Building a price comparison website is a great opportunity to make $ off ads and affiliate sales. However, the global e-commerce market (which will hit $ 4 trillion in 2020) is overcrowded as it is.

The giants like Google Shopping and Nextag leave virtually no room for small PCW companies. What’s more, the price comparison model is largely criticized by finance experts who claim such websites force customers and suppliers to make loss-leading deals under the guise of “unbiased comparison”.

What does it take to create a successful and really useful price comparison website and how much is it going to cost you?

How to create a comparison website: 6 steps to success

Find a niche.

While websites like Nextag and Shopping.com provide data on multiple product categories including electronics, food and home appliances, newbie can’t possibly be everywhere – and that’s why you have to choose an unoccupied and profitable niche long before you address reliable software developers. For this purpose, start with a thorough market research to find out who your customers are and what bargains they’re after.

Here are some stats to stir you in the right direction. Although 56% of US consumers compare prices online, it is Millennials and Centennials (that is, young people aged between 18 and 34) that use PCWs the most (74%). According to Ask Your Target Market’s 2016 survey, 72-77% of customers admit it’s at least “somewhat important” to them to get lower prices on food, clothes, home items and accessories. As of now, PCWs’ most occupied verticals in the USA are groceries, travel and insurance. This basically means you can choose any other vacant spot, be it alcoholic drinks, art supplies or parcel delivery. There are tons of untapped opportunities – and it’s up to you to unlock them!

Develop a viable business model.

Since there’s not much exclusive content on price comparison websites, you can’t just monetize them through ads. For the same reason, you might have a hard time getting high ranks on search engines. Most price comparison websites take the Cost Per Action (CPA) and Cost Per Click (CPC) approach to monetization. With CPA, online retailers will give you a commission on purchases made via your website (which exceeds $ 30 across certain verticals).

The CPC model provides for a smaller reward (usually a few cents) for leads – that is, users who click on a product and end up visiting a merchant’s website. If your website gets significant traffic, you shouldn’t ignore ad placement, too. In the future, you may as well enable a payment gateway and instead of redirecting users to online stores process transactions onsite. Also, you might want to sell customer browsing history data to marketing agencies and e-retailers.

Secure mutually beneficial partnerships.

Most PCWs make the lion’s share of their revenue by charging commission off sales; make sure your commission is lower than the actual customer acquisition costs (otherwise brands will simply advertise to customers directly).

Build a website.

Here comes the most important (and difficult!) part. Technology-wise, your website will most likely use the PHP (Laravel)/MySQL tech stack for back-end and a JavaScript framework (for instance, AngularJS) for front-end development. My colleague Zakhar – who is senior PHP developer at R-Style Lab – believes you should make do without a CMS as its extensions might affect the scalability of your website if you decide to expand your brand presence and enable support for new product categories.

Also, you’ll need custom-written price comparison and recommendation engines and a plethora of filters enabling customers to sort products by price, brand, qualities and shipping options (the more, the better). Other useful PCW features include user accounts, integration with social networks (alongside the option to log in via social media) and push notifications.

Gather data.

In order to extract data from e-commerce websites, you’ll need the websites’ APIs and custom web crawlers – bots that retrieve info from target online stores.

It is extremely important to have relevant data with minimal latency. Also, the data should be arranged in a simple and logical way; although short online forms convert better, you should make use of multiple filters to improve search results and convince users they’re comparing like with like. In order to win customers’ time, you have to provide real value and a lot of features and content (including detailed product descriptions and shopping tips) that users won’t find by simply going to a retailer’s website.

Pay attention to marketing.

Going back to your PCW monetization, where could you possibly get traffic? First, there’s social media marketing. The term covers a wide range of promotional activities including paid ads and working with influencers. Second, there’s white hat SEO which includes corporate and guest blogging. Finally, there’s networking which involves forum marketing (engaging in conversations with influencers and target audience on dedicated forums), email marketing, etc.

Price comparison website development: Cost breakdown

The actual cost of a custom PCW depends on several factors: the number of stores you’re going to extract the data from and their willingness to cooperate, the complexity of a recommendation engine, the number of filters supporting product search, as well as the decision to implement cutting-edge technologies like Artificial Intelligence algorithms for better search and automatic recommendations. According to Zakhar, you can always start with a Minimum Viable Product (MVP) version of the website and add extra features to the scope as your platform matures; in this case, however, it is important to design scalable website architecture during the early stages of the development process.

Thus, the key components of a PCW include:

• Price comparison engine (3 to 4 weeks, $ 6-10.5 thousand );
• Recommendation engine (3-4 weeks, $ 6-10.5 thousand);
• Web crawlers (these are developed separately for each e-commerce website you want to integrate your PCW with; if we talk about open-source APIs like those of eBay and Amazon, the integration will take about 2 days and will cost you around $ 1 thousand per online store; the integration with a closed e-commerce system requires up to 4 days of coding and costs $ 2.1-2.45 thousand);
• User interface (if you opt for the AngularJS technology stack, the front-end part will take up to 5 weeks, thus adding $ 15-17.5 thousand to the estimate).

In the end, we’ve arrived at an impressive figure – $29-41 thousand for a website! Also, you’ll spend another $ 30-50 thousand on marketing to get your platform noticed. As a PCW start-up, you should have about $ 100 thousand to make things work.

So, are you ready to replicate Nextag’s success?