Revenue Model of Shopify | Complete Guide

Introduction

 Shopify is a famous and easy-to-use website builder and had total revenue of $2,929.5 million in 2020. Also, Shopify sales from every corner of the world are about $135+ billion. Merchants and sellers find it easy to build websites with the help of Shopify. They can set up their eCommerce stores with any prior knowledge of coding. Another reason they use Shopify is the conversion rates that Shopify has: 4.29 % via email, 3.04% via search, 2.93% direct, and 1.81% via social. Even though everyone knows how popular Shopify is, why its uses are, how to use it and why to use it, not everyone knows how the revenue model of Shopify works. Here, we tell you the various ways in which Shopify generates money. Or, in simpler terms, the Revenue Model of Shopify! 

Shopify: What is Shopify? 

Shopify is a top-rated online service that helps merchants and sellers with their eCommerce stores. It is a website builder that takes care of the following aspects of building an online eCommerce store. 

1.web-hosting 

2.domain name purchases 

3.Setting up online stores 

Shopify has a simple and easy-to-use interface that lets merchants and sellers build professional stores using the various necessary tools. Sellers usually go for Shopify as this website builder does not require them to be conversant in technical knowledge or coding. Moreover, users can customize their websites to their liking without any coding knowledge. Another best thing about Shopify is that it furnishes users with a Shopping cart Service that includes its shipping suite called Shopify Shipping. This shipping suite equips sellers with calculated rates and options to choose one shipping carrier from the available options. In addition, Shopify Shipping eliminates dependency on third-party services by allowing the printing of labels from within the offered suite. 

Shopify: How does Shopify Work?

A lot of you might wonder how to use this magical platform. You have your answer here in this section. The first step to using Shopify is to sign up for a 14-day trial period. This trial is free and lets you explore the cloud-based system for multiple users. This solution is scalable, reliable, secure, and delivers high performance. The free trial sign-up requires users to type in their details, such as contact numbers, and answer a few business-related questions displayed on the screen. Users do not need to enter their card data. Once you complete this step, you can start enjoying your free trial. During this free trial, you get an opportunity to explore its features, such as marketing campaigns, store designs, and applications. This observation gives you insight into what is required to include in this venture. As the free trial ends, users can select a plan that suits their purpose, choose a standard layout for their eCommerce stores, and include all products. Apart from choosing a plan, users also choose extensions and applications that they would like to add to their user plan. There are over 15000 options from which users can pick their selections.

Shopify: Who are Shopify’s Key partners?

Shopify Key partners 1

Investors & Integrators Business investors and VCs are the primary sources of help that keep the company thriving. Shopify also lets various other platforms and sites incorporate Shopify into their services seamlessly; it is one of the primary areas of Shopify’s focus. For Instance, Shopify has integrated with Facebook and Amazon. This integration enables users to list their products on these sites with just a few clicks and no hassles. 

Shopify Key partners #2

 Blogs & Acquisitions Shopify also has blogs. These blogs educate people on using the platform to commence their eCommerce site. Shopify also depends on its primary acquisitions of companies like Oberlo and Handshake, and a few others. Oberlo happens to be Shopify’s crucial acquisition and partner as it aids in integrating drop-shipping services into Shopify.

Shopify Key partners #3

 Payment Gateways Users can use Shopify’s payment gateways or other payment gateway options offered. We list some of the payment gateways that Shopify supports below: 

1.PayPal 

2.Amazon Pay 

3.Worldpay 

4.Stripe

Shopify: What are the key features of Shopify?

Shopify Features 1

Blogging Shopify has a blogging feature that lets users develop their websites. A user can choose themes, write articles and begin discussions. Besides this, Shopify provides hosting. Thus, Shopify handles all technical issues related to your online shop. 

Shopify Features 2

Dropshipping Those interested in Dropshipping can use the platform to build their websites. Shopify has more than 800000 online stores, and they are made using this application. 

Shopify Features 3

Online Store Using Shopify means users get their own digitally controlled store to brand and market. Users also get help brand their products and accept a wide range of payment methods from their consumers. Anyone who wants to build an online store can use it by signing up for plans that start at $9 per month with a 14-day free trial. 

Shopify Features 4

POS POS means Point of Service. The POS features let users configure their online stores to make their stores stand out from the crowd. 

Shopify Features 5

Customer Service What distinguishes Shopify from its competitors is its exceptional Customer Service that helps users. Shopify has an extensive database of Frequently Asked Questions and offers email and chat support. Besides these ways of helping, Shopify also has an informative agent who answers your queries over phone calls. Let us now read about the revenue model of Shopify. 

The Revenue Model of Shopify

 Shopify Revenue Model 1

 Shopify Subscriptions The revenue Model of Shopify involves generating money via Subscriptions. There are three basic subscription plans. Users need to pay for them every month. These three subscription plans are as follows: 

1.Basic Shopify

Users pay $29 per month and get essential features and services. These features and benefits are sufficient for users to start and maintain their eCommerce stores. 

