Yes, Shopify does take a cut of what you sell. Depending on the type of plan you have, the cost or percentage will be different. Some people might think this is too much, since they already pay for Shopify plans. Shopify, on the other hand, has to pay a lot to keep the websites of its subscribers running.
I’ll explain in detail how much Shopify charges per transaction in this article. I will also give you a simple way to figure out how to price your products so that you don’t lose money while running your business on Shopify.
Price of the Deal
Shopify has different kinds of sales percentages that it charges. The numbers depend on two factors. The first is your plan, and the second is the type of system you used to process payments.
Here are the percentages for payment by credit card:
- Basic: 2.9% of the cost of the product and shipping plus $0.30 USD.
- Shopify Takes 2.6% of the cost of the product and shipping plus $0.30 USD.
- Advanced: 2.4% of the cost of the product and shipping plus $0.30 USD.
A credit card payment is any kind of payment where a customer used their credit card without going through a third-party payment processor.
Here are the rates for credit card payments made in person:
Basic: 2.7% of the total cost of the product and shipping.
Shopify Takes 2.5% of the cost of the product and shipping.
Advanced –2.4% of the cost of the product and shipping is paid up front.
When we say “in-person credit card payments,” we mean that the sale took place between you and the customer in person. In this case, you took the customer’s credit card and used it on your Shopify POS.
Here are the rates for payments made through payment processors:
- Basic: 2.0% of the total cost of the product and shipping.
- Shopify Takes 1% of the cost of the product and shipping.
- Advanced –0.5% of the cost of the item and shipping is paid up front.
This is a type of payment where a payment processor was added. PayPal, 2Checkout, Skrill, and Stripe are all good examples. When a customer pays for the items in her shopping cart, the money comes from the customer to the payment processor, which then sends it to your account.
I just want to add that if you want to use Shopify’s POS system for in-person sales, you have to pay an extra fee every month. The Shopify POS Pro costs $89 each month.
The most common way for Shopify users to pay is through a third party like PayPal. This is because the money that the customer paid goes to their balances right away.
How should you set the prices for your goods?
Now that we know how much Shopify costs, we need to carefully figure out how much our products cost so that we don’t lose money.
Let’s say we buy a dress from AliExpress for $10 and sell it for $10. If shipping costs $5, then the total amount of money you have to pay is $15.
We need to add 40% to this amount as our profit margin. The 40% is not a magic number; it is a standard in the business world.
We can do the math from here: $15 times 40% is $6. This is the bare minimum amount of money we want to charge our customer.
Now, let’s say we’re paying for the Basic Shopify plan and using PayPal to make the payment. In this case, Shopify will take 2% of the price we sell something for. Shopify will charge us $0.42 if we sell the item for $21.
Since it’s not much, we can just add $1 to the $21. This should be enough to cover the charge for the transaction.
Of course, this formula doesn’t work in every store. Don’t forget to pay for your Shopify plan, your utilities, your employees, and other costs. You need to think about these things when deciding if you will sell the item for a profit of 40% or more.
Also, if you use a payment processor, that company will also charge you money based on how much money you got. For example, the normal cost of getting paid through PayPal is $2.9 plus $0.30.
Shopify will take 2%, or $0.42, from the customer’s payment of $21. You only have $20.58 left now. This is how much money is going to be sent to your PayPal account. Then PayPal will ask you for $0.90. You only have $19 left. So, $2 was pretty much used to pay both Shopify and PayPal’s transaction fees.
Can the Shopify fees be skipped?
No, you can’t get around these fees no matter how you charge people. This is the only thing you can skip if your Shopify store is just a “display” site where customers can’t buy anything. In this case, you will have to ask your customer to pay you in another way.
This way of doing business doesn’t work, which is a problem. People probably won’t believe you if you ask them to pay you outside of your website. For example, if you want them to send money through Western Union, the customer may start to think you are a scammer.
Should you use Shopify still? Yes, you should still do it. One of the safest platforms in the world is Shopify. On top of security, it has built an ecosystem of apps and other features that you won’t find anywhere else.
This is why Shopify makes you pay a fee for every transaction you make. The money they ask for helps them give you the best platform for selling online. The price you pay each month just covers the cost of maintaining your server and website.
Shopify is doing you a big favor, if you think about it. If you make your own app and run your own servers, it will cost you much more than $29 per month.