What a Store Costs to Run Each Year

The lines people budget for

Those are the visible costs and they are usually the smaller half.

The lines they forget

1. Payment processing — 1.5–3% of everything you sell
2. Shipping subsidy — whatever free delivery costs you
3. Packaging — 1–4% of order value
4. Returns — both shipping legs plus lost value
5. Photography and content, which is ongoing rather than one-off
6. Someone's time, which is the largest line of all

The time line is the one that never appears in a budget and always dominates it. Listing, packing, support and admin is somebody's job whether or not it is costed.

Build the annual picture

Take your expected order volume, apply the per-order variable costs, add the fixed subscriptions, and add an honest estimate of the hours. That gives you the number your gross margin has to cover.

Most small store owners have never done this calculation, which is why so many are surprised by how little remains.

Budget for improvement too

• Photography for new products
• Content, if you want organic traffic
• One or two development improvements a year
• Advertising, if the economics work

A store with no improvement budget stays exactly as it is, which in a competitive category means gradually declining.

Review annually

Costs drift. Apps are added, carriers raise prices, suppliers increase, packaging costs more. A yearly review against actual spend usually finds several hundred pounds of avoidable cost.

It is also the natural point to check whether your prices still reflect what things cost.

Frequently asked questions