Shopify Fees: What's the Cost of Running a Shopify Store

Launching an ecommerce store comes with costs. Understanding Shopify's fees is crucial for properly budgeting your online business. From subscription plans to transaction fees, marketing, and fulfillment, expenses add up.

This guide will outline the key details of Shopify pricing plans you need to know. You'll discover the factors impacting total Shopify costs so you can strategically minimize expenses. With the right information, you can make informed financial decisions and operate profitably.

Understanding Shopify's Pricing Plans

Shopify offers several pricing plans to meet the diverse needs of ecommerce businesses. From hobbyists just starting out to major enterprises, Shopify has something for everyone. Their plans provide varying features, transaction limits, and support options at different price points. Understanding the plans available can help you pick the right one based on your current business needs and future goals.

Shopify Subscription Plans

The core of Shopify’s offerings are their five subscription plans: Basic Shopify, Shopify, Advanced Shopify, Shopify Plus, and Shopify Lite. Let's break these down:

Basic Shopify is best for new and emerging businesses. At $32 per month, it provides essential ecommerce features like a customizable online store, unlimited products, 24/7 support, and secure payment processing. The main limitations are a 2% transaction fee and lack of advanced features like gift cards or advanced report building. Still, the Basic Shopify plan is a great way to dip your toes into selling online without a huge upfront investment.

Shopify, at $92 per month, adds more robust features like gift cards, professional reports, and abandoned cart recovery. The 1% transaction fee is also lower. Shopify is ideal for small but steadily growing businesses that need more customization and want to offer a branded, premium experience.

Advanced Shopify bumps the price up to $399 per month but unlocks further capabilities like advanced report building, third-party calculated shipping rates, and the ability to sell wholesale. The 0.5% transaction fee is even lower. Companies that expect substantial sales volume or want maximum control over their customer experience should consider Advanced Shopify.

For major enterprises that expect huge transaction volumes, Shopify Plus is the premium plan at $2,300+ per month. It boasts dedicated Shopify account management, the lowest 0.25% transaction fee, and support for complex business needs like B2B sales and global operations. Access to the Shopify App Store is unlocked to find custom apps that integrate with your systems. Only the biggest brands need Shopify Plus, but it can scale to their level.

Finally, Shopify Starter at $5 per month provides a pared-down Shopify store that sellers can embed on Facebook or other social media to accept buy buttons and process orders. The main limit is a lack of a full website, so it's best for social sellers or pop-up shops.

Overall, most growing small and medium businesses will find what they need in one of the main three plans: Basic, Shopify, or Advanced. Shopify Plus is for true enterprise needs. And Shopify Lite serves a niche.

Annual Discounts

While the base prices for Shopify’s plans are charged monthly, you can get discounts by signing up for annual billing cycles.

Opting for annual billing reduces the price of Basic Shopify to $24/month, Shopify to $69/month, and Advanced Shopify to $299/month. That comes out to savings of 25% off the monthly price.

Locking in longer subscription terms can be a smart financial move, especially once your business has stabilized and you know you'll need Shopify for the long haul. Just keep in mind that you are committing for 1 year when you agree to annual billing.

If your business is still early-stage, it may be safer to stick to monthly billing at first in case you want to change plans as your needs evolve. But down the road, the discounts for annual subscription can lead to considerable cost savings on your overall Shopify expenses.

Free Trial Period

One excellent perk Shopify offers is a free 14-day trial for new users to test drive their platform. You get access to the full Shopify store setup experience, including using themes, adding products, setting up payments, and making test orders.

The trial provides exposure to Shopify’s dashboard, tools, and reporting features. You can get a feel for how intuitive the interface is and whether it matches your business workflow. Checking for any glitches in your desired setup is easier during a trial versus after launch.

Most importantly, the free trial lets you evaluate if Shopify fits your needs before spending a dime. You can drill into specifics like whether the available themes suit your brand, how smoothly the checkout process flows, if shipping workflows make sense for your products, and so on.

While you can’t accept live payments during the trial, it does let you fully test drive Shopify virtually risk-free. There are also online guides, videos, and experts available to help optimize the experience before deciding if Shopify is the right ecommerce platform for your current and future business goals.

Transaction and Payment Processing Fees

Shopify charges transaction fees on orders processed through their platform. These fees help cover payment processing costs and other operating expenses. Understanding Shopify's transaction fee structure is important for calculating the true cost of selling on their platform. We'll explore Shopify's default payment processing option, Shopify Payments, as well as fees for using third-party gateways.

Shopify Transaction Fees

Shopify transaction fees vary based on the subscription plan you choose. On Basic Shopify plan, the transaction fee is 2% of order value. For the standard Shopify plan, it drops to 1%. And Advanced Shopify reduces it further to 0.5%.

These represent the transaction fees if you use Shopify Payments, their default integrated payment gateway. Shopify Payments handles everything from securely accepting payments from major credit cards, debit cards, Apple Pay to managing transactions and transferring funds to your bank account automatically.

