Hosted Solutions Avoid Overkill
Hosted vs. Licensed - Which One is Right for You?
Selecting a software package to run your new online business can be a daunting task, to say the least. The enormous selection (over 300 at last count on PeC) is enough to discourage even the most gung-ho entrepreneur. In this post, I hope to shed some light on the choices you have and how you can decide which option fits your business.
The Big Picture
There are 4 (loosely translated of course) main groups of e-commerce software options available to a merchant today. Carts, Hosted, Licensed, and Commercial. Small to medium businesses tend to focus on the middle — makes sense. Carts don't have the professional control and features that you need. Commercial products target large enterprise and are way too expensive for consideration. So, that leaves Hosted and Licensed software left standing as the two choices for the SMB.
Hosted vs. Licensed
Proponents of either option generally site similar benefits in opposition of the other. Most times, this leaves you unsatisfied and confused. Here is the down and dirty quick version of what you may see elsewhere, over and over:
- Hosted: quick to market, capable and customizable, inexpensive to start, pricier long haul, runs the works for you, saves you time.
- Licensed: slower to market, portable and configurable, heavy on start-up cost, cheaper long haul, you run the works, costs you time.
On the surface, these two offerings seem very similar - in reality, they are very different. Your "best" choice can be very clear and evident - once you really understand the differences.
Let's say you're an Internet/computer-type person wanting to try your hand at business online, a Licensed e-commerce solution may be the right choice. You can grok the technical side of "running the works" — things like setting up a database, configuring DNS entries, writing code to add features and other geek-speaky things.
On the other hand, if you're a business person or entrepreneur — which most of you are — your talents are selling products and writing good copy. You want to use the works, not run them. If all the control and portability of the Licensed solution seems like overkill, it probably is - find a Hosted solution that will fill the bill.
The Bottom Line
You need the solution that best fits your actual business — the way it runs, or will run, in the real world. Map out your business processes. Make a chart of your work flow. Re-read your Mission Statement. Take a self inventory. You'll find the one that fits.
2 Comments
Janet Macdaniel says:
You have expressed this well, Eric. Entrepreneurs often have to "wear many hats." They might as well make sure they are a good fit for their skill-set.
Massimo Arrigoni says:
Hi Eric, this is a good way to summarize this important topic. One important aspect is the total cost over a certain amount of time, which varies substantially when you choose one e-commerce solution versus another.
We recently updated the "E-commerce Cost Calculator" on our Web site and I thought it might be useful to some readers. The page does not take one side or the other in the hosted vs. licensed solutions debate. It simply allows you to plug in some numbers and obtain the total cost of a certain e-commerce system over time. Here is the link:
http://www.earlyimpact.com/productcart/total-cost-calculator.asp
For example: Web site hosting is included in most hosted e-commerce solutions and not when you buy licensed e-commerce software. How will that impact the total cost? On the other side, support for large numbers of products does not typically change the cost of a licensed e-commerce system, but does increase the monthly subscription cost for many hosted e-commerce solutions. What happens to the cost comparison as the monthly subscription fee grows? This handy little tool might help answer some of these questions.
Note: the "calculator" could certainly be improved to cover more variables/scenarios. Anyone is welcome to drop me a note with your suggestions.
