Executive Summary
Analysis on Merchant data shows that Shopify’s direct Fees operated in a range between 3% to 5% of Sales once all platform costs are factored in with a Median Average of 3.5%. The largest driver of these costs is Shopify Payments, which accounts for 73% of Shopify’s revenues where International Transaction Fees can exceed 6%.
Why Calculating Shopify's Real Cost Proved Complex
While Shopify’s entry-level plans are inexpensive, determining the true cost is far more complex. To uncover the true cost all ‘additional costs’ must be tracked down and accounted for.
To conduct this analysis, we studied the Shopify site, carried out extensive online research and spoke to Shopify Agencies. Agencies we spoke to had no accurate understanding of the end cost of Shopify to the Merchant. So to create this definitive guide we had to undertake a forensic analysis of actual Shopify merchant transaction data.
We are a competitor so we studied real world Shopify costs extensively and fairly. Anyone can repeat our methodology - if we have overlooked any details or if you can provide further insights - we welcome your feedback. Please feel free to contact us.
Shopify Fees Averaged at 3.5% of Sales - £35,000 per Million
A Note on Uncovering Shopify’s Full Cost Structure
It is not easy to find an accurate real-world breakdown of Shopify Transaction Fees. Shopify quotes a base rate, but unless you examine every single transaction it is difficult to know the "Actual Rate".
The costs we analysed were for UK and Irish SME Merchants in a range from 250K to £8M. These Merchants had NOT understood their Shopify Fees themselves. Shopify Payouts arrived as a "credit" in their bank account and their Accounts Department never saw a “Shopify Cost” for card processing fees. “Payouts” meant Shopify Processing costs were a missing line item in the P&L.
Shopify’s true costs worked out to be HIGHER than the Merchant realised. The exact Fee% varied by individual Merchant. The bottom line is that Shopify Fees for Plans, Payments and Apps averages out at 3.5% of a Merchant Sales. Why? Read on…
GMV means Shopify takes Fees on All Sales - that means Returned, Cancelled & even Fraudulent Orders
The Implications of Shopify's "GMV based Fees"
Shopify calculates its transaction fees based on “GMV”. GMV stands for "Gross Merchandise Value". GMV sums up all gross sales including returns, cancelled, fraud and tax charges - essentially the total transactions of the Merchant.
The issue with Shopify charging based on GMV for Merchants is that the unrecoverable Shopify Fee% applies to EVERY order even if the order is returned or cancelled. Returns in fashion average at 30% - so GMV in that case is 30% higher than "Actual Merchant Sales".
We observed cases where a Merchant paid 6.3% in Shopify Fees on an international order that was later returned. Not only was the payment processing fee unrecoverable, but the returned item was damaged and unsellable. Shopify GMV means Merchants significantly OVERPAY relative to their realised revenues.
Shopify International Fees can track above 6%
Merchants Underestimated Shopify's Card Processing Costs
GMV can elevate Fee% by up to to 30% or more above actual sales - however GMV is part of the reason for the incomplete understanding of Shopify Costs.
Merchants had NOT examined the difference in their Online Sales value and what they received from Shopify in “Payouts”. Shopify has deducted their Payment Processing Fees at source - so these Fees never appeared on an invoice. Merchants see a "Shopify Payout" credit into their Bank but do NOT see the associated cost.
Shopify has high card processing fees - and these make up a reported 73% of Shopify PLC revenues. These Fees are deducted from “Payouts” and are NEVER refundable. International processing fees can track above 6% and can be UNNOTICED. Payouts is the key area to study to properly understand the TRUE COST of Shopify. Shopify also NEVER refunds Payment Fees whereas most Card Processors do.
Shopify PLC Generates 73% of its Fees from Card Processing.
Payouts is the KEY AREA TO STUDY to understand Shopify Fees.
Card Processing Rates can be 700% above GlobalPay Rates.
Shopify’s Five Cost Groups and 8+ Direct Charges
To get Shopify Cost terminology correct - the 5 MAIN SHOPIFY ONGOING COST GROUPS are
- Shopify Plan
- Shopify Payments (where the cost is subtracted from Payouts)
- Shopify App Fees
- Shopify 3rd Party Transaction Fees (Includes Gift Vouchers and Alternative Payment Methods)
- Other Fees - this includes other fees such as Shopify Tax (0.25%) and the Shopify Duties Calculator (0.5%-1.0%).
These FIVE ONGOING COST GROUPS are either deducted from Sales in Shopify Payouts OR charged as part of the Shopify Plan Billing - or more rarely for Apps paid directly to the App creator.