By using Shopify Payments instead of a third-party payment provider, you avoid setting up a separate merchant account and additional gateway fees. Shopify Payments streamlines the process while providing competitive transaction rates.

To illustrate potential savings, a Basic Shopify store doing $50,000 in sales would pay $1,000 in transaction fees (2% of 50K). An equivalent store on the Shopify plan would pay just $500 in fees (1% of 50K). So upgrading to a higher tier plan can directly reduce transaction costs as your sales volume increases.

Compared to platforms like Wix and Squarespace that charge transaction fees of 3-4%, Shopify’s rates are quite competitive for an all-in-one solution. However, for high-volume merchants, standalone payment gateways like Stripe may offer even lower rates.

Third-Party Payment Provider Fees

While Shopify Payments is the default option, you can also use external payment gateways like Stripe, PayPal, or Braintree with your Shopify store. These third-party providers typically charge a small transaction fee on payments processed through them.

For example, Stripe charges 2.9% + $0.30 per transaction for online payments. PayPal charges a fee of 2.9% plus $0.30 for Shopify transactions as well. So in addition to Shopify's transaction fees, you'll pay these third-party processing costs per order.

The main reason to use a third-party gateway is if you need support for specialized payment methods Shopify Payments doesn't offer. For example, Stripe supports over 135+ currencies, extensive global payment types, and options like Alipay.

PayPal may be preferred for sellers who want to offer customers the flexibility to pay with PayPal at checkout. And Braintree users cite features like fraud protection, reporting, and PCI compliance as benefits.

While third-party fees only add a few percentage points, those costs can add up over thousands of orders. For high-volume merchants, staying within Shopify Payments may be the cheapest way to minimize transaction costs. But the extra features of external gateways may justify the fees for some stores.

Payment Processing Options

In summary, Shopify provides two main options for accepting payments:

Shopify Payments: This integrated solution offers simplified transactions, bundled reporting, automated payouts to your bank, and competitive transaction fees starting at 2% for Basic, 1% for Shopify, and 0.5% for Advanced plans. Using Shopify Payments eliminates the need to setup and maintain a separate merchant account.

Third-Party Gateways: Alternatively, you can opt to use an external payment gateway like Stripe, Braintree, or PayPal for access to additional features like support for alternate payment methods, currencies, fraud protection, and specialized reporting. Processing with a third-party gateway will incur slightly higher transaction fees due to gateway costs of 2-3% per order in addition to Shopify's fees.

Most merchants will benefit from the convenience and cost effectiveness of Shopify Payments. Larger enterprises that require specialized payment functionality may justify using a third-party integration. But the extra gateway fees add up, so carefully evaluate whether the additional features warrant the higher processing costs. Consider your business needs, sales volumes, and customer requirements when selecting the best payment processing approach.

Other Shopify Fees and Costs

Domain, Hosting, and SSL Certificate Costs

Setting up a proper domain name, web hosting, and SSL certificate are essentials for any ecommerce website, including Shopify stores. Shopify simplifies these aspects by providing domain registration and hosting bundled into their subscription plans.

The main costs to be aware of are:

• Domain Registration: Shopify charges $14/year to register a new domain or transfer an existing one. This provides access to a custom .com, .net, or .org domain that establishes your brand identity online.
• Web Hosting: Hosting is included free with all Shopify plans, so there are no extra hosting fees. Shopify's worldwide content delivery network (CDN) ensures fast page load speeds.
• SSL Certificate: An SSL certificate for enabling HTTPS on your site comes built-in and optimized with Shopify's platform, so there are no added certificate expenses.

The all-in-one convenience of domain, hosting, and SSL through Shopify saves the hassle and costs of sourcing these externally. Unless you need a specialty domain suffix, these necessities are covered in the main Shopify subscription fees.

Design, Theme, and Development Costs

Building an aesthetically pleasing, easy-to-navigate, and conversion-focused Shopify store often involves design and development costs for things like:

• Themes: Shopify has over 100 free and paid themes to choose from starting at around $140. Premium themes with advanced design customization typically cost between $160-$180. This provides the core look, feel, and functionality of your online storefront.
• Custom Design Work: For a fully customized store design, you may need to hire a Shopify web designer. Designer fees often range from $50/hour for basics like logo design up to $150+/hour for advanced custom store development.
• App Subscriptions: Shopify apps and integrations that add advanced functionality like email marketing, reviews, and loyalty programs often have monthly or annual subscription fees ranging from $9-$99+/month per app.
• Developer Services: Completely custom store development, complex integrations, or optimizations by expert Shopify developers and programmers can cost $50-$200+ per hour.

While Shopify allows anyone to set up a basic store quickly, investing in pro design and development takes your brand presentation and customer experience to the next level. Allocating even a few thousand dollars can pay dividends in elevated site design, conversions, and professionalism.

