Shopify is a popular e-commerce platform that allows individuals and businesses to create their own online store and sell products. The company has experienced significant growth in recent years, with its revenue increasing from $205 million in 2015 to $2.9 billion in 2020. In this article, we will take a closer look at how Shopify makes its money.

  1. Subscription Fees

One of the primary ways that Shopify makes money is through subscription fees. The platform offers a range of pricing plans, starting from $9 per month for the basic plan to $299 per month for the advanced plan. Each plan offers a different set of features and functionality, allowing merchants to choose the plan that best suits their needs.

The subscription fees are a recurring source of revenue for Shopify, as merchants pay on a monthly basis for access to the platform. As of 2020, Shopify had over 1 million merchants using its platform, making subscription fees a significant source of revenue for the company.

  1. Transaction Fees

In addition to subscription fees, Shopify also generates revenue through transaction fees. Merchants who use Shopify Payments, the company’s in-house payment processing system, are charged a transaction fee for each sale they make on their store. The transaction fee varies depending on the pricing plan, with merchants on the basic plan paying a higher fee than those on the more expensive plans.

Shopify Payments is available in select countries, with the company partnering with third-party payment processors in other regions. In these cases, merchants are charged a fee by the third-party processor, with Shopify taking a small percentage of the fee as revenue.

  1. App Store

Shopify has an app store that offers a range of third-party apps and plugins that merchants can use to enhance the functionality of their store. The app store includes both free and paid apps, with Shopify taking a commission on the sale of each paid app.

The commission rate varies depending on the app, with Shopify taking a 20% cut on the sale of most apps. The app store is a significant source of revenue for Shopify, with the company reporting that it generated over $2.2 billion in revenue for developers and partners in 2020.

  1. Shipping and Fulfillment

Shopify also generates revenue through its shipping and fulfillment services. The company offers a range of shipping and fulfillment options, including in-house fulfillment through its network of warehouses and third-party fulfillment services.

Merchants who use these services are charged a fee, with Shopify taking a percentage of the fee as revenue. The exact fee structure varies depending on the service and the region, but shipping and fulfillment services are a growing source of revenue for Shopify.

  1. Other Services

Finally, Shopify offers a range of other services that generate revenue for the company. These include Shopify Capital, which provides funding to merchants, and Shopify Plus, a premium version of the platform for larger businesses.

Shopify Capital generates revenue through interest charges and fees, while Shopify Plus generates revenue through higher subscription fees and custom development services. These services are a smaller source of revenue for Shopify compared to its core offerings, but they help to diversify the company’s revenue streams.

In conclusion, Shopify generates revenue through a range of sources, including subscription fees, transaction fees, the app store, shipping and fulfillment services, and other services. These revenue streams have helped the company to become a leading e-commerce platform and a major player in the industry.