Shopify is by far the most popular and it could also be the most powerful hosted solution for business owners to build the eCommerce stores on. It offers great flexibility and reliability and greatly enhanced security when compared to other popular platforms like WooCommerce or Magento.
One of the key reasons why businesses choose Shopify for their eCommerce stores is pricing. But is Shopify truly a more cost-effective solution for businesses? We’re actively working with over 60 Shopify Stores today and built hundreds across multiple platforms so we’re going to give you the breakdown you need.
We’ll start by breaking down the costs of running an eCommerce website. Those are split between hosting, maintenance, and optimization.
This is the cost to physically host your website on a server. These costs range from $10-15/month for smaller WooCommerce websites to hundreds or even thousands for VPS solutions for bigger websites.
Shopify hosts your website and your hosting fee is included in your monthly subscription plan.
Platforms like Magento or WooCommerce need to be maintained by the business owner and with monthly security updates and optimization patches being released regularly, the development costs usually range from a few hundred to a few thousand $ every month. The alternative to not having these costs is to just skip the updates however that puts businesses in a very insecure position where they can have their websites hacked and their customer data at risk.
Shopify and the Shopify App developers are constantly updating their systems on their own and the costs associated with this are built into your monthly subscription fee.
Operational development costs
Running an eCommerce business means you constantly need to experiment with new services, implement new features, and make design changes to constantly improve the user experience.
With most solutions, this implies custom development and the costs range from hundreds to tens of thousands of $.
Shopify allows store owners to easily manipulate their themes and add apps to optimize the usability of their websites. In most cases, no custom development is required and when code manipulation needs to occur, it is usually resolved using the help from the app, or theme support teams.
What are the Shopify Plans?
It is clear that by opting to build a store on Shopify you will be saving money on hosting and development. So what are the plans and how is Shopify making money?
Shopify Basic Plan
- Online credit card rate: 2.2% + 20p
- In person credit card rate: 1.7% + 0p
- Additional fees using payment provider other than Shopify Payments: 2.0%
- Online credit card rate: 1.9% + 20p
- In person credit card rate: 1.6% + 0p
- Additional fees using payment providers other than Shopify Payments: 1.0%
- Online credit card rate: 1.6% + 20p
- In person credit card rate: 1.5% + 0p
- Additional fees using payment providers other than Shopify Payments: 0.5%
- Credit card and payment processing fees are negotiated on a case by case basis
More details about the Shopify plans and their features: https://www.shopify.com/pricing
How is Shopify making money?
Shopify is making the bulk of its money from payment processing fees.
Credit card rates range from 2.2% to 1.6% for online orders and between 1.5% and 1.7% for in-store orders. This is not something specific to Shopify. You would pay a payment processing fee on any platform you are on, just not directly to Shopify.
Shopify is making money from payment processing even if you are not using Shopify Payments.
If you opt to use a different payment processor (PayPal, Stripe, Authorize.net, etc), you will have to pay between a 2% and 0.5% fee for your orders to Shopify.
We always recommend Shopify Payments to our clients as it integrates easily, as it has Buy Now Pay Later, Apple Pay, and Google Pay built into it. Plus, no additional fees are incurred.
What Shopify plan should you choose?
We always tell our clients that it’s simple math. Are the payment processing fees you are paying more than $50? Then it makes sense to move from the Shopify Basic to the Shopify plan.
Are the payment processing fees you are paying more than $220/month? Then it’s time to upgrade to the Advanced Shopify Plan.
Are the payment processing fees reaching $1.7k/month? Get in contact with Shopify Support and ask for an offer to move to Shopify Plus.
Are there any other considerations to take into account when opting for a Shopify Plan?
Plans come with different perks like calculated third-party shipping rates, number of staff members or physical store locations, and other perks. Ultimately, payment processing will be the main driver behind upgrading your plan.
Our clients, that moved over to Shopify based on our recommendation are thrilled beyond measure with the money they saved on development alone.