There is a stereotype that the Magento Commerce edition is perfect for large businesses, while the Open Source edition is better for shops with $1-5M revenue a year or less. It sounds simple, but the situation is much more complicated. Both editions are scalable and deeply customizable. So why should one pay the cost of a good car for the Magento license if they can use the Open Source edition for free? Let us compare Magento editions and analyze what business will prevail from the paid option.
Magento Commerce vs Open Source: Introduction
Magento was born on the 31st of August 2007, when the first public beta version was released. It was planned that Magento would become a sub-product of the osCommerce platform. But the functionality turned out to be too vast, so a whole new platform came into existence. In 2008 the Magento gained huge popularity, and at its peak in 2009, the core team introduced the Enterprise edition.
At first, the two versions did not have many differences. Initially, the first Enterprise edition was for those who needed technical support with installation, usage, and troubleshooting. But now, the platforms are very different, even by their names. Magento Community is now called Magento Open Source. Magento Enterprise was renamed Magento Commerce and has eventually merged with Adobe Cloud solution and is now called Adobe Commerce and Adobe Commerce Cloud — version with cloud hosting.
Cloud solution has two plans: Starter and Pro. Magento offers the first one as a decent alternative for Shopify, and the Pro version is targeted at larger enterprises. Mainly the Pro plan provides more control over the server environment and deeper analytics.
Although free and paid versions still have the same core files, Adobe Commerce’s built-in feature range is impressive as well as the annual price.
Table of content:
Magento Commerce vs Open Source: feature comparison
Content staging, preview, and scheduling
Advanced marketing and customer loyalty tools
Content and System features
Magento Commerce Cloud or On-Premise
Magento Commerce vs Open Source: pricing comparison
Magento Commerce vs Open Source: Feature Comparison
Both Magento editions are flexible, scalable, and focused on global sales. Only ten years ago, the differences between the two were not that obvious. Now, the Magento license does offer some benefits:
- Integrated B2B functionalities
- Pre-integrated cloud services
- Content staging, preview, and scheduling
- Advanced marketing and customer loyalty tools
- 24/7 technical support
You can see the full feature comparison chart here.
Let’s review the features to understand if they are worth 0,3-2,2% of the company annual revenue.
Magento released its B2B suite in 2020, and the functionality became a key feature of the Commerce solution. The suite includes the following features:
- Company accounts — the client companies of the Magento website can create sub-accounts for their managers on the main account. Each sub-account has flexible rules that the account owner assigns to them. It means that B2B clients of the Magento website can create their hierarchy inside their corporate account and control the purchases for their managers. The amount of sub-account is unlimited.
- B2B quotes — this RfQ functionality implies that the buyer can log into the account and submit the request to negotiate the price via the checkout. The feature saves all requests and communication history between a seller and a buyer.
- Quick order and requisition lists — the functionalities let buyers fulfill the order in several clicks if they know the product name or its SKU. It also saves requisition lists and allows quick ordering directly from the list. So if your B2B customer buys almost the same set of products each time, they can complete the order in several clicks.
- My Purchase Orders — it is a request from the commercial buyer to order the goods. When this Magento feature is enabled all orders are created as Purchase Orders by default. The company user with specific permissions then can edit POs, delete or create them.
- Company Credit and Payment on Account — B2B module enables the buyer to sell goods in credit for chosen companies. If this feature is on, the buyer-company can see its credit history, list of outstanding invoices, and credit limit. The seller can change the credit limit stating the reason for the change.
- Shared catalogs — the shop owner can maintain customer-specific catalogs with different prices for different companies. You can also make it visible only for some companies. The website has only one public catalog for non-logged-in users and those who are not associated with the specific company. And as many needed catalogs that only logged-in users associated with the specific company can see. To enable Shared Catalog to the certain companies the seller creates Customer Groups and assigns certain catalogs to them.
There is also an opportunity to set functionalities according to your business needs.
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Magento pushes on to the next level with this functionality and shows its focus on the B2B experience.
Content staging, Preview, and Scheduling
The feature is old but became much better with time. It allows previewing all content changes before implementing them. It helps quickly respond to user behavior and analyze different content strategies.
The functionality also includes scheduling content changes needed for some seasonal and promo activities. For example, you want to implement some content and pricing or a discount rules for Halloween such as getting a gift for purchases for a certain amount or discount for specific goods. You can set them up beforehand and schedule the changes to come into effect on the 31st of October. You can also set a time when the promotion ends, and the changes will disappear.
