Shopify Pricing Review
Picking the right ecommerce builder can be confusing, especially when it comes to figuring out how much it really costs.
A lot of people complain about Shopify pricing plans, specifically when it comes to transaction fees and credit card rates.
In this Shopify pricing review, we’ll investigate commonly misunderstood concept of transaction fees, how you can remove them, and how you can save on credit card fees.
Review by Jeremy Wong
Last Updated on May 2, 2017
When it comes to Shopify pricing plans, we’ve heard mixed reviews. It really boils down to two separate camps.
Some say it’s well worth the investment and some say the fees are giant rip-offs.
So, what’s the truth?
How come some people gladly throw money at Shopify and some cringe in disgust?
It’s really not that hard to distinguish these two major groups of people:
- Shopify users who are successfully leveraging off Shopify’s tools to grow their businesses.
- Non-Shopify users who are very price sensitive and enjoy nickel and diming when price shopping for the best (aka lowest) prices.
Let’s be honest, we all want a good deal by getting the most out of purchases while paying the least possible. It’s wise, and there’s nothing wrong with it.
But when it comes to picking a tool to build your business, pricing consideration is just one factor out of many and I’d argue that this factor should not be the most important one.
I know, times are tough and every dollar counts (while you are sipping a fancy $5 latte, just kidding). What I’m trying to say is that in addition to being obsessed with the price tag while shaking your head, you should also weigh the rewards from achieving long-term success.
Ask yourself these questions:
- Why am I building an ecommerce store? To expand my business? To generate some side income? Maybe one day I can quit my full-time job and work from home?
- To best reach my goals, should I automatically use the cheapest tools available? Or should I use the best tools available, even if it costs more per month?
If you’re going to enter a car race where the prize is freedom (however you define it – financial freedom, lifestyle freedom, freedom from your nagging boss, etc.), would you enter the race with the cheapest car you can find on the lot? Or would you actually consider investing in a high-performance car to give yourself the best chance of winning?
If you have a healthy budget and you’re still going to pick the cheapest car, you should probably just stop reading.
“But what if I can find the cheapest tool that delivers the best performance?” You might argue.
Well, that does happen. But let’s get back to reality.
I’m not recommending that you throw your entire life savings away here. You’re more sensible than that.
What I’m suggesting is to consider investing in the best tool (even if it costs more) to give yourself the best chance to succeed.
The fact is, Shopify is not the cheapest ecommerce builder in the market. It’s not. But in my view, it is one of the best and it’s getting better every year.
You can see our full review of Shopify here.
So if you want to improve your chances of building a successful online store, Shopify is one of the best tools you can invest in to help you achieve your goal.
If you’re still with me, let’s keep pushing forward.
Below, we’ll discuss:
- What you actually get from each Shopify pricing plan.
- Credit card rates – using Shopify Payments versus PayPal.
- The truth about transaction fees (Q&A) – common misunderstanding.
Shopify Pricing Plans – What It Costs Per Month
One thing you should note is that on Shopify’s pricing page, the monthly price for each plan assumes you pay on a month-to-month plan.
What this means is that if you decide to cancel, you just stop paying. Period.
If you decide to go on the 1-year or 2-years plans, you do save 10% or 20%, respectively.
|Shopify Pricing Plans||Monthly ($/month)||1-Year ($/month)||Savings (%)||2-Years ($/month)||Savings (%)|
One interesting fact that I dug up is that based on Shopify’s annual report (they are a publicly listed company), there are more users on the monthly plan than the 1-year or 2-years plan.
This is a broad statement but unfortunately, Shopify didn’t provide exact percentages. I’d imagine that discounts you receive are not steep enough for users to commit to longer terms.
On that note, you should also know that more than 133,000 net new merchants signed up to use Shopify in 2016 (this figure already removes users who canceled), and Shopify currently powers more than 400,000 online stores and has helped its merchants process over $34 billion in sales.
Shopify is an on accelerated growth path as their brand received more and more recognition over the years as one of the best ecommerce builders available today.
In fact, uber successful entrepreneurs such as Tony Robbins and Daymond John (Fubu, Shark Tank) all recommend and support Shopify’s mission and platform.
Getting back to Shopify pricing plans, here is exactly what you get from each plan:
|Features||Basic Shopify||Shopify||Advanced Shopify|
|Credit Card Rates||2.9% + $0.30||2.6% + $0.30||2.4% + $0.30|
|Transaction Fees||Shopify Payments = 0.0%
Other Processors = 2.0%
|Shopify Payments = 0.0%
Other Processors = 1.0%
|Shopify Payments = 0.0%
Other Processors = 0.5%
|No. of Products||Unlimited||Unlimited||Unlimited|
|Abandoned Cart Recovery||No||Yes||Yes|
|Features||Basic Shopify||Shopify||Advanced Shopify|
You can click here to see the actual pricing table on Shopify’s website.
