Understanding the Costs: How Much Does It Cost to Sell on Shopify?

Table of Contents

1. Introduction
2. Shopify Pricing Plans Overview
3. Understanding Transaction Fees
4. Additional Costs to Consider
5. Real-World Examples
6. How to Reduce Your Shopify Costs
7. Conclusion
8. FAQs

Introduction

Did you know that around 60% of the approximately 4.8 million Shopify stores are based in the U.S., contributing to about 10% of all e-commerce sales in the country? If you're contemplating launching an online store, you're likely asking yourself, "How much does it cost to sell on Shopify?" Understanding the various costs involved in setting up and running a Shopify store is crucial for budgeting and forecasting your business's financial health.

In this blog post, we will delve into the different pricing tiers offered by Shopify, the transaction fees associated with sales, and other hidden costs that may arise as you navigate your e-commerce journey. By the end of this article, you'll have a comprehensive understanding of the financial commitments required to operate on the Shopify platform, empowering you to make informed decisions for your business.

Let’s explore the various aspects of selling on Shopify, from basic subscription fees to transaction costs and additional services. We encourage you to reflect on your own business model and consider how these costs will affect your profitability.

Shopify Pricing Plans Overview

Shopify offers several pricing plans tailored to meet the needs of different types of businesses. Each plan comes with its unique features and costs, allowing you to choose an option that best fits your operational requirements.

1. Shopify Starter Plan

• Cost: $5/month
• Best For: Businesses primarily selling through social media and messaging apps.
• Features:
  • Simple online store setup
  • Mobile POS capabilities for in-person sales
  • Basic reporting tools
• Transaction Fees: 2.4% on card payments, 2% on third-party payment gateways.

2. Basic Shopify Plan

• Cost: $39/month
• Best For: New businesses wanting a full-fledged online store.
• Features:
  • Unlimited product listings
  • Basic sales reports
  • Two staff accounts
  • Shipping discounts
• Transaction Fees: 2.9% + $0.30 for online orders, 2.7% for in-person transactions.

3. Shopify Plan

• Cost: $105/month
• Best For: Small to medium-sized businesses looking to expand.
• Features:
  • All Basic plan features, plus advanced reporting
  • Five staff accounts
  • Additional shipping discounts
• Transaction Fees: 2.6% + $0.30 for online orders, 2.5% for in-person transactions.

4. Advanced Shopify Plan

• Cost: $399/month
• Best For: Larger businesses with complex needs.
• Features:
  • Custom report builder
  • 15 staff accounts
  • All features from previous plans
• Transaction Fees: 2.4% + $0.30 for online orders, 2.4% for in-person transactions.

5. Shopify Plus

• Cost: Starts at $2,000/month
• Best For: High-volume businesses and enterprises.
• Features:
  • Custom billing and features tailored to specific business needs
  • Unlimited staff accounts
  • Advanced integrations
• Transaction Fees: No transaction fees when using Shopify Payments.

Understanding Transaction Fees

Beyond monthly subscription fees, Shopify also applies transaction fees to each sale made through its platform. These fees vary based on the type of payment processor you use.

1. Using Shopify Payments

When you use Shopify Payments, you only incur the standard credit card processing fees (as outlined in the plan details above). This option is highly recommended as it allows you to avoid additional transaction fees.

2. Using Third-Party Payment Providers

If you choose to use a third-party payment processor (like PayPal), you will incur additional fees:

• Basic Plan: 2% per transaction
• Shopify Plan: 1% per transaction
• Advanced Plan: 0.5% per transaction

3. Credit Card Fees

Each transaction also incurs credit card fees, which vary based on the plan and whether the card is domestic or international. For example, the Basic Plan charges 2.9% + $0.30 for domestic credit card transactions.

Additional Costs to Consider

While the monthly subscription and transaction fees represent the primary costs of using Shopify, there are additional expenses that you should account for:

1. Domain Name Registration

Shopify provides a default myshopify.com URL, but if you want a custom domain (e.g., www.yourstore.com), you will need to purchase it. Domain prices typically range from $10 to $100 per year.