Advanced Marketing and Customer Loyalty Tools
Adobe Commerce offers customer segmentation, abandoned cart emails, reward points, gift registries, and wish lists. Not all these features are used frequently, but when the business needs them, it’s important to have them by default without the need to install a third-party extension.
It is one of the most significant is marketing features of Commerce edition. It allows creating groups of customers according to their gender, age, interests, previous purchases, and other attributes. You can show different content and promotions to different customer segments, according to their address, shopping history, and other attributes. It ensures more effective marketing campaigns and increases sales.
This feature allows Commerce clients to add more customer attributes to the ones provided by default. The business can use newly created attributes for billing or shipping. The functionality is closely related to customer segmentation.
Applying unique attributes for the customers you can then divide them by parameters significant for the business. For example, it can be an average check or company size rather than just name, gender, and date of account creation. The assigned attributes can be used for more specific targeted marketing campaigns on your website. For example, you can show a certain promotion for a group of customers who are tagged with a certain attribute only.
There is also a robust marketing functionality that implies smart product recommendations. It is powered by Adobe Sensei technology using AI and machine learning. The technology analyses customer’s behavior and the catalog then demonstrates product recommendations in blocks like “Customers who viewed this product also viewed”, “Customers who bought this product also bought”, “Recommended for you”. The opportunity to show customers personalized recommendations boosts conversion rate and increases sales rate.
Other Marketing Features
There is also a range of features that make Magento Commerce more appealing for businesses.
- Gift Cards — the seller can create and sell virtual, physical, and combined gift cards. Each gift card has a unique code that can be used only once. So before selling gift cards shop owners should create a range of codes or a code system
- Gift registries — the shop customer can create gift registries for special events and invite guests there. The guests then can buy products from the registry while Magento keeps track of all purchases.
- Wish List Search — the widget allows customers to search for other customers’ wish lists by email or customer name. The customer can view products from them or buy or add them to their wish list.
- Related Product Rules — Magento Commerce license owners can set up rules to display related products, up-sell, or cross-sells. They can connect the rules with the customer segment. If the customer triggers several active rules, the shop admin defines rule priorities to display products on the page.
- Visual Merchandiser — this set of tools allows setting some rules to determine how the products appear in the category listing. You can change the product order with a drag-and-drop tool or by setting a position value.
- Reward and loyalty system — the store owner can create different reward point rules using shopping cart price rules or customer balance.
- Private Sales and Events — Magento Commerce allows creating VIP sales and events that only certain groups of customers can see. Here the Customer Segmentation and Customer Groups are very helpful.
- Email reminders — the feature automatically sends emails to customers to remind them of sales, events, and products in the shopping cart.
- Google Tag Manager — Commerce license owners can configure their store with Google Tag Manager by default. The tool allows creating tags for the marketing campaigns and tracking their performance. Google Tag Manager then transfers the data to Google Analytics and Enhanced Ecommerce.
Magento Commerce also offer several features that influence user behavior and facilitate sales.
- Returns — the Commerce built-in feature is an opportunity for the customers to return the purchase and get a refund. The store owner can configure a returned merchandise authorization (RMA) for all products or just for certain groups of products.
- Cart Thumbnails — the feature displays thumbnail images in the shopping cart so the customers know what they are buying.. The store admin can decide to display the image of the parent product only or its variation.
- Address Search — Magento Commerce websites have the opportunity to configure Address Search. If the customers have too many addresses in their address book, they can use the Address Search instead of scrolling through all of their addresses, looking for the right one.
- Managing a Shopping Cart — Magento Commerce owners can configure an assistant shopping session with the customers to help them choose and buy the product they need. The feature comes in handy while you have customers who are not very good with online shopping or some of your functionalities are too complicated.
In addition to these features, there are also other benefits like PWA Studio, Mobile Commerce, or Amazon Sales Channel, which allow growing income from other channels rather than your website only.
Content and System Features
Magento Commerce also offers several valuable features to make content and order management more comfortable.
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- Order Management System — Magento provides OMS to manage catalogs from different selling channels.
- Full Catalog Export — you can download the full catalog and export it directly to Magento OMS.
- Page Hierarchy — tthe feature allows organizing website structure, adding pagination, navigation, and menus. The relative position of each page is demonstrated as a tree structure. The functionality makes it easier for customers to find related content on the website.
- Dynamic Blocks — it is interactive blocks, the content of which depends on price rules and customer segments. It is the replacement of a Banner option in Magento 2.3.1, which was removed in Magento 2.4.0. The feature allows showing certain customer groups the necessary marketing material.