Besides the obvious monthly pricing differences, here are a few other differences you should pay attention to as well:
- Credit Card Rates – decreases marginally for higher plans
- Transaction Fees – decreases significantly for higher plans
- Abandoned Cart Recovery – very useful tool to help you earn more profits automatically. Detailed discussion here.
I’ll go over the Credit Card Rates and Transaction Fees in much more detail below.
Shopify Plus (Enterprise Level Users) – If you’re in the big leagues and your business generates 6 to 7 figures in sales per year, this is how Shopify Plus can help you grow even more.
Shopify Pricing – Credit Card Rates
On Shopify’s pricing table, the Credit Card Rates section relate to the rates you get charged if you decide to use Shopify Payments to handle your payment processing.
When you use a credit card to purchase online or offline, there is a fee that you will pay no matter what – a payment processing fee.
What this means is that when a shopper purchases a product from you, the payment processor that helps you collect money and deposit the money into your bank account, will charge you a fee for handling this monetary transfer process.
It’s something you can’t avoid unless you physically go to each shopper, collect the cash and depositing it into your own bank account.
When you go to your local grocery store to purchase something with your credit card, the grocery store pays a processing fee to their payment processor to collect payment from your bank and deposit it into their bank. That’s just how the world of commerce works. All merchants pay this fee.
Having said that, the only thing you can control are the credit card rates and that is determined by which payment processor you choose to use.
With Shopify Payments, their credit card rates / payment processing rates for online transactions are as follows:
- Basic Shopify Plan – 2.9% + 30 cents per transaction
- Shopify Plan – 2.6% + 30 cents per transaction
- Advanced Shopify Plan – 2.4% + 30 cents per transaction
These fees are on a per transaction basis, not on a per item sold basis. So if someone buys 10 widgets from you in one single transaction, the 30 cents is charged only once and not on each item.
(Note: If you sell products in-person using Shopify’s Point-of-Sale system, the credit card rates are lower)
Shopify Payments is Powered by Stripe
Shopify Payments is actually powered by a very reputable payment processor called Stripe.
They’re known to be reliable, easy to work with, and for their transparent pricing structure.
Shopify Payments is currently available to merchants located in the US, Canada, the United Kingdom, Ireland, and Australia.
If you’re not located in these countries, Shopify is fully integrated with over 70 different payment processors to accept credit cards from all over the world. You can see their list of payment processors here.
Shopify Payments vs PayPal
In this section, I’ll compare Shopify Payments (essentially Stripe) with PayPal – the most popular payment processor in the world.
PayPal is rock solid. It’s reputable, easy to use, but they’re more expensive than using Shopify Payments:
|Monthly Fees||$0||$30 *|
|Transaction Fees||2.9% + $0.30
2.6% + $0.30
2.4% + $0.30
|2.9% + $0.30|
|Amex Fees||Same as above||3.5% + $0.30|
|International Fees||Same as above||3.9% + Fixed Fee **|
|Accepts Apple Pay||Yes||No|
|Payout Schedule||2-Days: US, Australia
7-Days: Canada, Ireland, UK
Source: PayPal Merchant fee schedule
* If you want your customers to remain on your website throughout the entire checkout process, you’ll need to upgrade to PayPal Payments Pro ($30 per month). If you don’t, your customer will be redirected away from your website to PayPal’s secure payment page, then be brought back to your website after payment. Stripe keeps your customer on your website the entire time.
** If your customer is not based in your country, PayPal will charge you a higher percentage plus a fixed fee. The fixed fee depends on where your customer is located:
A lot of ecommerce businesses choose to use Stripe because their pricing structure is simple and transparent, and the funds are automatically deposited into your bank account a lot faster than PayPal.
In fact, the majority (85%) of Shopify users use Shopify Payments when it is available in their country (we’ll get into more details in the next section).
While PayPal is also reliable, their pricing structures are often confusing as there are a lot of “depends on…”, so it’s challenging to work out exactly how much they’re going to charge you per transaction.
It can be really frustrating sometimes, especially if you’re a very detailed type of person and want to know exactly how they calculated the fees.
At the end of the day, it’s cheaper to use Stripe / Shopify Payments if it is available in your country. Keep in mind that the processing fee also decreases (though marginally) if you subscribe to a higher Shopify plan.
For more discussions on Shopify Payments, see our guide here.
Shopify Pricing – Transaction Fees (Q&A)
I see complaints about Shopify’s transaction fees quite often, usually from merchants who are concerned about how transaction fees can add up quickly and eat into their profits.
Of course, nobody likes to pay more fees especially if you don’t think it’s necessary. However, I feel that the concept of Shopify’s transaction fee is commonly misunderstood.
Let’s spend a few minutes to investigate why transaction fees exist on top of monthly plan fees, is it unique to Shopify (or if they’re just a bunch of greedy people), and what you can do.
Q: How do transaction fees work?
A: Each time a customer purchases from you (a transaction), depending on which Shopify plan you subscribed to, a transaction fee will be charged. The fees are 2% for the Basic Shopify plan, 1% for the Shopify plan, and 0.5% for the Advanced Shopify plan.
