Costs and pricing
Part of Ecommerce platform costs: a whole-life budget that separates cash, accounting and economic cost
How to structure an ecommerce platform cost register
This ecommerce platforms cost guide shows how to structure comparable register rows, using Square fees while keeping VAT, returns and assumptions distinct.
To compare ecommerce platforms on a like-for-like basis, build a cost register over a stated period. Paid platform plan prices are not compared here; take the current figure from each vendor's pricing page. Start with an England merchant and its actual order route. Then add infrastructure, payment deductions, fulfilment, people, assurance, incidents and exit.
What to take away
- Price the whole service over a stated period. A plan headline is not the total cost.
- Fix the legal seller, goods, territory, payment methods and fulfilment route before gathering figures.
- Use four recurring unitsper month, per captured payment, per fulfilled order and per support case.
- Payment fees are separate from the platform price. Square charges 1.4% + 25p on UK cards for online purchases.
- Mark any total unknown when a factor is missing, and approve the budget only after the accountant has checked VAT.
Define the unit before gathering figures
Write down the legal seller, goods, customer territory, expected payment methods, stock owner, fulfilment route and budget horizon. Record GBP as the reporting currency and give every line a VAT field.
Use four recurring units: per calendar month, per successful captured payment, per fulfilled order and per support case. One-off work can use approved hours by role or a scoped quotation. Never combine a card authorisation with a settled order.
Separate free software from payment charges
Some prices are published and some are blank by design. WooCommerce is free to download and use, and you choose where to invest your budget from there. That makes hosting, extensions and maintenance hours the real cost rows.
A payment provider can have no monthly charge. Square's free plan has no setup fees or monthly fees, and you only pay when you take a payment. The cost then sits entirely in the per-payment rate.
Fill six cost blocks
- Technology:exact platform edition, hosting, domain, theme, extensions, integrations, testing environments and support.
- Money movement:payment fee, card geography, refund treatment, dispute charge and settlement option.
- Delivery and remedies:pick, pack, carrier, failed delivery, returns handling, replacement and customer support.
- People:catalogue preparation, implementation, content, migration, training and reconciliation, priced as approved hours multiplied by an approved loaded rate.
- Assurance:consumer, product-safety, privacy, accessibility, security and tax review.
- Change and exit:rejected migration rows, parallel running, export validation, deletion and restore testing.
The costs and budget guide shows how to separate cash, accounting and economic cost for each block.
Price the payment line from the provider page
Square's online rate is 1.4% + 25p for transactions with UK cards, and 2.5% + 25p for transactions with non-UK cards. Read the live Square pricing page before you commit, because rates change and apply to a named service only.
The per-payment fee is a percentage plus a fixed amount, so small baskets cost proportionally more. Compare gateways on the same basket in the payment gateways article, and compare quotes on one scope with the pricing models method.
Build one row per charge
Create one row per supplier charge or internal activity, using line cost = quantity x unit rate + fixed charge. Give each row an evidence owner, source date, billing period, VAT basis, minimum term, confidence and refresh trigger. If a factor is missing, mark the total unknown.
Illustrative worked example, not a quotation and not market data. Assume 4,800 UK-card payments a year at a £40 order value, and a Square online fee of 1.4% + 25p. The fee per payment is £0.56 + £0.25 = £0.81, so the year costs 4,800 x £0.81 = £3,888. The platform and hosting inputs below are assumed.
| Charge row | Quantity | Unit rate | Line cost (GBP) |
|---|---|---|---|
| Platform plan (assumed) | 12 months | £30 per month | £360 |
| Hosting (assumed) | 12 months | £25 per month | £300 |
| Payment fees | 4,800 payments | £0.81 per payment | £3,888 |
| Subtotal before VAT | £4,548 |
Add VAT and returns
You must register for VAT if your total taxable turnover for the last 12 months goes over £90,000, as the GOV.UK VAT registration guidance sets out. The standard VAT rate is 20%, but the actual supply decides the treatment, so the accountant must approve each entry.
HMRC, the UK's tax, payments and customs authority, administers VAT, and the rules are UK-wide.
Returns need their own row. Under the GOV.UK distance selling guidance, you must tell the customer they can cancel their order up to 14 days after it is delivered. If you do not tell them, they can cancel at any time in the next 12 months.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 set the goods cancellation period at 14 days after the goods come into the consumer's physical possession. Budget for refunds, return postage and write-offs from the first order.
Illustrative arithmetic, with assumed inputs: 5 per cent of the 4,800 payments become returns, which is 240 returns. At an assumed £4 return postage each, that is £960 a year before refunds and write-offs.
Stress-test quantities
Run low, expected and high quantities without inventing probabilities. Ask what changes if more customers use non-UK cards, returns rise or an extension needs replacing. At 2.5% + 25p, a £40 non-UK card payment costs £1.25 instead of £0.81.
Keep cash paid, accounting treatment and internal cost in separate columns. Approve the budget only when procurement checks the sources, the accountant reconciles the units and the selection checklist gates have owners. Reopen prices on the commitment date, and read the UK regulations map for store-journey duties.
Before you act
- Write down the legal seller, goods, territory and payment methods.
- Record GBP as the reporting currency and give every line a VAT field.
- Separate card authorisations from settled orders in every calculation.
- Give each cost row an evidence owner, source date and refresh trigger.
- Run low, expected and high quantities.
- Get an adviser to approve the merchant's VAT entries.
Common questions
Why is a plan headline not a reliable price for an ecommerce store?
The plan is one charge. The register covers the rest, from infrastructure and payments to fulfilment, returns, assurance and exit.
How should payment fees be calculated?
Multiply the payment count by the per-payment rate. For a UK card on Square online, that is 1.4% of the order value plus 25p, checked against the live pricing page.
What must happen before a budget is approved?
Procurement, the accountant, the specialists and the exit test owner should each sign off. Diary the commitment date to reopen prices.
