How much does it cost to run an online store?

This article was written by our expert who is surveying the industry and constantly updating the business plan for a retail store.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the retail market.

What does it typically cost monthly and yearly to run an online store?

Running an online retail store typically costs between $3,000 to $10,000 per month for small to medium operations.

These costs include essential expenses like inventory, platform fees, marketing, fulfillment, and customer service. Smaller stores can operate on the lower end, while growing businesses often spend more on marketing and inventory.

Annually, expect to budget $36,000 to $120,000 for comprehensive operations. The largest expense categories are usually inventory procurement (20-30% of budget), digital marketing (15-25%), and fulfillment operations (15-20%).

Your actual costs depend on factors like product type, sales volume, and growth goals. Many successful online retailers start small and scale expenses as revenue grows.

This breakdown helps you plan realistic budgets for your retail venture.

How much do online stores spend on inventory each month?

Inventory procurement typically costs $500 to $1,500 monthly for small to medium online retail stores.

This expense covers purchasing products from suppliers, shipping costs to your warehouse or fulfillment center, and maintaining adequate stock levels. Larger operations or those selling high-value items may spend significantly more.

Annual inventory costs range from $6,000 to $18,000 or higher. The amount varies based on product margins, turnover rates, and seasonal fluctuations. Fast-moving consumer goods require more frequent restocking.

Smart inventory management reduces carrying costs while preventing stockouts. Many retailers use the 80/20 rule, focusing budget on top-selling items that generate most revenue.

You'll find detailed inventory planning strategies in our retail business plan, updated every quarter.

What are the costs for hosting and e-commerce platforms?

E-commerce platform and hosting costs range from $34 to $550 monthly for most online retail stores.

How much does website maintenance cost monthly?

Website maintenance for online retail stores costs between $100 to $1,000 per month.

This includes regular updates, bug fixes, security patches, content management, and technical support. Small stores using template-based platforms spend less, while custom-built stores require more investment.

Annual maintenance budgets range from $1,200 to $12,000. Larger stores with complex features, multiple integrations, or high traffic volumes may spend $1,500 to $2,500 monthly. This ensures optimal performance and security.

Essential maintenance tasks include plugin updates, backup management, performance optimization, and security monitoring. Neglecting maintenance leads to security vulnerabilities and poor user experience.

Consider maintenance costs as insurance for your online retail business's digital presence.

What are typical payment processing fees?

Payment processing fees typically range from 1.5% to 3.5% of each transaction, plus $0.30 to $0.50 per order.

For a retail store processing $10,000 in monthly sales, expect $150 to $350 in processing fees. These fees vary based on your processor, sales volume, and average order value. International transactions often incur higher rates.

Major processors like Stripe, PayPal, and Square charge similar rates. Some e-commerce platforms charge additional fees if you don't use their native payment gateway. Shopify, for example, adds 0.5% to 2% for external processors.

High-volume retailers can negotiate lower rates. Consider bundling payment processing with your e-commerce platform for potential savings.

This is one of the operational elements we break down in the retail business plan.

How much should retailers budget for digital marketing?

Digital marketing budgets for online retail stores typically range from $500 to $5,000 monthly.

Established retailers often allocate 7-12% of revenue to marketing, while new stores may invest 15-20% to build brand awareness. This covers paid advertising, content creation, email marketing, and social media management.

Annual marketing expenses range from $6,000 to $60,000 or more. The median Google Ads spend is $1,000 to $1,500 monthly, while social media advertising varies widely based on targeting and competition.

Successful retailers balance paid advertising with organic strategies like SEO and content marketing. Track return on ad spend (ROAS) to optimize budget allocation across channels.

Marketing investment directly correlates with growth potential in competitive retail markets.

What are fulfillment and shipping expenses?

Fulfillment and shipping costs for online retail stores range from $500 to $5,000 monthly.

How much does customer service and returns management cost?

Customer service and returns management typically costs $100 to $2,000 monthly for online retail stores.

This covers staff wages or outsourced support for handling inquiries, processing returns, and managing refunds. Small stores may handle this internally, while larger operations often outsource to specialized providers.

Annual costs range from $1,200 to $24,000. The expense depends on order volume, return rates, and service level expectations. Fashion retailers face higher costs due to 20-30% return rates.

Efficient returns management reduces costs through automated processes and clear policies. Many retailers use self-service portals to minimize support tickets.

It's a key part of what we outline in the retail business plan.

What are typical payroll costs for retail staff?

Payroll costs for online retail stores range from $500 to $5,000 or more monthly.

Small operations may start with the owner handling everything, then gradually hire for customer service, order fulfillment, and content creation. Virtual assistants cost $500-$1,500 monthly, while full-time employees require $2,500-$5,000 including benefits.

Annual payroll expenses typically range from $6,000 to $60,000 for small teams. Growing retailers often employ 2-5 people covering customer support, operations, marketing, and management roles.

Consider starting with contractors or part-time help to manage costs. As sales grow, transition key roles to full-time positions for better consistency and control.

Strategic hiring accelerates growth while maintaining service quality.

How much is business insurance for online stores?

Business insurance for online retail stores costs $50 to $200 monthly.

This includes general liability ($30-$75/month), cyber liability ($50-$100/month), and inventory protection coverage. Annual premiums range from $500 to $2,000 depending on coverage limits and business size.

Essential coverages protect against customer injuries from products, data breaches, and inventory damage. Cyber insurance becomes crucial as you store customer payment information and personal data.

Many insurers offer bundled e-commerce packages combining multiple coverages. Consider your specific risks: high-value inventory needs more protection, while digital products require stronger cyber coverage.

Insurance provides peace of mind and protects your retail investment.

What software tools do online stores need?

Software tools for online retail stores cost $100 to $500 monthly for essential operations.

1. Inventory Management System ($50-$175/month): Tracks stock levels, automates reordering, and prevents overselling across multiple channels.
2. Email Marketing Platform ($20-$200/month): Manages customer communications, abandoned cart recovery, and promotional campaigns.
3. Analytics Software ($0-$150/month): Google Analytics is free, but advanced tools provide deeper insights into customer behavior.
4. Accounting Software ($15-$70/month): QuickBooks or Xero for financial management, tax preparation, and reporting.
5. Customer Support Tools ($50-$100/month): Help desk software for managing tickets and live chat functionality.

How much should be allocated for unexpected costs?

Online retail stores should allocate 5-10% of monthly expenses for unexpected costs, typically $200 to $1,000.

This contingency fund covers platform outages, emergency inventory purchases, legal compliance updates, and infrastructure upgrades. Unexpected expenses might include sudden shipping rate increases, payment gateway issues, or cybersecurity incidents.

Annual contingency budgets range from $2,400 to $12,000. This buffer prevents cash flow disruptions when surprises occur. Common unexpected costs include seasonal demand spikes requiring extra fulfillment capacity or regulatory changes requiring website updates.

Building this cushion into your budget prevents financial stress during critical business moments.

Smart retailers maintain reserves equal to one month's operating expenses.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Upmetrics - Ecommerce Business Startup Costs
2. Shopify - Ecommerce Website Cost Guide
3. FinModelsLab - E-commerce Operating Costs
4. ShipBob - Fulfillment Costs Breakdown
5. NerdWallet - Credit Card Processing Fees
6. Stryde - Average Marketing Budget for Ecommerce
7. WebFX - Website Maintenance Pricing
8. Forbes - Small Business Insurance Cost
9. Capterra - Inventory Management Software Pricing
10. Warehousing and Fulfillment - Service Costs Guide