Shopify Costs: Budgeting for the Build, Monthly Expenses, and Total Cost of Ownership
How Much Does Shopify Really Cost?
When it comes time to upgrade your ecommerce platform, one of the most looming factors may be the cost. We’ve been asked a few times to break down the total cost of ownership (TCO) for running an ecommerce business on Shopify. Shopify likes to lead its marketing with their $29/mo price to run a Basic store, but the actual costs for anyone running the platform will actually be much higher.
In this blog, we'll break down the most important details you need to know before making the change to Shopify. We’ll compare Shopify Advanced vs Shopify Plus and we’ve also included a link to a handy template you can use to estimate the total cost of each.
Shopify pricing is advertised as follows:
- Basic Shopify: Best for new businesses or online businesses new to in-person selling – $29 per month.
- Shopify: Best for growing businesses with one retail store – $79 per month.
- Advanced Shopify: Best for growing businesses with two or more retail stores – $299 per month.
The pricing model for Shopify can be challenging to figure out, especially if you’re accustomed to an open source ecommerce platform, handling your own hosting arrangements, or managing your own payment gateway. All of that gets bundled in with Shopify.
Before we dive into a breakdown of Shopify-specific costs, we’ll shed some light on costs incurred while building and maintaining your Shopify website.
Cost of hiring a developer
The cost to hire a website development team to build and set up a store in Shopify will vary based on the complexity of your design (theme), custom integrations, inventory migration process, the number of products and, of course, the agency itself. Here at Bear Group, to bring a relatively complex Shopify site live, we typically see Shopify development costs ranging from $35-75,000.
Cost of ongoing development support
Once your Shopify storefront is live, you’ll undoubtedly continue to improve and grow your platform. As our clients like to say, “the web is never done,” and the opportunity for continual improvement is actually one of the great benefits of selling and marketing online.
With Shopify, you won’t have platform upgrade costs to worry about, but you will likely want to continue to grow and evolve the platform in various ways so there may be additional development costs.
We have an ongoing website support program, Run State, specifically for this purpose. Clients may choose to sign up for 20/40/60 hour tiers per month for ongoing development needs. There’s a wide range of support that clients need, but most clients in Run State spend somewhere between $15-$35,000 for ongoing site improvements each year (ideally with offsetting ROI from your awesome new store).
Shopify bundles costs together for the commerce platform + hosting + app costs + credit card processing. So think of it like your Apple iPhone. When you add a new app from the Apple store, you pay Apple, then Apple pays the vendors in the store. Some merchants view this as having Shopify in the middle of your customer transaction, but frankly there is always a bank or payment gateway in your transaction.
Special Note: Lower Shopify Plus credit card fees help offset platform cost
What is unique about Shopify’s current pricing is how they’re adjusting the credit card transaction fee rate — eliminating much of the platform costs through efficiencies in credit card fees.
For example, the Shopify Plus platform fee is $2,000 per month or 0.25% monthly revenue (whichever is greater). If you do $500,000 in sales per month and pay the lower Shopify Plus credit card transaction fee of 2.15%, you’ll create enough savings in credit card fees to almost entirely offset the higher platform cost.
Shopify Advanced: The Shopify Advanced plan price is a flat $299 per month.
Shopify Plus: The Shopify Plus plan is based on usage. It’s priced at $2,000 USD or 0.25% monthly revenue (whichever is greater). The inflection point is $800,000 per month, so once you make over that, you’ll pay 0.25% of your monthly revenue, as you can see below. However, see below as the credit card fees are 0.25% lower in plus, which can fully offset the base plan price.
Credit Card & Transaction Fees
Shopify Advanced: These are the same/similar transaction fees as you incur with any ecommerce system, but all bundled into Shopify. This is at a rate of 2.4% + $0.30 per transaction. Fees can be calculated using this handy estimator tool.
So, if you have one month with $500,000 in sales on Shopify Advanced, you would pay $15,300 in credit card and transaction fees.
Shopify Plus: Shopify Plus fees are at 2.15% + $0.30 per transaction. This is a 0.25% lower credit card fee than with Shopify Advanced.
With $500,000 in sales in Shopify Plus, you’d be looking at $13,750 in credit card and transaction fees for the month.
Most Shopify stores will require at least a few apps from the Shopify app store to be a fully functional ecommerce website for your business. Some apps are free, or priced as one-time payments, but many are priced as monthly subscription charges and billed through Shopify.
Apps will be necessary whether you’re on Shopify Advanced or Shopify Plus. (While Shopify Plus offers more ability for developers to edit the base theme and make changes, apps would still be needed).
Below is an example of the apps — and their monthly cost — on a client’s Shopify website.
Shopify Plan Pricing Comparison Template
We created a pricing comparison template to help you plan out your Shopify Advanced and Shopify Plus costs (note that all fees are in US dollars, as Shopify will always bill you in that currency).
Shopify’s Total Cost of Ownership
We’ve seen some businesses experience “sticker shock” once they start getting the monthly Shopify bill. The big driver in that cost is always the credit card processing fees — which are going to be the same in any ecommerce platform — you might not have added them up before though.
In a nutshell, the TCO for Shopify is driven by the same measures as any platform:
- Platform costs
- Extensions / apps
- Credit card and transaction processing
- Initial development
- Ongoing development
Their control of the platform code and SaaS model mean it is harder (if not impossible) to customize to suit — which means they can maintain the core code effectively. So it lowers some inherent maintenance costs for system upgrades.
We're here to help you love your website! Don't forget to subscribe below for the latest helpful insights from our team to yours.