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Episode 104 - Should you upgrade to Shopify Plus?

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    Hey Scott Austin here.

    In this episode, I want to talk about Shopify Plus and help you answer the question of should you upgrade to Plus.

    For most stores, I think Shopify Plus is purely an economic question.  There are situations when upgrading to Plus saves you money.  And I'm going to show you that math here.

    But that's not how Shopify sells Plus.  Shopify has a dedicated team for helping stores evaluate and upgrade to Plus.  And in their sales process, they talk alot about the features and benefits of Plus, but they don't go into the financial impacts.  I don't know this for a fact, but I'd bet that the Plus team is goaled on the number of Plus subscriptions that they drive.  If that's true, then they have skin in the game on your decision and you should factor that in when deciding on how much to lean on their advice.

    Shopify Plus has some features that aren't available in the lower Shopify plans.  Some of those include:

    1. A customizable checkout
    2. Cart scripts which is being replaced by Shopify functions
    3. Additional API access for your custom apps
    4. Unlimited staff accounts
    5. Built-in wholesale support
    6. Plus only apps
    7. And several other smaller features that I don't think are signicant  enough to impact your decision

    The Math for Shopify Plus

    But as I said before, I recommend first looking at the economics of Plus.  And that's because, some stores will reduce their Shopify costs by upgrading to Plus.  Even though Plus has a high monthly base fee of $2,000, the savings in credit card fees can offset this.  You see, as you increase your monthly plan fee, one of the benefits that Shopify provides is a lower credit card fee if you are using Shopify Payments.  So you can do the math of the monthly fees and the credit card processing fees to see which plan has the lowest cost for you.  The basic math of just using the Shopify monthly fee and the credit card processing fees is that Shopify Plus is lower cost for stores once their annual revenues go over $7.6 million.  

    Some other financial factors to account for in the equation

    But there are some other financial factors that could bring that annual sales threshold down for a business.  Some of these factors are:

    1. Number of Shopify Stores.  Plus allows you to operate up to 10 Shopify stores under the same brand that would be included in the $2,000 / month fee.  And some brands have multiple stores for things like different business models.  For example a wholesale store or a promotional business store.  Other brands have seperate stores to promote a single product.  So if your brand has multiple Shopify stores, you'll want to factor that savings into your Plus calculations.
    2. Shopify Apps.  Some of the Plus only features may allow you to eliminate some of the apps in your store.  And you should use that cost savings in your Plus calculations.  Some common app types that can be replaced with Plus-only features include Wholesale Pricing, Quantity Breaks and other pricing or discount apps.
    3. Annual Discount.  As far as I know, Shopify doesn't offer Plus subscribers a discount for paying annually.  But Shopify does offer a 25% discount for paying annually on the lower Shopify plans.  So if you are using that discount today, you'll want to factor that into your equation.

    Here, I'll illustrate how these factors can affect the economics of Plus.  As I mentioned before, the raw threshold for Plus is around $7.6 million in annual revenue.  But let's say your business has 3 Shopify stores and each store can save $100 per month in app fees by using Plus features.  Then the annual sales threshold decreases from $7.6 million to $6.2 million.

    Decision Making Tool

    So, there are a number of variables to factor in when calculating the cost of the different Shopify plans.  So I've put together a tool to help you with it.  The tool is an Excel file that you enter some business details into.  And it will show you your costs for each Shopify plan and highlight which one is the lowest.  The inputs into the tool are:

    1. Average Order Value
    2. Number of Monthly Orders
    3. Number of Shopify Stores
    4. App Fees Saved on Plus

    Some of the cost factors that are not included in the tool are:

    1. Shipping discounts
    2. POS Fees
    3. Ala Carte Shopify fees

    This tool will help you remove the marketing buzz around your Plus decision and focus on making the decision based on costs.  There's a link in the Show Notes to where you can get the tool.  I do ask  for your email to get the download.

    When features matter

    Now, there are times when a store should upgrade to Plus for features.  But in my experience, those are rare situations, say 5% of the time.  Here are a couple of examples of clients of mine that did upgrade to Plus because the features available in Plus were needed to move their business forward.

    In the first business, they had an outsourced sales team that would create draft orders in Shopify.  There were over 200 sales staff and they were bonused on the sales that they generated.  So the needed Plus feature was unlimited staff accounts.  With unlimited accounts, each sales staff could log in with their own account and create draft orders.  And the business could credit each order to the appropriate sales staff and calculate bonuses accordingly.

    In the second business, they had a mobile app that was associated with their product.  And the customer could create a user account in either the app or at their Shopify store and the account worked in both experiences regardless of where it was created.  Well that functionality requires access to the User API.  And access to that API is only available under Plus.

    Summary

    In summary, I believe that 95% of the time, upgrading to Plus is simply a business decision based on reducing the fees you pay to Shopify.  For this, I have created a tool that you can download.  You input the numbers for your business and can see which Shopify plan is the lowest cost for you.  A store needs to have over $6 million in annual revenue before Plus will start making economic sense.

    For about 5% of the stores, they may need to upgrade to Plus before the economics make sense because their business needs a Plus-only feature.

    I recommend that if you are thinking about Plus that you evaluate the pros and cons on your own and not engage the Plus sales team until you've made your decision.  I just think the sales team has too much skin in the game to provide you unbiased advice.

    If you think you are close to the threshold and want some outside advice, I'd be happy to meet you on help you out.  The conversation would only take 15 minutes and I don't charge for my first consult.

    That's it on Shopify Plus.  Thanks for listening.


    JadePuma is a certified Shopify Expert. If you need any help with your Shopify store, we can help.


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