- Archive — Commerce license owners can archive orders, invoices, shipments, and credit memos to free a workspace. The owners do not have to delete data that might be of use in the future, they can archive and unarchive them at any time.
Scheduled Data Import/Export
To administer an online store more efficiently Magento Commerce offers scheduled data import/export. The feature allows downloading product, customer, and financial information automatically once a day, week, or month.
For example, if the store owner or manager prefers to work with Excel documents, they can synchronize the documents with the store. So the products and customer information are automatically updated in the table. And vice versa, when some changes are made in the document, the information is updated in the store.
The features ensure efficient marketing campaigns performance and create a great user experience.
There is no dedicated support for a Magento Open Source. Your technical team can only derive benefit from a vast community, significant guide library, and forums.
Magento Commerce Edition does provide support: a dedicated account manager to manage the relations with Magento, 24/7 technical support with a real person, access to the Rapid Deployment Packages from Magento partners that can help launch any solution easily.
It is still impossible to manage your online store with Magento Support only — the technical team is a must-have. But some support is better than none of it. In most cases, Magento’s support team is used to report bugs and ask when a fixing patch will be released. But there are situations when the support is very helpful and convenient:
“We’ve got an example when the Magento support team was fast and helpful. We couldn’t open a large gallery on the cloud, so we asked the support team for help. The guys found a problem and sent us the necessary patch the same day.” © Oleg Semenov, technical Team Lead.
It was a Magento Commerce-only feature for several years, but starting from Magento 2.4.3, the functionality is now available on the Open Source version. If you have not updated the website yet, learn what this feature is about.
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The tool is truly decent. It allows managing contact and changing templates without coding skills. You can use drag-and-drop technology to add page blocks and change content.
Without Page Builder, you either have to use a WYSIWYG or hire a developer to create the layout. The first option allows elementary changes: you can type some information, upload the pictures, and slightly align them. To change the rest, at least middle-level coding skills are required. The latter option requests money and time.
There is also a common practice to integrate Open Source with WordPress for blogging. Thanks to Page Builder, there is no need to do it in the Commerce version.
So, of course, there is no need to update the store only for Page Builder, but the feature significantly simplifies content management of Magento websites.
When it comes to overall security, the core is the same for both versions. The difference is that sometimes new patches can be released several days earlier for the Commerce version.
But Magento Commerce edition also provides some features to ensure better customer protection:
- Credit card tokenization or advanced payment security to ensure the safety of payments (Magento 2.4.0 does not support the code samples, but the concept is applicable)
- Multiple secured payment gateways like PayPal, Authorize.net, CyberSource, WorldPay, so payment data are not stored in Magento Commerce environment but are passed directly to payment gateways
- Action Logs — the system records every change a user with access to the admin panel does on the store. So the user with permissions to the whole website Admin can see who and when implemented the change. The main user can also create new roles and set permissions to avoid unwanted changes to the shop.
You can also implement these features with the help of third-party extensions. But If you still require other features Magento Commerce offers, it will be more convenient to buy a license.
Most of the features we describe are possible to create on an Open Source version with the help of the development team and third-party modules. An initial price can even be lower than buying the Magento license. But such a decision has some drawbacks:
- you will most likely have to pay for the modules every year
- some third-party modules can be incompatible and by installing one more module, you can crash the website at some point
- when Magento releases a new version, it simultaneously updates Commerce features. But developers of third-party extensions need time to upgrade them, and some developers can refuse to upgrade them for free, so there is a risk to pay more.
If you benefit from the features Magento Commerce offers, it is easier to buy the license than implementing these features with the technical team.
Magento Commerce Cloud or On-Premise
After having decided to buy a Magento license, you should also choose whether to use Adobe Commerce on cloud or on-premise.
The Cloud solution uses Amazon Web Service and sounds much easier:
- no issues associated with self-hosting as the platform is fully managed
- automatic adaptation to traffic spikes
- no need to pay for a technical team to maintain the server.
In simple words, the Cloud version offers all the features Commerce on-premise has and also provides a robust hosting platform.
Magento Commerce on cloud has two plans: Starter and Pro. The Starter Plan is simpler, while the Pro Plan offers a Platform-as-a-service experience – secure cloud infrastructure hosting.
With both Magento Commerce Cloud plans, you get all pre-integrated cloud features like security, support, and managed infrastructure. The solutions are decent, and business owners should consider them if they have already decided to buy a Magento Commerce license.
