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How Much Does It Cost To Start A Shopify Store?

Starting a Shopify store can be expensive, with costs ranging from marketing, product sourcing, team costs and more. Knowing the costs of starting a business, including how much it will cost to launch an online store and maintain it can help you with your business plan.

In this article, I will explore the costs of starting a Shopify store, giving you an idea of what to expect in terms of the expenses needed to launch an online store with confidence.

Why You Should Consider Shopify For Your eCommerce Store

As you probably know, Shopify is a platform that allows anyone to create an ecommerce store without any technical skills. All you need is an idea for the kind of store you want to open, and it can be up in just minutes. With your new Shopify account, you'll get all the tools you need to start earning money online.

When you're just starting, speed of execution is essential, which is why Shopify offers plans for every business. Whether you have an e-commerce site in mind or are interested in building a website with a complimenting online storefront, there is a plan that you can make work for you.

What The Data Is Saying

What The Data Is Saying

According to Shopify, the cost to start a business (as observed by those in their first year of business using this platform) is estimated to be around $38,000.

Those that didn't use Shopify as their platform spent an average of $41,000.

The costs were divided as follows:

  • 10.3% on marketing costs
  • 18.8% on team costs
  • 10.5% on offline costs
  • 8.7% on shipping costs
  • 11% on operating costs
  • 31.6% on product costs
  • 9% on online costs

Let's dive deep into the key areas to consider when considering these various costs.

Operation Costs

Your Shopify membership will take care of most of the requirements when it comes to operations. There are four plans to choose from - the Basic plan, the Shopify plan, the Advanced Shopify, and the Shopify Plus plan.

Basic Shopify

Amongst other items, this plan includes the following features:

  • Online store: the basic plan allows Shopify store owners to open a single online shop.
  • Unlimited products: this means that there is no limit on the number of products your store can hold, and you're not restricted to a set number of product listings either.
  • Two staff member accounts: Shopify users get two staff members accounts, allowing them to add team members who will have access to all the features available in the Shopify app store.
  • 24/7 support: Shopify offers 24/7 live chat, phone and email technical support for its customers, so they can fix any issues as soon as they arise.
  • Up to 4 inventory locations: this means that your eCommerce business can have up to four warehouses (and therefore, inventory locations), allowing you to manage nationwide or worldwide shipping easily.
  • Manual order creation: Shopify uses manual order creation, which means users will need to check their orders manually before they are sent to the eCommerce store's fulfillment system.
  • Discount codes: Shopify stores can create coupons for discounts, making it easy for new customers to get started on their store.
  • Free SSL certificate: The SSL certificate is provided with this plan, which will encrypt any data users enter when purchasing your store.
  • Abandoned cart recovery: With the abandoned cart recovery feature, you'll be able to potentially recover any customers that add products to their carts but don't complete the checkout process.
  • Gift cards: This option allows Shopify store owners to create and manage gift cards for their online stores, so if someone wants to give another person they care about a gift card to spend on your shop, they can do this.
  • Shipping labels: You can print shipping labels and packing slips for your Shopify orders, so they're ready to go whenever it's time to send them out.
  • Fraud analysis: Shopify offers fraud analysis too, which helps ensure you don't get scammed by fake customers who are just looking to take your money.

Shopify

The mid-tiered plan has all the Basic's benefits with a few upgrades.

Amongst others, these include:

  • Five staff accounts: Shopify store owners can add and manage up to five people on the team. This is useful for larger stores with many daily operations to manage.
  • Up to 5 inventory locations: the five inventory location limit means that Shopify users will be able to oversee multi-locations more efficiently - such as different warehouses or stockists around the country (or even worldwide).
  • Lower online credit card rates: this plan offers lower rates for taking payments from customers via their credit cards.

Shopify Advanced

The highest tier plan has all features included in the above two plans and also includes:

  • Up to 15 staff members: with the highest number of staff accounts included in the Shopify plan, one can add team members to their business much more quickly. With higher numbers of staff members, you'll be able to add a more extensive range of roles within your eCommerce company - especially if you have a more extensive network or a retail store in addition to an online shop.
  • Up to 8 inventory locations: with up to eight different stock locations available for shipment, your Shopify users will be able to manage shipments from other parts of the world much more quickly. They won't be restricted to just one warehouse, which means they'll be able to streamline shipping and reduce any potential errors that may result from having multiple warehouses.
  • Advanced reports: more detailed reports are included with the Shopify Advanced plan, so your store users will be able to generate valuable data before making crucial business decisions.
  • The lowest costs when not using Shopify Payments: this feature allows you to take payments via credit cards at the cheapest possible rates (using alternatives to Shopify's own payment gateway). 
  • Duties and import taxes calculations: this feature lets you calculate duties and import taxes on your Shopify orders, which is especially useful if your store sells products from many different parts of the world. Your website must clearly state such costs to avoid customer confusion down the line.
  • Custom pricing by market: another way to make sure customers know exactly what they're buying is with this option - which allows a custom item price for each country a customer comes from. This is a common factor amongst larger eCommerce stores worldwide - such as eBay or Amazon - because it means prices will be competitive no matter where in the world someone is shopping from.

