Compass Designs

We have carried out an extensive comparison of common shopping cart/merchant account solutions. Read more about other providers such as Paypal, or Yahoo, or to learn more about selling online. We have distilled hours of research and price comparisons to help you make the best decision on what path to take. Think of this as your compass!

You need two basic things to start selling online:

• A storefront (shopping cart enabled web site)
  This is a place on the web for people to go to see what you have to sell. It can be your own website, a 3rd party site (like yahoo, or an eBay store) or even just a temporary page on an auction site like eBay's.
  
• A way to accept payment
  Most buyers want to use a credit card to buy online. To accept credit card payments you need a merchant account. A merchant account is not a business checking account. It is a special facility that allows you to process card transactions.. In many cases you will have to pay higher rates than offline businesses such as shops or restaurants who obtain a signature from their customers. Another alternative that I explore in the table below is Paypal. Think of it as quasi-cash that can only be used online.

The combinations to achieve these two are virtually infinite. Some providers have low initial set up fees but high monly costs, or high transaction percent costs, others are the reverse. Here is a look at several different ways to meet these two requirements.

Click on the store logos to read more about their services. 

Setup	0	0	Currently waived
Monthly	$15.95	$20	$29.95
Per Sale %	8% of initial $25 ($2), 5% of remaining	2.9%	0.5%
Per Sale	$0.02	$0.30	0
Merchant Account	*Effectively Paypal	Included	Included
Setup	0	Included	Included
Monthly	$20	Included	Included
Per Sale %	2.9%	Included	Included
Per Sale	$0.30	Included	Included
Storefront	Included	None	Included
Domain	Included	$20/yr	Included
Hosting	Included	$90/yr	Included
Web Design	$90	$150	$150
Comments	Proprietary eBay website	Paypal heavy on branding	eBay company
Total First Year Costs	$212.55	$256.60	$266.55
		Recommended

.

Setup	$50.00	$49	0
Monthly	$39.95	0	$25
Per Sale %	1.5%	5.5%
Per Sale	0	$0.45
Merchant Account	Paymentech	Included	SellIt!
Setup	0	Included	$99
Monthly	$22.95	Included	$4
Per Sale %	2.69%	Included
Per Sale	$0.20	Included
Storefront	Included	None	Included
Domain	Included	$20/yr	Included
Hosting	Included	$90/yr	Included
Web Design	$150	$150	$150
Comments	Many Extras	Checks only once per month	Many Extras
Total First Year Costs	$349.5	$285.60	$447
			Recommended

This is just a start. As you can see the fixed and percent costs vary considerably. To make a more informed decision on which route to take, you need to have some idea of volume of sales and item prices. Then you can do an analysis by $ sales. This starts showing up the high percent cuts in vendors like 2checkout.com (who have the lowest startup fee).

We recommend Paypal for the fact that it has the lowest costs of a "real" store front (as opposed to an eBay store) and BuildIt for its sophisticated collection of web marketing and search engine optimization tools.

Analysis Process

To come to these conclusions, we actually didn't just grab what we thought might be the best paying affiliate links, but did a real detailed analysis.

The first step was to create a spreadsheet and pick some arbitary values for sales and volume.

 

This allwed me to zero in on the real costs of running an online store and plot some comparison graphs. Its much easier to see trends in this way.

 

 

You can grab the files I used in the ecommerce section of the file library.

Comparison of cost to set up online stores

A detailed analysis of first year costs for online stores

I strongly recommend you use these files with your own projected values to find the best solution for you.