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Tangible costs

1 

Physical costs

(a)  Hardware, software

(b) Network costs

2 

Planning costs

3 

Implementation costs

(a)  Project management

(b) Software development, testing

(c)  Data migration

(d) Training

(e)  Promotion (online and offline)

4 

Operational costs

(a)  Hardware and software maintenance

(b) Network maintenance

(c)  Technical staff costs

(d) Content maintenance staff costs

(e)  Support staff costs

(f)  Management staff costs

(g) Ongoing promotional costs (online and offline)

Source: This worksheet was originally based on White Paper ‘A Return on Investment Guide for 

Business-to-Business Internet Commerce’ provided by e-commerce solution provider Openmarket  

(www.openmarket.com).

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Chapter 12  Digital business service implementation and optimisation

Different approaches for estimating costs are recommended by Bayne (1997):

● 

Last year’s Internet marketing budget. This is assuming the site has been up and running 

for some time.

● 

Percentage of company sales. It is again difficult to establish this for the first iteration of a site.

● 

Percentage of total marketing budget. This is a common approach. Typically the percentage 

will start small (less than 5%, or even 1%), but will rise as the impact of the Internet increases.

● 

Reallocation of marketing dollars. The money for digital marketing will often be taken by 

cutting back other marketing activities.

● 

What other companies in your industry are spending. This is definitely necessary in order 

to assess and meet competitive threats, but competitors may be  over-  investing.

● 

Creating an effective online presence. In this model of ‘paying whatever it takes’, a com-

pany spends sufficient money to create a website which is intended to achieve their objec-

tives. This may be a costly option, but for industries in which the Internet is having a 

significant impact, it may be the wise option. A larger than normal marketing budget will 

be necessary to achieve this.

● 

A graduated plan tied into measurable results. This implies an ongoing programme in which 

investment each year is tied into achieving the results established in a measurement programme.

● 

A combination of approaches. Since the first budget will be based on many intangibles it 

is best to use several methods and present high, medium and low expenditure options for 

executives with expected results related to costs.

As a summary to this section, complete Activity 12.4.

Activity 12.4

Creating a measurement plan for a B2C company