a more memorable experience. The price for this will vary depending on what you want it to do but will average between $2500 and $5000 before adding in the cost of design work.

  • Frontend/Backend Costs. There are a couple of costs here, including the implementation of your custom design and layout, developing new functionality if needed or desired, and the integration of any extensions that you desire into your current design. The exact price for this naturally varies depending on the features included. Given that it is a fair amount of work to develop and make it work correctly across desktops, phones, and tablets, it is not cheap. Depending on the developer, you are likely to spend between $5000 at the low end and $65,000+ at the high end.

So, while there are a number of variables making it difficult to say exactly what you will need to invest in starting your Magento store, you will likely require a minimum of $7000, while the upper limit can easily reach $140,000. This is, of course, an extremely rough estimate.

With such a huge range, your best bet is to get an actual quote that will look at your particular situation and needs.

What is the Cost of Running a Magento Website?

Now that you have an idea of what is involved in launching a Magento store, we will look at the cost of running it. While hosting is a bit of a complicated issue, we can look at the four basic options, from cheapest to most expensive:


  • Shared Hosting. If you are using shared hosting, you are sharing server resources with other websites. This is used for sites that have little in the way of requirements for CPU and RAM. While it is only $10 to $25 per month, it will not be your top choice if you want good performance.
  • Virtual Private Server (VPS). This option is the best bet for small- to medium-sized stores. It offers flexibility with high-performance hosting and better security. The cost varies with your needs, but expect it to fall anywhere from $60 to $300 per month.
  • Dedicated Hosting. For the largest stores to provide the best possible service, dedicated servers are called for. These allow for control over every aspect of the server, including hardware and software. The upfront payment is high, with server hardware being expensive. Dedicated hosting can cost up to $2000 per month.
  • Cloud Hosting is another option for the largest stores. It offers tremendous independence and is excellent for complex setups, while capable of handling huge workloads. It is, however, an expensive option at $4000 per month.

Third-Party Services and Development Support Costs

Even though Magento works just fine on its own, you may at some point want to consider third-party services to help you deal with the integration of SEO in the store, or perhaps improve your ability to deal with workload spikes or dips in performance. This might run you another $100 to $3000 per month.

Busy stores will always have something new to work on, such as developing new features, performance optimization, and troubleshooting. Magento stores should have a minimum of one developer ready to assist. This may be for handling smaller issues as they arise or working a full 40-hour week. Depending on the workload, expect a cost of $150 to $5000.

Final Thoughts

As you can see, your total cost can vary dramatically, from a minimum of $260 up to $12,000, though the average falls closer to $2100. Some things to consider:

  • Magento will function on shared hosting, but in practice, it is too slow.
  • You are well served in starting with a VPN and upgrading later on.
  • Try to find a specialized Magento hosting provider to provide you with better tech support and hosting on servers that have been optimized for Magento.
  • Don’t try to save on your infrastructure. You will receive more sales with a faster store.

These are all extremely broad guidelines. For a better idea of the costs involved, contact us today for an estimate based on your specific needs.


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