Shopify holds the lion’s share of the eCommerce platform market. Ecommerce platforms are websites that provide hosting and design services to businesses looking to establish online stores. They have unique features and are often more favorable than Shopify.
But then again, these alternative eCommerce platforms exist and thrive because market giants like Shopify are too pricey for all businesses. This article looks closely at the charges that come together to make up your Shopify bill and the factors that may drive it up or bring it down.
If you are looking for a Shopify pricing calculator, this article will give you all the information you need to gauge your expenditures once you set up shop on Shopify.
Let’s start!
How are Shopify Fees Calculated?
When you sign up on Shopify to begin creating your online store, you get the option to try the service for free for 14 days or pick one of three pricing plans immediately.
The cheapest plan is Shopify Basic. It costs $29 a month to be a Shopify Basic user. Shopify Basic users get almost all the selling ability but limited calculation and store management services. Unlimited product range abandoned cart recovery, 24/7 support from Shopify staff is included. Management of taxes, shipping rates, and automated store functions are some of the abilities missing in Shopify Basic.
Sourse: Shopify
Shopify’s Standard plan costs $79 a month and has several useful additions to the Basic plan. For instance, your store can perform actions automatically or respond to a customer. Shopify Standard users also get up to 88% discounts on shipping fees using DHL, UPS, and USPS. All Shopify pricing calculator
The premium option is Shopify Advanced, and Shopify charges $299 monthly. Shopify Advanced is clearly meant to accommodate large-scale corporate entities in their sales and store management.
For instance, Shopify Advanced users can manage up to 15 different physical stores besides their online store. Furthermore, the plan gets you tax, duty, calculators, shipping rates, and a product pricing calculator.
Source: Shopify
Sounds simple enough, right? Well, there is a bit of a catch. The more expensive your plan is, the less you pay Shopify per sale, which reduces your Shopify pricing calculator fees. Read the section below to know more about the Shopify pricing calculator.
What are Transaction Fees?
Transaction fees are a form of commission that Shopify pricing calculator and some other eCommerce platforms charge you. Every time a customer pays you for a product or service, Shopify takes a cut. Transaction fees are not a fixed amount of money.
Instead, they are calculated separately for each transaction and are listed as percentages on the Shopify website. However, you have to pay 30 cents on top of whatever the percentage equals. This is a must-know for any Shopify pricing calculator.
However, some users might be able to avoid these charges by using Shopify Payments as their primary payment channel and processor.
What are Shopify Payments?
When you sign up on Shopify, Shopify pay is already your default payment processor. Shopify pay is powered by Stripe and is a great tool that lets you receive payments from all major credit card services. And since it was created especially for Shopify merchants, Shopify Payments offers can integrate the most fittingly with websites that run on Shopify.
The only downside is that Shopify Payment is not globally accessible as of yet. Shopify payment is not available for use if you are operating out of anywhere except the following countries:
- The USA;
- The UK;
- Canada;
- Singapore;
- Spain;
- New Zealand;
- Australia;
- Hong Kong;
- Japan;
- Ireland;
- Germany.
Shopify Payments has also been known to withhold funds belonging to Shopify merchants for several reasons. The funds are usually recovered soon, but it is an overwhelming cause for anxiety if your earnings are suddenly not accessible.
Source: Shopify
Shopify pricing calculator explains it as such: credit card companies charge fees for each transaction that Shopify pays, with your money, on your behalf. If you use their own payment processor, they don’t have to pay any third party a service charge.
How Much Does Shopify Charge Per Sale?
If you choose not to use Shopify Payments as the payment processor for your store, the Shopify pricing calculator charges you a fraction of your earnings.
As mentioned earlier, Shopify transaction fees vary with the pricing plan you choose for your website. A Shopify Basic user has to pay 2%.9 of whatever they earn for each transaction, plus 30 cents. The Shopify Standard plan requires you to pay 2.6% of the sale plus 30 cents per transaction. Lastly, the Shopify Advanced plan entails transaction fees of 2.4% plus 30 cents.
Shopify does not outright claim that this is commission, nor do they claim that these funds are to pay the credit card companies for their processing fees. But, understandably, they don’t agree to pay credit card companies for services you and your business are purchasing.
Should I be Wary of Hidden Costs While Using Shopify?
Hidden costs are a common phenomenon in many areas of commerce these days. Most often, service users are not legal experts or accountants who can identify where they are being charged discreetly and unfairly. These people become victims of corporate activity that is unethical but still technically legal since they are made to consent to it one way or another.
Source: Shopify
While there are no “hidden” costs involved in using Shopify, you will need to be careful getting new themes or apps for your website, as these can be paid and free. For the Shopify pricing calculator, it is important to know that transaction fees, shipping costs, premium apps and themes, and a custom domain name are the main factors that might drag down your profits.
How to cut costs and reduce business expenses
Looking to maximize profits?
Here are 14 ways of reducing and cutting costs for your store and being profitable.
