11 mins

Shopify Costs | How much do you need?

Chris Grundy
Aug 1, 2017

Shopify costs - Cost is, of course, a key consideration in selecting the best ecommerce platform for building and operating an online store, but it’s not necessarily the most important one. Making a decision based solely on cost would be very short-sighted. As with many things in life, you get what you pay for. While we all love a bargain, the least expensive option may not give you all of the functionality and support needed for long-term e-commerce success.

What you should be looking for is the best value—the option that gives your online store the best chance of success for a price you can afford. Shopify is more expensive than some ecommerce builders, but less so than others, and is widely regarded as the best in terms of what it can do for you.

Shopify Cost Components

Before we even look at the various pricing plans Shopify offers, let’s acknowledge the two basic cost components that generate a lot of concern and controversy among those comparing different ecommerce options: transaction fees and credit card fees.

Transaction Fees

The principle behind the transaction fees charged by most ecommerce builders is that they pay for the resources it takes to keep an ecommerce store running optimally, regardless of the number of visitors on the site at any one time. Think of transaction fees as something akin to the monthly electric bill that ensures a steady supply of power for your home.

One common criticism of Shopify is that its plans all include transaction fees. It’s  true that Shopify charges a transaction fee of 0.5% to 2% on each purchase—that’s on the total amount of a purchase, not on each individual item. The exact percentage depends on the specific Shopify pricing plan, from 0.5% for the most expensive plan to 2% for the least expensive one.

But Shopify is not alone in charging transaction fees, though other ecommerce builders may calculate them differently or call them by another name. And, while transaction fees can certainly make a dent in your profits, you can avoid them entirely if you use Shopify’s own payment processing service, Shopify Payments, instead of one of the many other possible payment processors, like PayPal, WorldPay, Stripe, or Authorize.net. If you choose to use Shopify Payments, Shopify waives all transaction fees.

Credit Card Fees

There is no way for any seller to avoid paying the credit card fees charged by credit card companies on each transaction. Whenever a purchase is made using a credit card, online or offline, the credit card company charges a fee for processing the payment—collecting the money and forwarding it electronically to the seller’s bank account.

Credit card fees vary depending on the specific Shopify plan selected, from $2.9% + 30 cents per transaction for the least expensive plans to 2.4% + 30 cents per transaction if you go with the most expensive plan. That’s assuming that you use Shopify Payments as your payment processor. For the roughly 15% of Shopify sellers that choose another payment processor, the rate for credit card fees may be different.

Why Use Shopify Payments?

Shopify is able to waive transaction fees for sellers that use Shopify Payments because the credit card fees are paid to Shopify. Sellers pay only the credit card fee for each purchase, and the credit card rates with Shopify Payments are lower than the rates charged by other payment processors. Sellers pay no monthly fee for using Shopify Payments, and if you do business with customers residing in a country other than your own, there is no additional international fee. Another significant advantage of using Shopify Payments is that the money from credit card payments typically makes it into your account faster than other payment processors would get it there.

Shopify Payments is available only to sellers located in the U.S., Canada, the UK, Ireland, and Australia, although this list may expand in the future. Sellers who don’t have access to Shopify Payments because of their location can select from the list of more than 70 payment processors payment gateways supported by Shopify.

Shopify Payments vs. PayPal

Shopify Payments’ closest competitor is PayPal, which is unarguably highly reliable and the best-known payment processor of all. Its merchant fees are also higher than the fees charged by Shopify Payments. Here are some other drawbacks of using PayPal rather than Shopify Payments to process payments for your Shopify store:

  • Unless you pay an additional $30 per month to upgrade to PayPal Payments Pro, customers will be redirected from your store to PayPal’s secure payment site, and then back to your store after completing the transaction. (With Shopify Payments, the transaction is completed without the shopper leaving your store.)
  • PayPal’s pricing structure is more complicated and can keep you guessing as to how much will be charged for processing a particular transaction.
  • PayPal’s rate is higher for transactions involving customers in countries other than your own and a fixed fee (which varies depending on the country) is also added.
  • PayPal’s rate for processing American Express payments is significantly pointed higher than Shopify Payments’ rate.
  • It can take up to 21 days for payments processed by PayPal to be deposited in your account.
  • PayPal does not accept Apple Pay.

Shopify Payments will probably be the more cost-effective option for processing your ecommerce transactions.