Shopify Plus

There is also the Shopify Plus Plan, which costs upwards of $2000 per month. 

This is the plan for super advanced users that require complex systems working in their business.

What Does It All Mean?

With these pricing points and features out of the way, let's elaborate on a few points.

Shopify payments are very competitive and offer the lowest costs per transaction for most businesses using credit cards to make online payments.

Shopify also has a good range of third-party apps and is considered easy to use by many - especially when compared with other eCommerce platforms like Magento or WooCommerce. This means that when you start using one of its three plans, you won't necessarily need to hire someone to help you get up and running.

One of the most significant benefits of Shopify is that it has good support available - via email, phone, and its customer support chat feature, which is always an advantage for business owners who are looking for quick answers. Shopify also provides many eCommerce tutorials online for both customers and store owners, which can be helpful when using this platform for the first time (or even if you're a long-time user).

Using the Shopify eCommerce platform, you're able to create an online shop that can be used for anything from small business startups to larger businesses with many employees. It's also straightforward for people using this platform for the first time, which is why it's popular amongst beginners.

Shopify eCommerce platform

The monthly fees for this platform are also typically a bit cheaper than you'd find with other eCommerce platforms, which is an advantage when you're using it for your business.

While some will say that a monthly subscription fee is a bit of a turn-off and that Shopify's options are not as good as some other eCommerce platforms, it is worth noting that this platform has been successful for many business owners worldwide. Also, when you start to generate money online, this business model and its subscription fees will more than pay for themselves.

Considering that the basic Shopify plan can get you on your way for less than a dollar a day, this option could be a good option if you're looking to start with a low investment. There is also a free 14-day trial to build up your store before launching it on all plans.

Marketing: Organic vs Paid

Having an online business is great because you can sell your products to anyone, anywhere in the world. But how do people find your online store, and what happens when they get there?

One of the biggest problems with selling online (whether it's on an eCommerce platform like Shopify or any other type of online drop-shipping store) is that you're going up against a lot of competition - which means it can be challenging to get your first sale.

You don't necessarily need a marketing degree to run an eCommerce business, but it's essential to learn how to market yourself if you want regular sales coming through the door. Organically driven marketing requires time and patience as well as trial and error, but you'll notice results as long as you keep at it.

While an eCommerce site can generally be promoted using traditional web-based marketing strategies, the platform itself should be social media-ready. This can save considerable time and effort for business owners, who won't have to move between different platforms they use.

With Shopify's built-in social media features, you'll be able to share posts directly from your store to various social networks - which will create links back to your site without the need for additional apps or services.

Your marketing budget will play a big part in how successful your online shop is, and you should try and work out how much you can afford to spend on each campaign. As always, it's wise to start small and then increase the budget as sales improve.

Creating posts, ads, and promotional ads with different offers will show you what works best for your audience - whether that's organic search (which is free but takes time) or paid advertisements (which is fast but requires a monetary output) such as Google Ads or Facebook Ads.

All in all, marketing efforts make or break eCommerce businesses since online stores aim to convert browsers into buyers through their advertising.

Sourcing Products

The success of an eCommerce website depends on the number of products available. Since online stores have a broader target market than brick-and-mortar businesses, they should also consider having the right products for their target market.

Sourcing products from suppliers worldwide is the best way for eCommerce business owners to tap into different markets and increase sales revenue. With many eCommerce platforms offering drop shipping services, you can take your pick from thousands of suppliers from all over the world.

To offer a wide range of products at competitive prices, eCommerce entrepreneurs should source not just for new items but also collect discontinued stock and clearance sale items from manufacturers and other retailers so they can resell these items at a lower cost without having to spend too much on acquiring them in the first place.

Finding high-quality and affordable manufacturers is essential for eCommerce businesses to keep growing. Retailers will have a regular supply of products, even when they need to expand their inventory, which allows for the proper growth.

The aim is to have a steady stream of revenue coming in rather than just one big payday, so it's important to source only the best quality wholesale manufacturers. These manufacturers are typically willing to offer bulk pricing discounts on top of free shipping services.

