With most of the retailers we work with being mid-market (within the ~£5m – £25m bracket), in the past, I’ve discounted Salesforce Commerce Cloud (previously Demandware) when reviewing platform options with clients – due to a combination of build costs and licensing costs (which many others I know have done also). However, in this article, I’ll run through some changes that Salesforce Commerce Cloud have made to their pricing to make the platform more feasible for smaller retailers.
The Salesforce Commerce Cloud licensing model is based on a retailer’s gross merchandise volume (GMV), with the average percentage previously being around 2% – 3% at our end of the market. This being said, I have previously seen the licensing costs go to ~1%, but for much higher volume retailers or strategic cases. The GMV percentage is based on forecasted growth commitments and is paid annually based on performance – however, as above, Salesforce has recently changed their pricing to allow for SMB retailers and also to ensure that the pricing remains relevant to retailers of different levels. This will also help the platform compete with some of the challenger SaaS platforms, like Shopify Plus and BigCommerce.
As part of the licensing cost, Salesforce Commerce Cloud is provided as a SaaS solution, with their team taking care of platform maintenance, hosting / server management, pre-peak planning & provisioning, CDN management, code quality assessment / validation, upgrades etc. They also tend to get a lot more involved than most other platforms, as a result of their true GMV model.
The new pricing model being applied for smaller retailers is more in-line with the following:
- Salesforce Commerce Cloud Starter Tier – 1 website / store and 2 price books – ~1% GMV
- Salesforce Commerce Cloud Growth Tier – 5 websites / stores and 10 price books – ~1-2%
- Salesforce Commerce Cloud Unlimited Tier – Pricing reduces as you grow or for higher GMV retailers, but likely to be closer to the 2% region
A website or store could be a brand or an international store for example. A pricebook is a set of pricing (e.g. standard pricing), that can be built upon with additional groups of pricing for different users.
This is a big move in the right direction in my opinion and it brings the total cost of ownership down a lot, which is great. I’ll come onto some of the other reasons why Salesforce Commerce Cloud can be quite competitive at some levels later.
In my experience, a Salesforce Commerce Cloud build would start from £200k and could go all the way to £1m, depending on complexity. The average build seems to be more in-line with £300k – £500k, which is pretty close to Magento and a bit lower than SAP CX, which have probably been the closest competitors for Salesforce Commerce Cloud in recent times.
The area where Salesforce Commerce Cloud generally starts to get more appealing is when you consider the native features that are included within the licensing costs, which includes Einstein for personalisation and machine learning. Einstein is a very broad personalisation and machine learning solution that spans across search, the product grid and product recommendations – it’s also integrated across Salesforce Marketing Cloud and Commerce Insights.
This can add up with other platforms, who might be using a solution like Klevu or Algolia for search and NOSTO or Monetate for personalisation, as well as potentially a solution for visual merchandising (also native with Salesforce). Another example of a newer native capability is the Salesforce Commerce Cloud Page Designer, which is pretty impressive from my first views of it. Third parties like Cloudflare and Maxmind are also included within the Salesforce Commerce Cloud fee.
These are just a few examples, but this is a pretty big area that can actually bring the TCO much closer with competing platforms.
For a £10m online retailer (looking to get to £15m over two years) with a single store, the rough main costs with Salesforce Commerce Cloud would likely be somewhere in the region of:
- Three-year licensing cost: £375k
- Build cost: £300k
- On-going development retainer: £15k
Other third parties you’re likely to use alongside Salesforce Commerce Cloud include a reviews platform, any social solutions used, a PIM & / or DAM (depending on the retailer), address validation etc.