Table of Contents
- Introduction
- Shopify Plans and Pricing
- Additional Costs to Consider
- Hidden Costs and Unexpected Expenses
- Calculating the Total Cost of Ownership
- Conclusion
Introduction
Launching and managing an online store using Shopify or Shopify Plus comes with various costs that often go beyond the obvious subscription fees. With over a million businesses relying on these platforms, understanding the true financial commitment is crucial for entrepreneurs aiming for long-term success. This blog post delves into the total cost of ownership (TCO) for Shopify and Shopify Plus, considering various factors from base costs to hidden and unexpected expenses, offering a comprehensive guide that will empower you to make informed decisions for your ecommerce business.
By the end of this article, you’ll have a full understanding of all the financial aspects involved in operating a store on Shopify or Shopify Plus, and how to manage these costs to optimize your business operations.
Shopify Plans and Pricing
Basic Shopify Plan
The Basic Shopify plan is designed for small businesses or startups. It costs $29 per month and includes essential features such as:
- An online store with unlimited products
- Two staff accounts
- 24/7 customer support
- Sales channels (online store, social media, marketplaces)
- Discount codes
- Free SSL certificate
- Abandoned cart recovery
Shopify Plan
Geared towards growing businesses, the Shopify Plan costs $79 per month. It builds on the Basic Shopify features and includes:
- Five staff accounts
- Professional reports
- Gift cards
- Lower credit card rates and transaction fees
Advanced Shopify Plan
The Advanced Shopify plan, priced at $299 per month, is suited for larger businesses with significant sales volumes. Additional features include:
- Fifteen staff accounts
- Advanced report builder
- Third-party calculated shipping rates
- Even lower credit card rates and transaction fees
Shopify Plus Pricing
Shopify Plus offers a custom pricing model starting from $2,000 per month, tailored for enterprises with complex needs. Prices can go up to $40,000 per month based on various factors such as business size, sales volume, and specific requirements.
Additional Costs to Consider
While the subscription fees are the initial costs, other expenses significantly contribute to the total cost of ownership.
Transaction Fees
Transaction fees depend on your subscription plan and the chosen payment gateway:
- Basic Shopify Plan: 2.9% + 30¢ per transaction
- Shopify Plan: 2.6% + 30¢ per transaction
- Advanced Shopify Plan: 2.4% + 30¢ per transaction
If you utilize third-party gateways instead of Shopify Payments, expect additional fees typically ranging from 2.5% to 3.5%.
Themes and Apps
Customizing your store can also incur costs for premium themes, typically ranging from $180 to $350, and essential and optional apps that enhance functionality:
- SEO Optimization Apps
- Email Marketing Apps
- Inventory Management Apps
- Customer Support Apps
- Advanced Analytics Apps
- Social Media Integration Apps
These apps can range from $5 to $50 or more per month, depending on their complexity and utility.
Custom Development and Integrations
Businesses demanding advanced features may require custom development, which involves hiring Shopify experts. The cost can vary significantly based on project complexity and expert experience. Integrating your Shopify store with third-party systems such as CRMs or inventory management tools can also entail both one-time setup fees and recurring costs.
Hidden Costs and Unexpected Expenses
Site Maintenance
Ongoing maintenance is crucial for addressing security vulnerabilities and ensuring your store runs smoothly. Expenses in this category can include software updates, app patches, and hiring security professionals.
Customer Support and Training
Training internal teams and providing customer support are ongoing costs. Ensuring staff are proficient with Shopify features may require:
- Hosting training sessions
- Creating instructional materials
- Hiring Shopify experts for guidance
Educating customers can involve maintaining a comprehensive knowledge base and offering live chat or email support.
Calculating the Total Cost of Ownership
Factors to Consider
When determining the TCO for Shopify or Shopify Plus, consider:
- Base Platform Costs: Subscription fees and costs for scaling as the business grows.
- Transaction and Payment Processing Fees: Shopify's transaction fees and payment gateway fees.
- Themes, Apps, and Custom Development: Premium themes, essential and optional apps, and custom development fees.
- Maintenance, Support, and Training: Costs for updates, security, and staff/customer support and training.
Example TCO Calculations
Shopify Advanced Plan
Assumptions:
- Monthly cost: $299
- Average monthly GMV: $100,000
- Utilizes Shopify Payments
- Premium theme: $280
- Five essential apps: $20/month each
- Annual custom development: $5,000
TCO Calculation:
- Base Cost: $299/month × 12 = $3,588/year
- Transaction Fees: 2.4% × $1,200,000 = $28,800/year
- Premium Theme: $280 (one-time)
- Apps: $20 × 5 × 12 = $1,200/year
- Custom Development: $5,000/year
Total: $3,588 + $28,800 + $280 + $1,200 + $5,000 = $38,868/year
Shopify Plus Plan
Assumptions:
- Annual GMV: $2,000,000
- Average order value: $75
- Transaction rate: 2.15% + $0.30 per transaction
- Monthly subscription: $2,000
TCO Calculation:
- Subscription: $2,000/month × 12 = $24,000/year
- Transactions: 26,667 × (2.15% + $0.30) = $57,233/year
- Payment Gateway: 0.5% × $2,000,000 = $10,000/year
- Fraud Protection: 0.1% × $2,000,000 = $2,000/year
- Apps: $5,000/year
- IT/Developer Support: $20,000/year
Total: $24,000 + $57,233 + $10,000 + $2,000 + $5,000 + $20,000 = $118,233/year
Optimizing TCO with Expert Support
Partnering with experienced Shopify experts can aid in optimizing your store's operations and identifying cost-saving opportunities. For instance, BSS Commerce offers a range of managed services and custom development solutions to help streamline processes and reduce unnecessary expenses.
Conclusion
Understanding the total cost of ownership for Shopify and Shopify Plus is essential for making informed decisions that contribute to the long-term profitability and sustainability of your online store. By accounting for both visible and hidden costs, including transaction fees, themes, apps, custom development, and ongoing maintenance, you can better manage your ecommerce expenses.
FAQ Section
Q1: What are the main differences between Shopify and Shopify Plus?
A1: Shopify Plus is an enterprise-level solution with custom pricing, designed for large businesses with complex needs, whereas Shopify plans cater to smaller businesses with fixed monthly fees.
Q2: Are there any free themes available on Shopify?
A2: Yes, Shopify offers free themes, though investing in premium themes can offer a more polished and professional look.
Q3: How can custom development impact my Shopify store costs?
A3: Custom development can significantly increase TCO by adding one-time and ongoing costs, especially for complex projects requiring specialist expertise.
Q4: Do transaction fees vary with different Shopify plans?
A4: Yes, transaction fees decrease with higher-tier Shopify plans. For example, Basic Shopify charges 2.9% + 30¢ per transaction, while Advanced Shopify charges 2.4% + 30¢ per transaction.
By understanding these costs, you can strategically plan your budget and ensure your ecommerce venture remains profitable. For personalized advice on managing your Shopify store's TCO, consider consulting with experienced ecommerce professionals.
