Understanding Shopify Pricing Plans and TCO for an eCommerce Store

Shopify is one of the most adopted eCommerce platforms, offering rich features and designed to fulfill the myriad needs of online businesses of all sizes. Starting an online store with Shopify offers a range of possibilities for businesses. However, to ensure your business is both successful and financially sustainable, it’s crucial to understand the total cost of ownership (TCO).

The TCO includes all expenses associated with owning and operating a Shopify eCommerce store over its entire lifecycle. Let’s explore the various Shopify plans, its pricing, and various cost heads you should consider for a comprehensive view of your investment.

Let us start by understanding the various Shopify plans that are available.

What is Shopify?

Shopify is a leading eCommerce platform providing all the tools required to launch and manage an online store successfully. It was initially developed as a stand-alone platform; businesses could directly integrate it with their website or utilize a secure Shopify page for transactions.

Over time, Shopify has added several features and has grown to become a household name. It is one of the most adopted eCommerce platforms. Today, Shopify is available in various plans that meet the needs of businesses of all sizes.

The Shopify Pricing and Plans

Your Shopify journey begins with selecting the right subscription plan. Shopify provides several tiers tailored to different business sizes and needs, each with unique features and pricing.

• Basic: Ideal for new businesses starting to build an online presence.
• Shopify: Suitable for growing businesses looking for advanced reporting.
• Advanced: Best for scaling businesses needing more detailed analytics.
• Plus: Tailored for large enterprises requiring custom solutions.

The first two plans are ideal for small to medium-sized businesses, and the latter two for larger organizations.

In addition, they offer three other plans:

Total Cost of Ownership of a Shopify Store – Factors to Consider

Now that we have looked at the various plans that Shopify offers, let us look at the total cost of ownership of an eCommerce store powered by Shopify. We will consider the following 6 cost heads to calculate the TCO.

1. Shopify Subscription Plans + Transaction Fees
2. Shopify Store Design and Development Costs
3. eCommerce Hosting and Security
4. Apps and Integration
5. Payment Processing Fees
6. Maintenance and Support

1. Shopify Subscription Plans + Transaction Fees

As we have seen earlier, Shopify offers several subscription plans. The foundation of your Shopify eCommerce store lies in choosing the right subscription plan. Each plan comes with a monthly or annual fee, varying based on the level of features and support.

What’s different with Shopify, over other eCommerce platforms, is the transactions fee. Shopify, in general, charges very small fixed monthly fee but charges an additional fee per transaction.

Note: For Shopify Plus, there are other factors that determine the final price that you pay for the subscription. For example, the annual revenue, the length of the contract, type of sales (B2B, Online, Retail), and your base region/ location.

• According to our sources, if your revenue is between 0 – $800K/ month, you will pay Shopify a flat fee of $2300 – $2500 (depending on the length of your contract).
• However, if your revenue is >$800K/ month, Shopify uses a revenue share model, charging between 0.25% – 0.4% (depending on type of sale – B2B, Online, Retail, and the length of your contract).

Choosing the right plan is foundational. Evaluating each plan’s features and ensuring they align with your business requirements will help you avoid unnecessary upgrades and additional costs in the future.

2. Shopify Store Design and Development Costs

The costs associate with designing and developing a visually appealing and user-friend eCommerce store include:

• Template/Theme: Shopify offers free and paid themes. Paid themes can range from $140 to $350. You can also work with the agency to create a custom design that will cost you a lot more. The actual cost of a custom design can vary depending on the agency and your requirements.
• eCommerce Store Development Costs: You should break this effort down into:
  • Default Store: The cost of launching a Shopify store with Default features. With default features, the scope and cost of developing the e-store is fixed and ranges between $5,000 – $15,000 for Basic and Shopify plans, and $10,000 – $50,000 for Advanced and Plus plans.
  • Customizations: The cost of adding additional custom features or functionality. This will require a developer, costing anywhere between $50 to $200 per hour.

3. eCommerce Hosting and Security

Shopify includes hosting in its subscription plans, but there are additional security measures are necessary to protect your site and customer data from cyber threats.

• SSL Certificate: Included in Shopify plans for secure transactions.
• Security Plugins: Additional services or plugins to enhance security may incur extra costs.

Ensuring robust hosting and security is fundamental for maintaining customer trust and compliance with data protection regulations, safeguarding your business from potential risks.

4. Apps and Integration

Shopify is popular among businesses of all sizes due to its affordability and app marketplace. If you want to enhance your online store with additional features and capabilities, Shopify offers several apps and integrations in categories like Payment, Analytics, Marketing, and more.