The 5 Cost groups can mean there are potentially 8+ ONGOING SHOPIFY PRODUCT RELATED CHARGES - Direct Shopify costs come from
- Shopify Plans
- Shopify Payments Card Processing Fees
- Shopify Payments Currency Spot Rate Conversion Fees
- Shopify Currency Charge for Payouts in different currency
- Shopify App Fees
- Shopify Tax (if used)
- 3rd Party Transaction Fees (if used)
- Duties Calculator (if used)
Eight fees can easily become 10+ or more. In the analysis below we have not focused on SERVICE COSTS for (9) Shopify Development and (10) Agency Fees. For simplicity we have analysed Shopify Payment, Shopify Plan & App direct costs.
Does eCommerce depend on a Merchant not understanding their P&L?
A Forensic Breakdown of Our Findings
The issue with Shopify charging based on GMV for Merchants is that their Fee% applies to all orders whether they get returned or cancelled. So GMV can be dramatically LARGER than "Real Merchant Revenues" after tax, returns and even fraud. If a clothing retailer has high returns of 30% - GMV is then 30% higher than Gross Sales (36% higher than domestic Net Sales).
GMV can significantly inflate the true cost of Shopify to certain Merchants.
It is the ongoing Opex Fees that are of most concern to Merchants and have been studied in this analysis. Shopify Plans are low cost - but the main costs come from Shopify Payments and the add ons. We have used Shopify Payments costs to model the overall % Cost of a Sale of Shopify to Merchants. The fee could be considered as "Shopify Plan + Shopify Payments Card Processing Fees + App Fees". We have used Shopify Advanced Plan rates as a benchmark guide.
Shopify Plan Fees are low to entice Merchants onto the Shopify Platform. Monthly Plan Fees for Shopify Advanced are currently listed as £259 a month when billed Yearly. Shopify Plus Plan comes in at circa £24K a year. While these costs are listed as monthly they are often billed yearly. Shopify Fees can escalate further if different store fronts are used for different markets. Shopify Plus has additional costs per storefront which can lead to operational overheads and duplicate App fees and Plan Fees. We have ignored these in the model and Shopify Plan Fees are generally low. The rates change periodically and current rates can be found here.
Shopify Payments is separate from Shopify and is domiciled in Ireland. Shopify website quotes a "Card Rates Starting at %" which is the LOWEST fee for a Card Scheme. Payments START at these rates for the lowest card type and go up. Shopify Payments are due on All Transactions. GMV for Shopify means that processing fees are due on all sales even if an item is returned or cancelled and even if the transaction is fraudulent. This rule applies to Domestic and International Rates. Unlike most Payment Processors Shopify NEVER refunds any fees on refunded orders.
On Shopify Advanced Plan, Shopify Domestic Payments "Start at 1.5%" on sales for the cheapest Card Scheme. Data showed payment rates were above 1.5% and included a 25p per Sale charge. Payment methods, such as a business credit card, were significantly higher. Combining the Shopify Payments Card Fee and the 25p charge and other payment methods - generally puts rates to circa 2.4%+ for Domestic sales. The fee is DEDUCTED off Shopify Payouts.
For International transactions Shopify Payments Card Rates again varied by Card Scheme and started above Shopify quoted online "From Rates". This "From Rates" language is important when understanding Shopify's International Fees. International sales have a 25p transaction fee applied to all transactions. A foreign card payment then incurs a series of costs:
- 25p Fee
- 2.7%+ Variable Card Processing Fee Average for Foreign Card Scheme
- Spot Rate Currency Conversion charge to change the currency to the Merchants Payout Currency
- 2% Conversion Charge to process the Payout into Merchant Currency
- A Shop Pay / 3rd Party Transaction Charge (if used)
- A 1% Charge if using a Duties Calculator (if used)
- A 0.25% Shopify Tax Charge (if used)
- Ireland also has an additional 23% VAT charge applied to the Card Processing Fee
All of the above fees are charged on Shopify GMV and remain non-refundable. A Merchant can lose an unrecoverable 5%+ on a returned international sale. As Shopify Payments is based in Ireland - Irish Merchants have a 23% VAT applied to the Card Processing Fee at source. International Sales on Shopify leads to high % fees. Irish International Fees can come in at 6.0%+. The total international combined fee for Shopify international Payments was generally circa 5%. Merchants viewed these Fees as costly when scaling internationally.
Shopify Apps can compensate for any missing functionality in the Shopify Platform. Apps also allow Shopify to disassociate themselves from any defects in these third party products. This useful flexibility however comes at an additional cost.
Shopify App fees are uncapped fixed and variable costs payable to Shopify or directly to the App Vendor. App Fees can be a substantial monthly cost for a Shopify installation. This charge depends entirely on the Apps being used and the cost structures the Apps employ.
Alongside the Apps, Klayvio is generally the Email Service Provider of choice for SMEs and is partly owned by Shopify. Klayvio pricing is a usage based variable cost based on list sizes. Like Shopify, Klayvio may increase its prices at any time under their Agreement.
Apps may create interoperability risk for the Merchant alongside the additional monthly fees. The average Shopify installation has 6+ apps. App fees come from a combination of (1) Fixed Monthly Fees, (2) %Fees Based on Sales, (3) API call based fees, (4) Variable Fees based on Usage Limits - and a combination of all of these.