Shipping Costs

Business costs are one of the main factors determining whether an eCommerce store is profitable enough to keep running. Startups often lose money because they do not have a firm grasp of their actual expenses.

Shipping costs are some of the most significant expenses for online stores since these are usually built into product prices - including shipping fees, handling fees and insurance rates.

The heavier your shipments are, the more it will cost you to ship them out to customers who buy these items. One way to control your shipping costs is by using consolidated shipping services to send all your orders in one box or envelope instead of having individual packages shipped across different locations, increasing delivery times and cutting down profit margins.

Shipping Costs

Image Credit: http://community.shopify.com

Your sales channels also play a significant role in determining your shipping revenue for each transaction. For example, eCommerce websites that ship products directly to customers will have lower shipping costs than marketplaces like eBay and Amazon.

Another thing to keep in mind is that if you are selling bulky items with high product weights, you should consider the extra weight of packaging during transportation so there won't be too much wastage when it comes time to send out boxes of goods.

Free delivery services for businesses that sell digital information products such as E-books or membership subscriptions will allow shoppers to access their purchases immediately, which is a win-win situation for everyone involved. 

If it makes sense to sell these types of products, the profits can offset some of the costs associated with other products you sell. 

Overall, a Shopify business has lower startup costs, high-profit margins, and fewer employees than a retail store, making it easier to scale short and long-term.

Team Costs, Including Customer Support

Customer support is an integral part of every e-commerce business since customers expect assistance on any issues they encounter before, during and after their purchase.

Not giving your customers the best avenue to get in touch regarding any questions they have will only result in delayed transactions, and you'll also end up losing potential sales.

To ensure that your Shopify store offers the best services for your customers, consider hiring at least one person to handle customer support - even if it's just a part-time job. You can continually expand this team once you start getting more orders.

Another team member could include a dedicated project manager who can handle your eCommerce business strategies. The person will also keep the rest of the team updated on new product trends, changes in customer behavior patterns and feedback on their shopping experience on your Shopify website.

The capacity of your eCommerce store to keep expanding without too many bumps along the way depends entirely on how well you manage your resources, which includes human capital. By hiring more members for your support staff and assigning specific project roles, you'll be able to build a more significant business with tremendous potential to generate revenue while reducing turnaround times on growing demand.

Hiring a Shopify Expert is another way to get help with your eCommerce business and make it grow faster than you could on your own.

They will be able to advise you on which payment gateways offer the best deal for your store's transaction volume and whether there are any hidden fees in the contract that could be hurting your bottom line. A professional web designer can also ensure that your site has a uniform style that meshes well with all of its features, so you don't have to hire additional freelancers when these parts need updating in the future.

While these costs are not something you need to think about from day one, it helps to know that these options are there when it's time to scale up.

Reputation Cost

Reputation costs refer to the impact that negative customer experiences may have on how shoppers perceive the quality of your products and services.

This means that if you have a store with five stars, 90% positive reviews, and just one person writes in to say they were unhappy with their purchase, it won't significantly affect whether or not people buy from you again. Compare this to someone who has three stars and a ton of dissatisfied customers ranting about their bad experience online - in this case, the business owner should do something to help with the store's reputation.

Getting more positive feedback for your Shopify store is helpful, especially if you plan to use social media platforms - some of them automatically filter out search results based on consumer behavior patterns and a low star rating. Hence, stores with higher review scores are more likely to show up.

Other Costs, Including Taxes And Accounting

Business owners and eCommerce brands incur various other costs in addition to the ones outlined above.

For example, you may need to pay for accounting software or file taxes every quarter depending on your local tax laws. When running a small business, these are unavoidable expenses, so it's important to factor them into your financial projections when you start building a Shopify store.

Other Costs, Including Taxes And Accounting

Image Credit: http://ledgergurus.com

Having everything set up correctly from the beginning will lead to greater peace of mind, especially when your big break comes and it's time to scale up.

Conclusion

To make a Shopify store work, you need to look at all costs associated with it, including hard startup costs, soft costs that include time spent building relationships with suppliers etc., infrastructure & support costs that have resources required to manage website traffic and keep an eCommerce business growing.

While some unexpected costs like reputation damage can be harder to estimate, planning will help you factor everything in so that your business is protected from both foreseen and some unforeseen risks.

The great thing about Shopify is that you can get started without much upfront cost and scale to different levels of eCommerce businesses depending on your objectives.

Further reading on MikeVestil.com: Want to compare Shopify and another commonly used eCommerce platform? Here’s my review on Shopify vs. Wix.

 In addition, here’s a case study of someone who made $500,000 in his first five months on Shopify.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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