How much does it cost to support and develop Magento?
In today’s post, I will describe these costs in detail and provide specific values in euros and dollars.
How much does it cost to support and develop Magento?
A significant problem in the ecommerce market
Why don’t Magento’s support and development costs amount to 0 EUR/USD?
What are Magento’s support and development costs?
Is Magento expensive to maintain and develop?
Maintaining and developing Magento – Summary
Today, we’ll address a question that I believe everyone considering implementing Magento should ask a Software House or ecommerce agency they’ve discussed the implementation with.
This question is rarely asked, and I believe it’s a major issue in our market.
The question sounds innocent: How much will it cost to support and further develop Magento after implementation?
If we imagine a store like the one we have here, which
Depending on how intensively we plan to develop it and the quality of the hosting and support we choose, we can assume that supporting and developing such technology over the next 5 years will cost somewhere between 325.000 EUR/USD and nearly 780.000 EUR/USD.
A big problem within our ecommerce market, where companies develop online stores on Magento, is that too few people ask about Magento support and development costs after the implementation stage.
The entire purchasing process is focused on discovering that magical Magento implementation amount, which is always associated with the number of hours needed for implementation.
Hourly rates are often mentioned, but seldom does anyone ask about subsequent Magento support costs. I see this as a big mistake.
Every ecommerce director, board, or business owner who decides to implement Magento should know the ROI of this technology. Depending on the subsequent costs of supporting Magento, the ROI and profitability of the entire ecommerce could be drastically different.
Although you own the code and don’t pay for any license, you must remember that you are the owners of Magento, and the responsibility for supporting this software lies with you.
Security patches must be installed, and basic bug fixing and updating Magento should be conducted.
This responsibility rests with you. Of course, later on, it is transferred to the ecommerce agency with whom you signed a contract.
Nevertheless, the store will be yours, and as a company, you will be liable for instances such as someone attempting to steal your customers’ data.
In other words—there’s no escaping it. You must at least take care of your store’s security, which will cost money.
Let’s delve into the calculations. Where do I get the amount of 325.000 EUR/USD or even 780.000 EUR/USD?
Assume we are looking at the next 5 years, from 2024 to 2028. Let’s say the store was launched on January 1, 2024, to simplify calculations.
Now, an assumption that I have already written about in a previous article is how often we should update Magento. Minor updates (i.e., a change in the last digit of the Magento version name) should be done about twice a year. Meanwhile, a major update appears every 3-4 years. This is the middle digit in the Magento version name. Updating to such a version requires much more time.
When talking about basic support and minor development, fixing minor bugs, monitoring, and installing basic security patches, we can assume that about 20 hours of an ecommerce agency’s work per month will be sufficient (although this is the bare minimum for a system scale like Magento).
However, if we plan to develop in addition to support, we should allocate an additional budget. Let’s assume we’ll allocate about 40 hours per month to this. This gives us about 120 hours quarterly for the development of new things. This will allow us to implement approximately 3-5 small new Magento functionalities. As a result, we will have a Magento system that is always up-to-date, secure, resistant to attacks, and will slowly develop.
In this assumption, we also consider the software house’s hourly rate. As of now (February 2024), I assume it is around 65 EUR/USD. Most hourly rates will be between 50 EUR/USD and 100 EUR/USD.
Regarding the hosting company’s hourly rate, I think an assumption of about 75 EUR/USD is quite realistic (February 2024).
In the calculations, we should also include a certain magical value that is currently quite significant, namely the average annual inflation. Let’s assume it’s 7% (but maybe it is too high?)
In the end, all these values add up to 323.140 EUR/USD, with the first year being 54.340 EUR/USD, then 58.600 EUR/USD, 71.600 EUR/USD, 67.000 EUR/USD, and in the last year 71.600 EUR/USD. In 2026, there will be a variance associated with a major Magento update.
The costs have been divided into support and minor changes, platform development, upgrading Magento versions, and hosting. We consider Magento Community Edition, so there are no license fees. In this example, we consider relatively cheap hosting. However, suppose we assume that we sell something expensive—like electric guitars—and the average transaction value is about 750 EUR/USD. In that case, it turns out that this is a business generating several million euros in revenue. In such a case, it would be good to choose something safer to have a peaceful sleep—hosting with better DevOps support.
If you opt for such premium hosting, the difference in total costs of maintaining and developing Magento over the next years will not be as large as it seems. In the end, we’ll land around 340.000 EUR/USD.
We move to the second scenario—let’s pretend we want to develop our business more intensely. In such a case, we would easily reach 780.000 EUR/USD for 5 years… Instead of 40 hours for additional development, we would allocate 140 hours. This will allow us to implement quarterly from 10 to 17 new and small functionalities in Magento (this is an oversimplification, but it’s about understanding the scale).
And the third scenario—if we assume that we want to use very good hosting and develop not too quickly but not too slowly, you should allocate about 80 hours a month for support and development. 20 hours would be dedicated to support and minor development, and 60 to develop new functionalities.
In such a case, the total cost of support and development would be around 412.840 EUR/USD over 5 years. Is this a large or small amount? Judge for yourselves.
In the market, no one talks about the total cost of ownership.
Most discussions focus on how much it costs to implement and launch a given service. Few perform the exercise of estimating subsequent support and development costs.
Suppose we convert the support costs of Shopify (including some payment fees) or take a closer look at Presta, Shopware, or WooCommerce. In that case, it turns out that maintaining and developing these ecommerce systems does not cost a few thousand euros annually but much more.
I want to convey that maybe 350.000 EUR/USD, 750.000 EUR/USD, and sometimes even 1.300.000 EUR/USD sound impressive because it’s a large value, but it’s not that Magento costs 325.000 EUR/USD over 5 years, and Shopify will cost 20.000 EUR/USD. Doing this math with other e-commerce technologies, you would be surprised at how much money it costs.
It’s all about the ROI. If we take a business that would generate revenue in the tens of millions of euros per year with a sales margin of 30% or 40%, then are the costs of Magento high from this perspective?
One more note at the end. I did not include any business growth in the hosting costs—I have kept the same amount of SKUs, users, transactions, etc., throughout. Therefore, if you want to make more precise calculations, you should also include the increase in hosting costs in this model. However, it will not change the amount much.
As I emphasized at the beginning, I believe that too little is said about the costs of maintaining and developing Magento, and too much focus is on discussing how much implementation costs.
With this post, I wanted to demystify this great secret.
The cost of maintaining and developing Magento for a business with 3.000 transactions, 150.000 users per month, 10.000 SKUs, and 3 environments (test, stage, and production) will differ depending on how we imagine the level of development.
Nevertheless, we should assume that for the next 5 years, we will need somewhere between 325.000 EUR/USD to 780.000 EUR/USD. That will be a safe assumption. If you plan an incredibly intensive development, just insert into the model value, say, 960 hours of development per month, and see what comes out.
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