5K to 20K+ per annum acts as a guide (for Email, Loyalty, Subscriptions, Marketing Feeds, Promotions, Reviews and others) - and this figure varies by Merchant. App Fees can be less or more.
In their Agreement, Shopify may increase fees and they have done so a number of times. This applies to Shopify Merchant Terms of Service BUT ALSO to Shopify Payment Agreements which means TWO different ways for Shopify to increase rates on Merchants at short notice. Because multiple agreements exist between Shopify and its apps, rates are not fixed and have historically tended to increase over time.
Shopify has the right to withhold cash in their Shopify Payment terms, and because the payment gateway and platform are one - this risk exists for Merchants in certain circumstances.
3rd Party Gateways can be seen as a way to reduce processing fees - however it is technically complex. 3rd Party Gateways CANNOT integrate with Shop Pay or Shopify POS. 3rd Party Providers such as Adyen only appear to be available to Shopify Merchants transacting above £5M. It could be that Shopify operates a "Facilitator Model" where transaction fees from the 3rd Party Acquirier are elevated to the Merchant so they can be shared with Shopify - which is perhaps why only certain Card Acquirers offer integrations with Shopify. The true cost of this area is complex - but it may not be as it appears on the surface where Shopify simply charges an extra % fee on a 3rd Party Payment Gateway. It will be studied in the future and all feedback on this area is welcome.
(B) Services Information
We have focused on Opex and not Capex as Deployment is a one off fee. Shopify Deployment cost will depend on the complexity of the Deployment. The one off cost is generally paid to an Agency to set up and build a Shopify instance. The Deployment Cost will depend on complexity, the number of Apps and the number of middleware integrations. A standard Shopify Deployment might cost as little as 5K whereas Shopify Plus can come in above 100K+ in fees to deploy. For more complex builds it can cost more again. Deployment costs vary.
Agency Services and Overheads are not detailed in this analysis. Agency Fees and ongoing fees are part of the Opex cost generally accounted for correctly as overheads outside of Shopify Fees. Performance of Services and Agencies impact the overall sales and profitability. Shopify views Agency performance as “Out of Scope”. However combined "Platform Fees + Traffic Spend" form another critical number known in the industry as the “eCommerce TCO”.
eCommerce TCO = Platform Fees + Traffic Spend
Ecommerce platforms are different from almost all other technologies - they are "Sales Platforms" but their success is ultimately measured in Profits which means the Platform must control all costs.
Traffic Spend on channels such as Google and Facebook are normally by far the largest Opex Cost of selling online. Traffic Cost is affected by the market, by services BUT also depends on the platform. This variable Traffic Cost largely determines Merchant Success and their end Net Profits.
The “eCommerce TOTAL COST OF OWNERSHIP” (eCommerce TCO or eTCO) is an industry construct that combines the Traffic Cost AND the eCommerce Platform Cost. Costs in eCommerce extend beyond Platform and Traffic - but overheads and other Costs of Selling, such as shipping, are only marginally impacted by platform choice so they are excluded from "eCommerce TCO". eCommerce TCO is defined as the Total Cost a Merchant pays for their “Platform + Traffic”.
Shopify advocates 25% Spend on Traffic as GOOD, saying a "4:1 ROAS is strong". Although traffic costs are the key factor in determining Merchant profit, the Shopify model places traffic costs as "out of scope". This lack of visibility and control may be viewed as an Architectural Flaw in Shopify.
When combining both Shopify Platform Fees + Traffic Spend - the “Shopify eCommerce TCO” may be a 30%+ Fee to Merchants.
Conclusion
The purpose of this article is to examine the true cost of Shopify as a percentage of sales. This includes the impact of pricing based on 1) GMV, 2) High card processing rates, 3) non-refundable fees on returned or cancelled orders, 4) International fees exceeding 5% 5) Deductions taken between sales and payouts, 6) App costs and more. These factors must ALL be considered to account for all of Shopify Costs.
The “profit problem” however for Shopify Merchants is not the 3.5%+ fees, but the platform’s lack of visibility and control over the largest expense of all - Traffic Spend. As a result, Shopify eCommerce TCO (platform fees + traffic spend) can exceed 30%. In practical terms, this means spending over £300,000 to generate £1 million in online sales - BEFORE accounting for overheads.
Fully accounting for Shopify fees reveals them to be in a range of 3 to 5%, however the biggest Merchant cost is Traffic Spend and the Merchant's biggest problem is lack of Net Profit.
These cost calculations were last examined and updated on 1st September 2025. We have tried to clearly and fairly lay out the true Cost of Shopify from the information available. Everyone is welcome to comment and give feedback on this article to improve its veracity. We will adapt the content over time with any additional information and feedback that furthers our research. Clarification and input directly from Shopify is very welcome.
