Big e-Commerce Questions: Hosted or Self-Hosted Solutions? Open Source or Closed?

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In this post, head of web development Alan Rowe helps you answer one of the biggest questions that arises during a new e-Commerce website build - "what type of platform should I use?"

Looking for more advice? Check out our FREE eBook Independent Guide to Selecting the Right e-Commerce Platform.

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We build lots of websites. So we understand how to navigate the minefield of technical, financial and aesthetic considerations that go into a new e-Commerce build.

But when planning a new site, there’s one overriding question that needs to be answered first. It’s a question that impacts all decisions made throughout the design and build process – and it’s guaranteed to stump first-timers.

Should you choose a hosted or self-hosted platform?

There is no easy answer. But it’s really worth thinking about.

Along with your choice of platform, the decision to go with a hosted or self-hosted solution will have the most profound effect on the final product – your beautiful new e-Commerce site.

Slip up at this stage, and you may end up in one of three nail-biting situations:

1)      Stuck with a platform that’s too restricted to meet your business objectives.

2)      Paying for features that you don’t need – or don’t have the development expertise to unlock.

Or, worst of all:

3)      Total disaster – you’ll have to go back to the drawing board and start again from square one.

Don’t write this off as hyperbole. We’ve seen enough of ‘3’ to know the dangers that come with knee-jerk decision-making.

…And breathe. Although it might seem like a mountainous decision to make, you’ve simply got to state your goals and use them to weigh up the advantages and disadvantages of each solution.

Hosted or self-hosted: What’s the difference?

To understand the difference between self-hosted and hosted solutions, think of it as a choice between simplicity and flexibility.

Or, to borrow a metaphor from WordPress, it’s like the difference between renting an apartment and buying a house.

Source: Paul Wilkinson at Flickr. Source: Paul Wilkinson at Flickr.

Hosted solutions are provided as a SaaS (Software as a Service) package. You pay for the use of the platform (usually via monthly subscription), and that’s it – with minimal setup, it’s ready to go. And you don’t have to worry about software or security updates, as these happen automatically.

But what you gain in simplicity you lose in flexibility. Although hosted packages include server hosting as standard, you don’t have direct access to the server or to the platform’s core code. This means more complex customisation – like integrating with third-party systems or making changes to conform to SEO best practice – is out of the question.

Hosted solutions may include plugins to allow for some customisation, but your choices are likely to be limited.

Open-source self-hosted solutions, meanwhile, may allow for more flexibility – with open-source platforms, you have access to the core code and can write your own extensions to make your platform fully bespoke to your business.

But you’ll be responsible for sourcing your own hosting provider and updating the software. And if things go wrong, it’s your responsibility to sort them out.

But wait… there’s more

Notice that we mentioned ‘open-source platforms’ above? There is a crucial distinction to be made between open-source and closed-source self-hosted solutions. Don’t skip this bit, because getting this wrong could leave you with a platform that’s a bad fit for your business.

Source: Yoel Ben-Avraham Source: Yoel Ben-Avraham

PHP open-source self-hosted solutions like Magento and PrestaShop allow users to download, modify and redistribute the core code. Generally, these offer the best flexibility, but will also require a great deal of coding knowledge and careful testing to turn your e-Commerce ambitions into moneymaking realities.

Non-PHP closed-source self-hosted solutions such as IBM Websphere don’t allow this deep-level access to code. They tend to be designed for big businesses so, generally, will offer a more robust set of tools and plugins than hosted solutions – but you may find it difficult if you opt for a closed-source solution and intend to integrate it with third-party systems or make other large changes.

Examples of hosted and self-hosted e-Commerce platforms

Hosted Self-hosted / open-source Self-hosted / closed source
Shopify Magento IBM Websphere
Ecwid PrestaShop DOT NET (including Umbraco and AspDotNetStorefront)
BigCommerce WooCommerce
Volution OpenCart


Financial considerations

Like all businesses, your bottom line is likely to be top of your agenda. So it’s important to ask yourself: “How much am I expecting to make from my website?” and “How much am I willing to spend to get it right?”

Source: The CE Shop Source: The CE Shop

Hosted solutions are typically delivered through an all-in-one pricing structure – Shopify, for example, is paid for via a small monthly subscription, whereas Yahoo! Merchant Solutions requires a monthly subscription and takes a small cut of each transaction carried out on-site. You don’t have to worry about server hosting because everything’s dealt with by the providers themselves.

With self-hosted solutions, you either pay for a licence (a la IBM Websphere), or download the core code for free, if it’s an open-source solution like Magento Community.

Then you pay for your own server hosting. For most businesses, this will mean paying a subscription with a third-party hosting provider – but some super-big firms may want to consider investing in their own servers.

Then it gets more complicated. If you’re planning to make big changes to your open-source e-Commerce platform, you’ll need to employ developers to implement the alterations you need. Whether these developers are in-house or outsourced, there’ll be costs to consider – and it can be difficult to budget for these, unless you’ve agreed a full design and build price with an agency.

For many smaller businesses that don’t need the flexibility of an open-source self-hosted solution, it’s often cheaper and simpler to pay for a hosted solution. But you have to consider the extra revenues that could be generated by getting your website right first time and plumping for a customisable, self-hosted solution.

Ease-of-use considerations

On first glance, this concern is easy to deal with. If you consider yourself a bit of a technophobe and you’re unable or unwilling to pay for experienced developers, then go for a hosted solution. Otherwise, you’ll be boggled by the essential ‘behind-the-scenes’ development work required for open-source self-hosted solutions.

Again, it comes down to the time you’re willing to put in and the expertise at your disposal. Self-hosted solutions allow for an enormous level of flexibility – and as a result, will be the only viable option for many businesses. But you will have to sacrifice a certain amount of ‘user friendliness’ if you choose self-hosted.

Technical considerations

For us, technical considerations are often the deal-breaker when it comes to choosing the best e-Commerce solution for a client. This is why we’re often inclined to recommend an open-source self-hosted solution as the best balance between flexibility and cost.

Source: winnifredxoxo at Flickr Source: winnifredxoxo at Flickr

A hosted solution is designed to be user-friendly. But to guarantee mass-market appeal and tight security, they have to limit access to the core code and thus limit flexibility.

Certain businesses may be able to live without this flexibility – if you’re not too bothered by having stock control systems integrated with your e-Commerce cart, it’s easy to weigh up the cheaper costs involved in a hosted solution and make your decision there and then.

But there’s a very, very big elephant in the room. Hosted solutions – and many self-hosted solutions, for that matter – aren’t built with best-practice SEO in mind.

Because we build sites with digital marketing in mind from the ground up, it makes sense for us to recommend flexible, open-source self-hosted systems like Magento. But even this platform requires a good deal of customisation to make it truly SEO-friendly.

Self-hosted vs hosted cheat sheet:

Hosted solution Open-source self-hosted solution Closed-source self-hosted solution
Monthly usage fees / transaction-based fees YES NO NO
Server fees NO YES YES
Direct server access NO YES YES
Automatic updates YES NO NO
Full customisation NO YES NO
Third-party system integration LIMITED YES LIMITED


Still stuck?

If you’re still unsure as to which solution will suit your business, download our FREE eBook Independent Guide to Choosing the Right e-Commerce Platform, which contains lots of hints, tips and real-life scenarios to help you through the challenges of an e-Commerce build.

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