2.Shopify

Users pay $79 per month for this user plan. The feature provides better Point of Sale service features. 

3.Advanced Shopify

Users spend $299 per month to use Advanced Shopify. This plan gives users the lowest fee per transaction among these three user subscription plans. The user plans do not end here. Two more subscription plans prop the revenue model of Shopify. 

1.Shopify Plus

 This subscription plan targets high-volume traders and businesses. 

2.Shopify Lite

 The user needs to spend $9 per month and is basically for those who intend to sell their products on Facebook. 

Shopify Revenue Model 2

Merchant Solutions Fee The second thing that contributes to the revenue model of Shopify is Merchant Solutions Fee. This website builder has a payment gateway that acts as a significant source of revenue for it. We list the different fees that a user needs to pay for using Shopify Payments below. 1.If a user has signed up for BASIC SHOPIFY, he must pay 2.9% + 30 cents for every payment transaction via Shopify Payments. 2.If a user has opted for SHOPIFY, he must pay 2.6% + 30 cents for every payment transaction via Shopify Payments. 3.If a user has chosen ADVANCED SHOPIFY, he must pay 2.4% + 30 cents for every payment transaction via Shopify Payments. 

Shopify Revenue Model 3

 Payment Gateways Fee The third way in which Shopify generates money is the Payment Gateways Fee. Thus, the revenue model of Shopify generates money by charging a fee for using payment gateways that Shopify does not offer. So, if users use Payment Gateways other than what Shopify offers, they need to pay a fee as follows: 1.If a user has opted for BASIC SHOPIFY, Shopify makes them pay 2.0% for every transaction via other payment gateways. 2.If a user has opted for SHOPIFY, Shopify makes them pay 1.0% for every transaction via other payment gateways. 3.If a user has opted for ADVANCED SHOPIFY, Shopify makes them pay 0.5% for every transaction via other payment gateways. 

Shopify Revenue Model 4

Point of Sale Service (POS) Shopify offers POS (Point of Sale Software Services) that assists merchants in tracking sales and transactions taking place in their physical stores. Also, users get unified analytics that merges in-store and online store sales. The Point of Sale Software Services features on offer may vary as per the subscription plan. 

Shopify Revenue Model 5

Miscellaneous The last method of revenue generation that contributes to the revenue model of Shopify is Miscellaneous. Shopify earns money via its theme store, numerous add-ons, and integration to other sites for fees. People go for theme stores as it lets users customize their websites, thus, making them stand out from the crowd. Theme creators will obtain 70 percent of the sale price, and Shopify will keep 30 percent. 

Conclusion

 Online stores are the new normal, and people shop more online than offline. Merchants worldwide use website builders to ease their work and create a professional-looking eCommerce store that attracts buyers to their products. Shopify is also one tool that helps merchants increase their sales via its numerous features and subscription plans. Although Shopify aids one to sell more, the features and add-ons require one to pay more, which might be a matter of concern for some. If you are a merchant looking for some help to configure your eCommerce store, you can blindly trust AppsRhino to help you. As an entrepreneur who has sought inspiration from Shopify and looking to launch your Website builder. You can reach out to us to build a website builder that can beat Shopify! Contact AppsRhino today!

Frequently Asked Questions (FAQs)

Can you explain the revenue model of Shopify?

Shopify's revenue model primarily revolves around subscription fees paid by its merchants. The company offers different pricing plans based on the size and needs of the business, and these plans generate recurring revenue for Shopify. Additionally, Shopify also earns revenue through transaction fees from its payment gateway, Shopify Payments, which is an optional feature for merchants.

How does Shopify earn revenue from subscriptions?

Shopify earns revenue from subscriptions by offering various pricing plans to its merchants. These plans provide different levels of features, scalability, and support, allowing businesses to choose the best fit for their requirements. Shopify's revenue is generated on a recurring basis through monthly subscription fees paid by merchants using the platform.

What are transaction fees in Shopify?

Transaction fees in Shopify refer to fees charged when merchants use external payment gateways instead of Shopify Payments. While using Shopify Payments is optional, if a merchant opts to use a different payment gateway, Shopify charges a transaction fee on each sale made through that gateway. Transaction fees help Shopify generate additional revenue on top of its subscription fees.

Does Shopify earn revenue from app sales?

Yes, Shopify earns revenue through the Shopify App Store, where merchants can download various apps and add-ons to enhance their online stores. Shopify takes a revenue share from app developers, usually 20%, on the paid apps sold on the platform. This allows Shopify to earn additional income based on the popularity and usage of these apps.

Does Shopify generate revenue through additional services?

Yes, Shopify offers additional services that merchants can opt for to enhance their online stores. These services may include domain registration, website design services, and consulting services. By offering these supplementary services, Shopify can generate extra revenue beyond its core subscription and transaction fees.