Q: What are transaction fees for?
A: When shoppers visit your online store, they browse around before making a decision to purchase. It takes resources for Shopify to power your ecommerce website to ensure that it stays up and doesn’t crash on you.
So the idea is that the transaction fees help Shopify keep your store open and operating at optimal levels, no matter how many visitors you have on your website at one given time (10 visitors or a million visitors).
Q: Doesn’t the monthly plan fee cover this already?
A: Yes and no. The monthly fee mainly gives you access to the Shopify platform and selling tools to get your online store published and working. The transaction fees exist to continually keep your store powered, and is only charged when someone purchases your product.
Q: What about other similar ecommerce builders? Do they charge transaction fees?
A: Yes, but in different forms.
For BigCommerce (Shopify’s closest competitor), even though they don’t charge transaction fees for each sale you make, if you generate more than a certain sales dollars per 12 months, they automatically bump you to up to a higher plan so you’ll end up paying more per month. Shopify doesn’t “force” you to upgrade to a higher plan, no matter how much sales you generate per month.
For Volusion, they limit the amount of bandwidth you have per month (think of bandwidth also as “power” that keeps your website running. The more shoppers visit your store, the more bandwidth it uses), whereas Shopify gives you unlimited bandwidth. Once you exceed the bandwidth limit with Volusion, you’ll have to purchase additional bandwidth from them (which they don’t list how much it costs, so it’s going to be a nice surprise.)
So transaction fees appear in different forms for ecommerce platforms similar to Shopify.
Q: Is there any way to remove Shopify’s transaction fees?
A: Yes. If you use Shopify Payments, they’ll remove all transaction fees.
Q: What’s the catch? Assuming if I use Shopify Payments and Shopify removes all transaction fees, how can they keep my ecommerce website powered?
A: Shopify Payments help you process payments from your customers (collect money from your customer and deposit it into your bank account). This is the credit card fee as discussed in detail above.
If you use Shopify Payments, then Shopify will earn the credit card fees.
This allows them to waive the transaction fees. So instead of paying transaction fees plus credit card fees, you just have to pay credit card fees if you use Shopify Payments. You’d have to pay this regardless even if you use another payment processor (such as PayPal).
Q: Will using Shopify Payments cost me anything more?
A: No. Shopify will waive transaction fees (saving you money), and the credit card rates are actually lower than payment processors such as PayPal (saving you money). The fee per transaction is fixed, there are no international fees (if you sell to customers outside of your country) and there are no monthly fees.
Q: Is using Shopify Payments going to save me more money compared to using other similar ecommerce builders?
A: Yes. As discussed, if you use BigCommerce, they force you to upgrade to a higher plan if you exceed certain sales levels. Shopify doesn’t require you to upgrade at all. So theoretically, you can sell $1 million worth of products and you can remain subscribed to Shopify’s lowest plan at $29 per month.
With BigCommerce, you’ll have to upgrade to a higher plan and pay more. If you use Volusion, they limit the amount of bandwidth and if you exceed the limit, you’ll have to purchase more from them.
Shopify gives you unlimited bandwidth.
Q: Are a lot of Shopify users using Shopify Payments?
A: Yes. According to Shopify, 85% of their users are using Shopify Payments when it is available (for users located in the US, Canada, Australia, the UK, Ireland) as at the end of 2016.
This shouldn’t be surprising at all as users get to save transaction fees, have lower credit card processing fees, and can start receiving funds after 2-days.
When it comes to fees per sales transaction, the best deal is to use Shopify Payments. Not only will Shopify waive all transaction fees, the credit card processing fees are lower than PayPal (and most other payment processors).
It doesn’t cost you anything more to use Shopify Payments, as you’ll need a payment processor to handle payments anyway.
Conclusion – Shopify Pricing Plans
I hope this discussion addresses the more commonly misunderstood aspects of what it costs you per month to use Shopify.
Shopify is one of the best hosted ecommerce builders available in the market today (see our full review here). They’re not the cheapest and they’re not the most expensive.
They have a very broad range of ecommerce tools, offers you access to their App Store (over 1,400 apps), and ecosystem of theme designers and experts, Shopify is a very strong and fast growing online store builder.
If you’re looking for a low-cost ecommerce builder, then Shopify is not the right platform for you.
But if you’re serious about building a successful online store, Shopify is an excellent platform to help you achieve your goals.
Their plans are not outrageously expensive and are actually quite affordable to give you the tools and infrastructure to get started. Imagine if you were able to earn $1,000 per month from your business, the $29 per month plan is quite manageable.
Now, imagine if you grew your sales to $5,000 per month over time, the monthly cost starts to become negligible.
So while $29 or $79 per month sounds expensive when you get started, keep in mind what your business sales goals are over the medium to long-term. If you only want to generate $200 per month, then Shopify is probably not for you.
But if you want to generate thousands of dollars per month over time, Shopify is a strong platform to help you do that.
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