2. Shopify Themes

Shopify offers a selection of free and paid themes. While free themes may suffice, premium themes can cost between $150 and $350 for installation.

3. Apps and Integrations

To enhance your store's functionality, you may want to utilize apps from the Shopify App Store. While many apps are free, premium ones can range from $9 to $299 per month. It’s wise to evaluate which apps are essential for your business to avoid unnecessary expenses.

4. Point of Sale (POS) Costs

If you plan to sell both online and in-person, you'll need to consider the costs associated with Shopify's POS system, which is $89/month per location for the Pro version.

5. Shipping Fees

Shopify offers competitive shipping rates, but you should be mindful of any additional shipping costs incurred through your chosen carrier. Using Shopify Shipping can help you save significantly on shipping costs, with discounts of up to 77% available through major carriers.

Real-World Examples

To better understand how these costs add up, let’s consider a few hypothetical scenarios:

Scenario 1: Newbie Entrepreneur

John launches a t-shirt business using the Basic Shopify Plan. He sells a t-shirt for $20. Here’s a breakdown of his costs:

• Monthly Fee: $39
• Transaction Fee: $0.30 + (2.9% of $20) = $1.10
• Total Monthly Cost (assuming 50 sales): $39 + (50 x $1.10) = $39 + $55 = $94

Scenario 2: Growing Business

Sarah, who runs a jewelry business, opts for the Shopify Plan at $105/month. If she sells items worth $1,000 in a month, her costs would be:

• Monthly Fee: $105
• Transaction Fee: $0.30 + (2.6% of $1,000) = $26.00
• Total Monthly Cost: $105 + $26.00 = $131

Scenario 3: High-Volume Seller

Mike operates an electronics store on the Advanced Shopify Plan. He sells $10,000 worth of products in a month:

• Monthly Fee: $399
• Transaction Fee: $0.30 + (2.4% of $10,000) = $240.30
• Total Monthly Cost: $399 + $240.30 = $639.30

How to Reduce Your Shopify Costs

Being strategic about how you manage your Shopify store can help you minimize expenses:

1. Choose the Right Plan: Start with a plan that meets your current needs, and upgrade as your business grows.
2. Use Shopify Payments: To avoid additional transaction fees, use Shopify Payments as your primary payment processor.
3. Limit App Usage: Regularly review the apps you're using and remove those that are not essential.
4. Leverage Free Themes: Start with free themes to save costs, and upgrade as your brand and budget expand.
5. Consider Annual Billing: Opt for annual billing to save 10% on your subscription fees.

Conclusion

Understanding the costs associated with selling on Shopify is crucial for any entrepreneur looking to build a successful online business. From subscription plans and transaction fees to additional expenses for domains, themes, and apps, the total cost can vary significantly based on your specific business model and choices.

As you assess your own digital strategy, consider how these costs will impact your pricing and profit margins. For those looking to harness the full potential of e-commerce, we invite you to explore the PowerCommerce eStore Suite, designed to optimize your Shopify experience and drive growth.

Ready to take your e-commerce journey to the next level? Order Now.

FAQs

Q1: Are there any hidden fees when selling on Shopify? A1: While Shopify is transparent about its costs, users should be aware of transaction fees, credit card fees, and additional costs for apps and themes that may impact overall expenses.

Q2: Can I change my Shopify plan later? A2: Yes, you can upgrade or downgrade your Shopify plan at any time based on your business needs.

Q3: Is there a trial period for Shopify? A3: Yes, Shopify offers a 14-day free trial for new users to explore the platform before committing to a subscription.

Q4: How can I save on Shopify fees? A4: You can save on Shopify fees by using Shopify Payments, choosing the right plan, using free apps and themes, and opting for annual billing.

Q5: What features are included in the Shopify Plus plan? A5: The Shopify Plus plan includes all features of the other plans, custom billing options, advanced integrations, and dedicated support for high-volume businesses.

By understanding and planning for these costs, you can create a sustainable and profitable online business on Shopify.