Lessons Commerce Can Learn From Other Industries: What Do Financial Advisors And Ecommerce Platforms Have In Common?

By Jason Wallis, CTO, Mozu

Whether a retailer is looking to partner with an ecommerce platform for the first time or is switching to another vendor, making a cost-effective and scalable decision can be daunting. From identifying integration capabilities to migrating mounds of data, there are several considerations to factor, including up-front costs and total cost of ownership.

Just like selecting a financial advisor, there are several methods in which an ecommerce platform can charge their clients, including fees, overages and maintenance costs. To help retailers and ecommerce professionals better weigh their options, consider the following when researching a potential ecommerce platform for your business.

Revenue-Share Pricing

Common with software-as-a-service (SaaS) ecommerce providers, vendors with a revenue-sharing pricing model charge their clients a percentage of sales. On the upside, this model is feasible for merchants with products that have high profit margins, such as luxury and high-end retailers. It also allows for a reasonable amount of overhead predictability, depending on the business’s consistency of yearly revenues and seasonality.

On the downside, revenue-sharing pricing models do not necessarily reflect the actual value that a user receives from their commerce platform. For example, if one retailer earns $1M and receives 50,000 visits in a month and their provider charges them 2 percent rev-share, that retailer would pay $20,000 to their ecommerce platform that month. On the other hand, let’s say another retailer generates $500,000 with the same amount of visits – their monthly cost would only be $10,000. This means that despite the same level of service and software access, the higher-revenue retailer would be required to pay much higher costs – much like a financial advisor might charge a percentage of your account value.

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