Both Cloud plans provide:
- SWAT — Site-Wide Analysis Tool is available only for the Cloud version. The tool provides a dashboard with website analytics where you can find recommendations on how to improve the code, infrastructure, and settings based on best practices.
- PCI compliance
- The Fastly Web Application Firewall (WAF), CDN, and DDoS protection to keep the website safe from OWASP Top-10 injections and more.
- New Relic APM — the system for application performance management. It analyzes customer actions in the store, the performance of applications, extensions, and infrastructure. It also gives recommendations if applications and infrastructure do not comply with industry best practices.
These features, together with encryption, hourly backups, which are also encrypted, and a read-only file system ensure decent security. Although with the right hosting, you can achieve a similar environment. For example, MageMojo is PCI Level 1 Compliant, and MGT-Commerce also offers VPN, DDoS attack protection, and the AWS WAF web application firewall.
Both plans provide all Adobe Commerce features and more. But the Pro plan in addition offers:
- B2B module — you can have it for an additional price in the Starter plan
- Isolated and dedicated hardware setup
- A dedicated technical advisor that will guide you through an initial launch period
- New Relic Infrastructure and Logs — besides benefiting from New Relic APM, the Pro user can use dynamic server monitoring and aggregate all log data from Staging and Production environments.
- Multiple environments to develop, test, and launch the store — while the Starter plan owner can have up to four environments.
Business Intelligence — an on-demand service for data extraction, warehousing, and analysis. It is available for both on-premise on Magento Commerce Cloud Solutions.
To use it, you have to be a Magento Business Intelligence subscriber. When activated, Magneto BI is connected to the Magento database and syncs the data with 5 dashboards where you get access to over 100 reports that show the company growth dynamics and help build a successful marketing strategy.
Conclusion: Adobe Commerce on the cloud is pretty neat with its built-in security feature — both Starter and Pro plans. But the first one is for those who do not need overall control over the server infrastructure and will not benefit from the B2B module. The latter provides all B2B functionality and deep analytics of applications and infrastructure performance.
Our technical team considers buying the Magento license and using Cloud infrastructure is smarter and more convenient than using other hosting providers. In the first case, you are going to take care of the only system and get valuable security and analytics functionality. While if you buy a license and use other hostings, you are paying to maintain two different systems.
The exception to the case is the business that has already been running the on-premise website. In a situation like this, the technical team is experienced enough in managing a server and knows precisely what it needs from the hosting. So an on-premises solution might be more suitable for some businesses as you have complete control over the server infrastructure.
Magento Commerce vs Open Source: Pricing Comparison
It seems that the pricing question is easy: the Open Source version is free to download and use. But to enjoy the benefits of Magento Commerce, you need to buy a license for thousands of dollars. The benefits are better security, comprehensive B2B functionalities, and advanced marketing tools.
The cost of an Adobe Commerce license starts from $22,000 a year and depends on annual Gross Merchandise Value. The pricing is as follows:
The Magento license price is the most profitable for companies with over $25 million in revenue per year, although the license price is the highest. And companies with revenue of less than a million dollars must give away more than 2% of their income for a Magento license.
But it does not mean that Magento Open Source is a free solution. Choosing an Open Source, you have to remember that you are going to pay for the development and support of the website as well as the hosting, some third-party extensions, and themes.
Thanks to the vast community Magento has a great choice of extensions that can enhance the store functionality. There are over 4000 extensions on the official marketplace and even more that you can find on Magento partners’ websites.
Not all extensions suitable for Open Source are available also for the Commerce version. Some of them cannot be installed to the Magento Commerce version directly. There are extensions available for both versions, but the price can be very different: the Commerce version of the extension often has the same functionality but costs twice the price of the Open Source option.
So choosing the Commerce version, you should also consider the price difference for themes and extensions.
Conclusion: if the company makes enough money and benefits from the features Magento Commerce (former Enterprise) offers, it is reasonable to buy a Magento license. It makes sense if the business also will benefit from the cloud-delivery system Adobe Commerce provides.
Open Source is a cheaper and more suitable option for those who need flexibility and customization but will not benefit from the B2B functionality or Cloud environment that the Magento license offers. Although if you need the features Magento Commerce offers and have yearly revenue of more than $5M the license will be helpful.
Our technical team also suggests buying Adobe Commerce Cloud if you have already decided to pay for a license. In this case, you will have to take care of one system and communicate with one support team instead of maintaining both Magento Commerce and your hosting environment. Moreover, the cloud solution gives robust security and deep analytics.
Nice article!Thanks a lot!
Very useful, thanks Igor!