Marketing, Advertising, and Sales Costs

Driving consistent traffic and sales to your Shopify store requires investing in marketing, advertising, and sales-related expenditures. Some costs to account for:

• Email Marketing: Using apps like Mailchimp or Klaviyo for email campaigns costs around $10-$299/month depending on subscriber volume. Email is a proven sales driver.
• Paid Ads: Running paid ads like Facebook and Instagram posts can cost anywhere from $100-$5,000+/month depending on competitiveness. Frequently test ad creatives and landing pages.
• Influencers: Paying influencers with an audience in your niche $50-$500+ for an Instagram post or sponsored content can grow awareness. Ensure their followers align with your target audience.
• SEO Services: While you can DIY basic SEO, hiring a professional Shopify SEO expert provides technical optimizations for $300-$1500/month. Improved SEO lifts long-term organic traffic.
• Transactional Emails: Well-designed transactional emails for order confirmations, shipping notices, etc. encourage repeat purchases. Plan $200-$500 for custom templates.

Factor in an adequate budget for getting the word out about your Shopify store and attracting customers continuously so sales don't stall after launch. Ongoing marketing and promotion activity drives sustainable growth.

Shipping, Inventory, and Supply Chain Costs

To physically fulfill orders, Shopify stores incur costs related to:

• Warehousing: If not dropshipping, storing inventory often requires third-party warehouse fees in the range of $1-$3 per order, plus monthly storage fees of around $0.50 per cubic foot. Proper warehouse systems prevent stockouts.
• Shipping Supplies: From boxes to tape and labels, plan around $1-$4 per order for packaging and mailing supplies in bulk. Speedy supplies ensure fast fulfillment.
• Shipping Rates: USPS, UPS, FedEx, and other carrier shipping fees vary based on box size, weight, and delivery speed. Compare rates to offer customers affordable delivery options.
• Inventory Planning Software: Tools like Cin7 and TradeGecko help optimize inventory at $79+ per month. Avoid overstocking or understocking.
• Order Fulfillment Services: Outsourcing fulfillment to 3PL providers costs around $3-$8 per order, which can be worth the logistics relief.

Maintaining adequate stock, packaging orders promptly, and leveraging cost-effective shipping providers reduces logistical bottlenecks that can frustrate customers. Plan fulfillment costs appropriately.

Taxes, Compliance, and Legal Costs

Depending on where you operate your Shopify store, costs arise related to:

• Sales Tax Setup: Proper sales tax calculation and collection helps avoid audit risks. Apps like TaxJar handle compliance for $17+/month.
• Business Insurance: Covering liability, inventory, and operational risks generally runs $500-$1500+ annually. Protect your business and assets.
• Accounting Software: Solutions like Quickbooks ($20+/month) help track finances, taxes, inventory, and metrics. Stay financially organized.
• Business License Fees: Depending on location, acquiring a reseller permit/seller's license can cost $25-$150+ annually.
• Trademark Registration: Protecting your brand name and logos through USPTO trademark filing costs $225-$400+. Prevents infringement.

Don't underestimate legal, accounting, and compliance costs when budgeting for your Shopify venture. Working with professionals saves money in the long run by avoiding issues.

Customer Support and Analytical Costs

Providing excellent customer service and making data-driven decisions carries expenses like:

• Helpdesk Software: Shared inboxes via HelpScout start at $15/mo for email support. Live chat may cost $39+/mo extra.
• Customer Service Staff: In-house or outsourced support agents typically cost $15-$30/hour. Quality assistance increases satisfaction.
• Transactional Surveys: Apps like Qualaroo ($63+/mo) deploy surveys to gain customer insight. Feedback fuels improvement.
• Business Intelligence Tools: Software like Cyfe starts at $19/mo to analyze data for smarter decisions. Measure KPIs.
• Shopify Reports: Advanced Shopify unlocks detailed sales, inventory, customer, and other custom reports. Monitor metrics.

Aim to budget around 1-2% of revenue for customer service. And invest in business intelligence for data-backed decisions and processes. The dividends justify these expenditures.

Cost Management and Optimization Strategies

When managing the costs of operating a Shopify store, some helpful tips include:

• Start lean. Minimize initial outlays for non-essentials until your concept is validated.
• Review pricing tiers as you scale. Transition to plans like Advanced as volume increases.
• Negotiate discounts on custom work. Seek package deals from designers and developers.
• Allocate marketing budget strategically. Double down on highest ROI channels.
• Automate fulfillment processes. Reduce labor costs through automation apps.
• Analyze metrics diligently. Cut inefficient ad/marketing channels.
• Pay close attention to profit margins. Trim costs proactively to avoid losses.
• Grow slowly and sustainably. Curb excessive growth that inflates expenses.

With careful cost planning and optimization as you scale, your Shopify store can operate profitably. Sync expenses to revenue and avoid unmanaged bloat.