• Marketing Tools: Email marketing, SEO tools, social media integrations, etc.
• Integrations: Apps to integrate with systems like ERP, Payment, Shipping, etc.
• Customer Support: Live chat, helpdesk software, etc.
• And more.

The additional features you need depend on the functionality provided by the eCommerce platform (under the selected plan) and your requirements.

Many apps have monthly fees ranging from $10 to $100+, depending on their complexity and features. Several apps also offer free trial or a free plan, so you can choose whether or not to pay for an upgraded service.

5. Payment Processing Fees

Efficiently handling transactions is vital for any eCommerce business. This involves understanding the fees associated with different payment gateways. As mentioned above, Shopify charges a percentage fee for both Shopify payments and 3rd-party payment gateways.

Details
Basic
Shopify
Advanced
Plus
Card rates starting at
• 2.9% + 0.3 USD online
• 2.6% + 0.1 USD in person
• 2% 3rd-party payment providers
• 2.7% + 0.3 USD online
• 2.5% + 0.1 USD in person
• 1% 3rd-party payment providers
• 2.5% + 0.3 USD online
• 2.4% + 0.1 USD in person
• 0.6% 3rd-party payment providers
Competitive rates for high volume merchants

Carefully selecting payment processors and understanding their fee structures helps manage transaction costs effectively, directly impacting your bottom line.

6. Maintenance and Support (Monthly Retainer)

Shopify stores, in general, required very little ongoing maintenance. However, you might need additional support to keep your store running smoothly. The costs required for this will depend on the nature of your business and your team’s composition and skills.

Tentative costs for monthly retainer are (depending on where you hire the resource from):

• 1/4 of a resource (up to 40 hrs) per month – $2K – $5K – enough to keep the store running
• 1/4 to 1/2 of a resource (40 to 80 hrs) per month – $2K – $10K – minor enhancements required on an ongoing basis
• > 1/2 of a resource (>80 hrs) per month – $5K – brands requiring ongoing development and enhancements

In addition to these, there are additional cost heads you can consider. These costs are related to running your eCommerce businesses in general and are not specific to your choice of eCommerce platform.

7. Domain Name Registration

Securing a domain name is one of the first steps in establishing your online presence. Costs include:

• Domain Registration: Typically ranges from $10 to $50 per year, depending on the domain extension (.com, .net, etc.).
• Domain Privacy Protection: An additional fee to keep your personal information private.

Investing in a good domain name and privacy protection ensures your business appears professional and trustworthy, forming the bedrock of your online identity.

8. Other Operational Expenses

Managing orders and deliveries efficiently ensures customer satisfaction. This includes costs for shipping, fulfillment services, and inventory storage.

• Shipping Costs: Charges by carriers like USPS, FedEx, UPS.
• Fulfillment Services: Fees for third-party logistics providers.
• Inventory Storage: Costs for warehousing if not using dropshipping.

Efficient logistics and fulfillment operations are key to delivering a great customer experience and can significantly affect your store’s reputation and return rates.

9. Marketing and Advertising

Driving traffic to your store requires a robust marketing strategy. This involves costs for SEO, content marketing, PPC advertising, and email marketing campaigns.

• SEO and Content Marketing: Costs for hiring experts or using SEO tools.
• Pay-Per-Click (PPC) Advertising: Google Ads, Facebook Ads, etc.
• Email Marketing: Services like Mailchimp or Klaviyo have subscription fees based on the number of subscribers.

Effective marketing and advertising strategies are essential for attracting and retaining customers, making these investments critical for your store’s growth and profitability.

10. Miscellaneous Costs

Other expenses such as legal compliance, accounting, and taxes are also part of running an eCommerce business. These costs, although sometimes overlooked, are crucial for legal and financial stability.

• Legal and Compliance: Costs for legal advice, GDPR compliance, etc.
• Accounting and Taxes: Services for managing finances and filing taxes.

Addressing miscellaneous costs proactively helps you avoid legal issues and financial mismanagement, ensuring long-term sustainability and compliance for your eCommerce store.

Conclusion

The total cost of ownership for an eCommerce store is multifaceted, extending beyond the subscriptions and the initial setup costs. By considering all these cost heads, you can create a realistic budget and plan for sustainable growth. Remember, investing wisely in your eCommerce infrastructure can lead to long-term success and profitability.

Embarking on this journey with a clear understanding of the TCO will help you navigate the complexities of the eCommerce landscape with confidence. Happy selling!

Request Your Shopify Website Quote Today!

Have questions related to Shopify features, plans or costs? Reach out to our Shopify experts for a discussion or personalized quote today.

Additional Reading: If you are evaluating Shopify and other eCommerce platforms, we’ve researched other platforms with similar features.

• BigCommerce vs Shopify
• Magento/ Adobe Commerce Vs Shopify