Don’t be fooled by Shopify websites
Ok – right tool right job. This is not an anti-Shopify rant or anything like that – in fact, if you are a small business – by all means go ahead and sign up to Shopify.
However, do it with your eyes open… I’ll be straight with you, many a time I have been asked what is recommended Adwords or SEO, the problem is if I recommend Adwords – Google gets the money, but if I recommend SEO, I get the money. The same is true with Shopify. If I recommend Shopify – they get your money, whereas if I tell you I can make the website some other way, I get the money. It’s a small but important consideration if you are looking to support a local business or if you are funding the global giants some of these tech companies have become.
That’s an aside… there is a clear advantage with Shopify and that is it spreads the costs of your website investment over time… You pay $29 (£25) month compared to £4000 upfront… Short term it’s an attractive proposition.
Doing the Maths
But do the Maths… if you are a small business and perhaps you choose WordPress as your platform for the website… you might spend £1800 with us on developing the website and getting it online… a bit more if you wanted it to be snazzy… £1800 is 70 months or 6 years at £25 ($29) per month. Assuming that all other costs are more or less the same…
6 Years is not an uncommon life-span for a website, we have many a lot older, and these days, for sure, Website tend to evolve rather than renew.
As a small business you might assume Shopify takes between 5 and 6 years before it becomes more expensive than a self hosted website.
If you are a bigger business, however, the maths starts to change… Assuming you need the $79 Shopify Plan (approx £65) and your choice is Shopify or an e-Commerce platform like Magento that might cost £4500 to set up. You are looking at 5 years or less before Shopify becomes more expensive.
These calculations are all taken in a broad context as costs will vary greatly, what I can say though without a problem is that the average lifespan of one of our websites is definitely longer than 6 years… probably more like 9 or 10 and indeed the websites we build today are more like to evolve than be scrapped and restarted.
The Extras
Having limited the comparison to just the most basic elements – now consider the ‘extras’, for Shopify these are the Apps, for WordPress, Plugins and for Magento, as an example, Extensions.
Shopify Apps vary in prices from a Google Shopping Feed for about $5 per month to maybe a Store Locator App for $50, the average price is more like $20-30 per month. Let’s call it $20 for comparion.
WordPress Plugins tend to be free but Pro versions of WooCommerce and some Payment processors may be $100 per year, or prehaps £10 per month… we could easily say $10 for comparsion… Also you’d probably need fewer of them than Shopify.
Magento is paid upfront as before a pricer platform but you’d expect that as hopefully, the volumes of orders going through would be significantly higher… most extensions are around $99-299 per extension… you might spend $200 for comparison, but these costs are usually one-off, there is no recurring cost associated.
So when comparing Shopify to other platforms we’re looking at a 10-12 month payback time period and this is where it does get a bit more interesting. If you require Apps and Plugins for your e-commerce website on Shopify – it can significantly add to your long term investment. Just three Apps could cost an additional £600 per year.
Payment Processors
Finally a quick look at Payment Processors… if you run an e-commerce website then you will want to accept credit cards. Shopify makes this easy, but it’s a flat rate of 2.2% +0.20p for each transaction.
If your average order value is £20 – then that’s 0.64 per transactions… Paypal charges 2.9%, but no 20p which comes to £0.58 per transactions, Stripe charge 1.4% +0.20p per transaction making it £0.48… 25% cheaper. The issue is exasperated the higher value of the orders. In short there are far better value option out there.
Shopify does allow you to use Paypal and other payment providers, but still bills you 1% of the transaction value on top. In short, you pay.
Conclusion
Shopify is good, do not get me wrong… many many headaches are solved through it’s simple and intuitive interface, the speed of creating a website, and the lack of upfront investment.
We recommend Shopify to all our small e-commerce clients, as a rule of thumb with revenues under about £2000 per month… But don’t get caught out, eyes wide open, you need to know what you’re getting into.
Forgetting Themes, Designs, Marketing, Operations, Fulfilment and all the rest, this Post just takes a small look at the long term financial considerations of Shopify… you will utlimately pay more for having a service that is so intuitive.
In our eyes, for a proper full-time e-commerce business you are better off working closely with a local company of dedicated website developers than giving you money to global catch-all businesses, that ultimately will have no loyalty to you and Shopify websites will actually cost more.
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