Additional Shopify Costs

Two other cost factors to be considered are the cost to acquire a domain name and the cost of additional apps you may need or want to purchase from Shopify.

Shopify Plans do not provide a domain name or email hosting. Your options are to:

  • Use an existing domain name if you own one
  • Buy a domain name from Shopify for $13 per year
  • Buy a domain name from an external source like Namecheap or GoDaddy
  • Use the free myshopify.com domain name assigned to all new Shopify stores

The Shopify App store gives you access to numerous apps, many of them free, to add functionality, like email marketing or automated receipts, to your Shopify store. To minimize your initial costs and give you the time and experience to know which apps you need and will pay for themselves, it’s best to hold off on buying any paid apps until your store has been up and running for a while.

Available Discount

Shopify’s advertised prices are monthly prices, which enables a seller to close up shop and cancel their plan at any time without further obligation. However, Shopify grants a 10% discount to sellers who sign up for a one-year plan and 20% for those who select a two-year plan.

Shopify Pricing Plans

Understanding all of these cost factors, it’s easy enough to compare and evaluate the various plans Shopify offers. The standard pricing tiers are Basic Shopify, Shopify, and Advanced Shopify, with the additional, less commonly used options of Shopify Lite and Shopify Plus.

Shopify Lite

This very inexpensive option ($9 per month) does not give you an actual online store but enables you to sell on Facebook. It enables sellers to accept credit card payments and use Buy buttons, which can be installed on an existing website, like a WordPress blog. It also includes the Facebook Messenger app for communicating with customers.

Basic Shopify

This is the most cost-effective Shopify solution for sellers offering a number of products, though it doesn’t have some of the features, such as abandoned cart recovery and gift cards, available with more expensive plans. Basic Shopify accommodates an unlimited number of products and, unlike the less expensive Shopify Lite option, it gives you a fully functional website and blog capability. Other popular features available with all of the standard Shopify plans include:

  • unlimited file storage,
  • a discount code engine,
  • fraud analysis tools  (only if Shopify Payments is selected for payment processing),
  • a free SSL certificate,
  • manual order creation,
  • the ability to print shipping labels (discounted labels can be purchased from Shopify),
  • unlimited file storage, and
  • around-the-clock support.

The monthly price of a Basic Shopify plan is $29 and an additional per-transaction charge of 2.9% plus 30¢. This is the plan for sellers offering more than 25 products who don’t need or want to pay for additional features included in the more expensive Shopify plans.

Shopify

The Shopify plan costs more ($79 monthly), but offers more features and a marginally lower rate on credit card transactions (2.6% plus 30¢ per transaction). This is the most popular Shopify solution. In addition to the features of the Basic Shopify plan, it includes:

  • Gift cards to encourage holiday and gift sales (physical or digital),
  • Professional reports to facilitate analysis of sales, customers, site visits and conversion rates, and customer behaviors
  • Abandoned cart recovery

Both gift cards and abandoned cart recovery can be added to a Basic Shopify plan by installing apps, which is less expensive than upgrading to the Shopify plan. Abandoned cart recovery is an attractive feature for sellers, as nearly 68% of online shoppers abandon their shopping carts. It automatically sends reminder emails to customers who did not complete a transaction. Those who respond to this remarketing effort end up spending 55% more when they finish checking out.

Advanced Shopify costs

At $299 per month, this is the most expensive Shopify solution, but it also offers the most features and the lowest rate for credit card fees (2.6% plus 30¢ per transaction). This is the plan for sellers who don’t want to do their own shipping, preferring to use a third-party carrier, because it shows shoppers calculated shipping rates by carrier at checkout. Advanced Shopify also supports custom report generation through user-specified filters, dimensions, and metrics. And, of course, it includes all of the features provided by the less expensive plans.

Shopify Plus

With a monthly price of $2,000 or more, this enterprise solution provides a scalable ecommerce platform for sellers doing enough business to justify the expense. A high degree of customization is involved, so to obtain additional information and pricing, interested sellers must contact Shopify directly.

Go ahead and look at what other ecommerce builders like BigCommerce, Volusion, or WiX have to offer. Then do your own cost/benefit analysis before making a decision.

Conclusion » Shopify costs

With all this in mind, it is hopefully clear that Shopify offers excellent value for money. The Shopify costs are manageable and represent good value for money. If you haven't already, get started today. Shopify is offering a 14 day trial period.

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