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Reduce costs of printing
With the world moving towards eco-friendly and more cost-efficient options, here are a few low-cost options:
- Advertisement in local magazines: Just pay a local magazine to advertise your business, instead of spending separately on the packaging, printing, etc.
- QR Codes: Provide scans and redirect them to your e-commerce website for more information.
- Inventory Management Software: No need for manual checklists as you can electronically record your inventory.
- Emailing Invoice: Through online invoices, they have fewer chances to lose them than giving them a printed sale invoice.
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Start an online store
Many people shifted to using multiple channels to operate their business and provide their customers with wider options to choose from. It is important to have an online store, especially since COVID-19 impacted the presence of brick-and-mortar stores. This saves costs and provides you with other channels to explore.
Source: Shopify
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Open a small physical store (brick and mortar)
Having a small physical store does help and allows customers to check the product in person before they purchase it from the Shopify website.
Source: Shopify
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Benefit from existing business relationships
Been in business with the same supplier or vendor since you started? This long-term relationship helps you get better rates on a larger number of orders. Want to avoid a longer chain of purchasing through a middleman? Be in direct contact with the manufacturer.
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Cut unnecessary expenses after auditing
While it’s inevitable to avoid all forms of operational expenses, it’s best if you can evaluate and see which expenses you can cut. It may be moving to full cash payments instead of accepting card payments, reducing some subscriptions, and saving on maintenance and other administration-related costs.
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Focus mainly on customer retention over acquisition
The financial spent on acquiring is always greater than on retaining a customer. Focus on customer retention and spend time focusing on them so they keep purchasing from you. You can create different milestone achievements for yourself, get constant feedback, and do other things more customer-focused.
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Reduce all sorts of travel expenses
Need to cut more costs? Don’t focus on expensive trips and accommodations, but try to go for more economical options. Moreover, don't travel altogether if you don’t need to travel for business purposes.
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Re-evaluate employee perks and benefits
Studies show how important it is for employee retention to provide them with perks and benefits, but you don’t need to give them a crazy percentage of benefits. Re-evaluate the benefits you originally gave your employees and negotiate the percentages to save up costs.
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Automate all repetitive tasks
Automating business processes always helps increase profitability and reduces overall costs and workload. This way, the existing employees have more time on hand to contribute to different ideas for the growth of your business. Multiple tasks can be automated for your ease and that of your employees.
Source: Shopify
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Rent out your retail space
With the high amounts of average monthly rent, you can look into renting out your shop space for different retail events or even set up a small corner for other businesses to set up their stall and profit from them as well. You can look into making your business space a co-working space or a community space for people to rent out for different events and meetings.
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Evaluate marketing options
While it is important to focus on marketing if you have both a brick-and-mortar and an online store, it's best if you can focus on specific marketing streams, consider the overall cost of investing and then go with minimal cost options with a long-term plan.
Source: Shopify
These plans can include the following:
- Social Commerce: Create an Instagram or Facebook shop and connect it to your store, so people can check what you offer on these platforms and simply click to purchase directly.
- Word of mouth marketing: If you have loyal, long-term customers, it is best to give them different incentives if they refer to any family member or friend. This will help in both customer acquisition and customer retention.
- Scent Marketing: A big factor influencing customers to shop in your store is visual marketing and smell. This provides customers with a soothing experience while shopping.
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Outsource time taking tasks
Outsourcing in all cases should be one of the major steps to control expenses and cut overall business costs. You can outsource a major chunk of your business tasks which can include the following:
- Marketing & Advertisement: Hire an agency to do this instead of exploring and exhausting all forms of advertising on your end.
- Order Fulfilment: You can bring a third party on board to do the logistics for your business and have your online orders shipped directly through them.
- Administrative Tasks: You can outsource any accountant to keep track of your accounts and help you manage your business's numbers.
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Reduce operational hours
The hours that you are open mean different expenses for your physical store. You can reduce the operational hours for your business and save overall expenses.
Instead of spending more time and effort on your brick-and-mortar store, you can focus your time and efforts on your e-commerce website and just keep the physical store for checking out products.
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Reduce overall shipping cost
There are always third-party contractors who can do shipping for you, but if you want to manage it on your end, you need to focus on the following for cost reduction:
- One box type in multiple ways: As an eCommerce retailer, focus on less expensive options and have a box you can resize multiple ways.
- Reduce packaging sizes: Reshaping and resizing help in saving per unit cost price per shipping box. This additional cost can go back into the business.
- Negotiating shipping rates with partners: While there is always a standard on-ground delivery fee, you can always negotiate with them in your favor and opt for an on-ground instead of a freight rate with FedEx Smartpost. This is only if delivery speed doesn’t affect your overall business.
- Use poly mailers or shipping bags: A great alternative to heavy cardboard boxes and much easier to store, this is still a high-quality alternative and a big cost reduction for your business.
Key Takeaway
While you might find the Shopify pricing calculator as a tool on the internet, it is safer to know what calculations they are making on the back end. Your business deserves the best without straining its budget, which is why you need to know everything an average Shopify pricing calculator does.
Tags: pricing calculator, shopify calculator, shopify pricing calculator
