Shopify Store Customization — What Is A Reasonable Project Budget?
You’ve set up your store with Shopify. You’ve sent some traffic. Based on the results, you now have ideas what needs to change.
Of course, as a store owner you won’t code the changes from scratch, wouldn’t you?
That’s not the way a business person rolls.
You are going to either buy an app, a theme or hire someone to build them for you. This way you are going to save your time an have an expert do their best work on your store, so that you achieve the business objectives you are after.
You find a professional shopify customizer and they ask you: “What’s your budget for this project?”
And then it hits you.
“Omg, I don’t how much does this thing usually take. I don’t know how much should this cost.”
When determining a budget, you shouldn’t think about time for execution, but about the value your business will get from this.
If you don’t know the value of the project to you, why bother when you can’t measure the effects of the work on your business?
How to calculate the value of a project to your business?
With e-commerce, 99% of the changes you do on your Shopify store can be tracked. And because you already have a baseline data, you can estimate how much a project will influence your revenue.
Calculating the value of a project to your business:
- Log into your Shopify admin
- Navigate to Reports > Dashboard
- Set the date range to include the last 12 months
- Make a note of the yearly revenue
- Make a note of the total conversion rate for that period
- Fill in this formula ((expected_conversion_rate/total_conversion_rate)–1)*yearly_revenue = additional_revenue_per_year
What you’ll be staring at now is the ADDITIONAL revenue you’ll have after an year, if the project is successful.
For example: Do you believe halving your store’s load time will double your conversion rate? If so, you can easily calculate how much you can gain from this.
Say you have a store making on average $120,000/y and it has 2% conversion rate. E-commerce averages are between 2 to 4%. This means you have a lot of room for improvement.
Let’s run the numbers through our formula:
((3 / 2)–1)*120,000 = 60,000 ((exp._cr/total_cr)–1)*yearly_revenue = additional_revenue_per_year
Getting your conversion rate from 2% to 3% will bring you $5k more every month or $60k more over the course of an year.
Divide that by 10 and you get a reasonable budget for the job ($6k) that makes sense as an investment.
Would you like to spend $6k to make $60?
Of course you do! With a budget of $6k you can get enough professional eyes and clever minds that could take on your project with a high chance of success. This means that the time contacting them and working on the project won’t be wasted.
Contrast that with a $200 pulled-out-of-thin-air conversion-optimization budget, where you get people with no experience wasting your time and getting your business nowhere.
I’d choose the former over the latter anytime.
So, what is your budget?
If you’ve read this far, you’ll like my guide to discovering missed revenue opportunities on your Shopify store!