Understanding How Much Does Shopify Keep: A Comprehensive Breakdown of Fees and Costs

Table of Contents

1. Introduction
2. Shopify's Pricing Plans
3. Transaction Fees Explained
4. Additional Costs to Consider
5. Strategies to Minimize Shopify Fees
6. Conclusion
7. FAQ

Introduction

Did you know that eCommerce platforms like Shopify have been instrumental in transforming the way we do business online? In 2024, Shopify has powered over four million online stores, becoming a favored choice for entrepreneurs and businesses alike. However, as with any platform, a crucial question arises: how much does Shopify keep?

Understanding the intricacies of Shopify's fee structure is vital for anyone looking to maximize their profit margins while managing their online business effectively. This blog post aims to provide you with a comprehensive breakdown of the various fees associated with Shopify, allowing you to make informed decisions about your eCommerce strategy.

By the end of this article, you will gain insights into Shopify's subscription plans, transaction fees, payment processing costs, and additional expenses that may affect your bottom line. We will also explore strategies to minimize these costs, enabling you to focus on growing your business sustainably. Let’s embark on this journey together as we dissect the true cost of operating on Shopify.

Shopify's Pricing Plans

At the heart of understanding how much Shopify keeps lies its pricing plans. Shopify offers multiple tiers to accommodate businesses of all sizes, each with a unique set of features and pricing structures. Here's a breakdown of the available plans:

1. Starter Plan

The Starter Plan is priced at $5/month and is perfect for solopreneurs selling primarily through social media and messaging apps. However, it does not support building a full-fledged online store.

• Transaction Fees: 2.4% on card payments, 2% if using a third-party payment gateway.

2. Basic Plan

The Basic Plan costs $39/month when paid monthly or $29/month if paid annually. This plan is ideal for new or smaller businesses looking to establish their online presence.

• Transaction Fees: 2.9% + $0.30 for domestic credit cards, 3.9% + $0.30 for international or American Express cards, and flat 2.7% for in-person purchases.

3. Shopify Plan

The Shopify Plan is priced at $105/month but drops to $79/month when paid annually. This plan is geared towards growing businesses that require more advanced features.

• Transaction Fees: 2.6% + $0.30 for domestic credit cards, 3.6% + $0.30 for international or American Express cards, and flat 2.5% for in-person transactions.

4. Advanced Plan

The Advanced Plan is designed for established businesses and costs $399/month, with an annual rate of $299/month.

• Transaction Fees: 2.4% + $0.30 for domestic credit cards, 3.4% + $0.30 for international or American Express cards, and flat 2.4% for in-person purchases.

5. Shopify Plus

For enterprise-level businesses, Shopify Plus starts at $2,000/month and offers advanced features tailored for high-volume merchants. The fees for this plan are customized based on business needs.

Summary of Shopify Plans

Plan	Monthly Fee (Monthly/Annual)	Domestic Transaction Fee	International Transaction Fee
Starter	$5	2.4%	2%
Basic	$39 / $29	2.9% + $0.30	3.9% + $0.30
Shopify	$105 / $79	2.6% + $0.30	3.6% + $0.30
Advanced	$399 / $299	2.4% + $0.30	3.4% + $0.30
Shopify Plus	From $2,000	Custom	Custom

Transaction Fees Explained

One of the primary ways Shopify earns revenue is through transaction fees. These fees can vary significantly based on the payment method and the subscription plan you choose.

Transaction Fees Breakdown

• Using Shopify Payments: When you utilize Shopify's own payment processing system, the transaction fees are generally lower. For example, the Basic Plan charges 2.9% + $0.30 per transaction.

• Using Third-Party Payment Processors: If you opt for a third-party payment gateway, such as PayPal or Stripe, Shopify charges an additional transaction fee that can range from 0.5% to 2%, depending on your plan.

Implications of Transaction Fees

These transaction fees can accumulate quickly, especially for high-volume businesses. For instance, if you sell a product for $100 under the Basic Plan, you would incur a transaction fee of $3.20 ($2.90 + $0.30). Over time, these fees can significantly impact your overall profitability.

Additional Costs to Consider

In addition to subscription and transaction fees, there are several other costs that merchants should account for when using Shopify.

1. Domain Name Fees

While Shopify provides a free .myshopify.com domain, many businesses prefer to purchase a custom domain. These can cost anywhere from $10 to $100 per year, depending on the provider.

2. App Fees

Shopify's app ecosystem is robust, with many apps available to enhance store functionality. While some apps are free, others can charge monthly fees ranging from $9 to $299, depending on the features offered.

3. Theme Costs

While Shopify offers free themes, many businesses opt for premium themes that range from $150 to $350. Custom theme development can cost even more, depending on the complexity of the design.

4. Shipping Costs

Shopify offers shipping solutions that can save you money, but additional shipping costs will apply. Using Shopify Shipping can provide discounts of up to 88% on shipping rates from major carriers, but it's still an expense to consider.

5. Payment Processing Fees

Beyond transaction fees, businesses that accept credit cards through Shopify Payments incur processing fees. These fees typically fall in line with industry standards but can vary based on the payment method.

Strategies to Minimize Shopify Fees

To maximize profits on Shopify, it’s essential to implement strategies that minimize costs.

1. Choose the Right Plan

Selecting the most suitable plan for your business size and sales volume can have a significant impact on transaction fees. For instance, businesses with higher sales volumes might find that upgrading to a higher-tier plan could reduce transaction fees overall.

2. Use Shopify Payments

Utilizing Shopify Payments as your primary payment processor can help you avoid additional transaction fees charged for third-party processors. This strategy is particularly effective for businesses with significant online sales.

3. Monitor App Usage

While apps can enhance store functionality, they also incur costs. Regularly reviewing the apps you use and removing any that aren't essential can help reduce monthly expenses.

4. Take Advantage of Annual Payments

Shopify offers discounts for annual payments. By opting for a yearly subscription, you can save up to 10% compared to monthly billing.

5. Leverage Free Themes and Features

Starting with free themes and gradually upgrading as your business grows can save initial costs. Additionally, many features can be utilized without incurring extra costs.

Conclusion

Understanding how much Shopify keeps is crucial for any eCommerce entrepreneur. By dissecting the various fees associated with Shopify, including subscription costs, transaction fees, and additional expenses, you can better strategize your approach to running a profitable online store.

As we’ve outlined, the total costs of operating on Shopify can vary widely depending on your business model, the plan you choose, and how you manage transactions. By implementing strategic decisions, you can reduce costs and improve your margins.

If you are ready to take your eCommerce journey to the next level, we encourage you to explore the PowerCommerce eStore Suite, designed to optimize your storefront, enhance conversion rates, and drive sustainable growth.

FAQ

1. What are the main fees associated with Shopify?
Shopify fees primarily include subscription fees, transaction fees (based on your chosen payment processor), app fees, theme costs, and shipping costs.

2. How much does Shopify take from each sale?
The amount Shopify takes from each sale depends on your subscription plan and whether you use Shopify Payments or a third-party processor. Fees can range from 2.4% to 2.9% + $0.30 per transaction.

3. Can I cancel my Shopify subscription at any time?
Yes, you can cancel your Shopify subscription at any time, but be mindful of any remaining billing commitments if you are on an annual plan.

4. How can I reduce Shopify fees?
You can minimize fees by choosing the right plan, using Shopify Payments, monitoring app usage, taking advantage of annual payment discounts, and leveraging free themes.

5. Is there a free trial for Shopify?
Yes, Shopify offers a free trial period for new users, allowing them to explore the platform before committing to a subscription plan.