Will Shopify's 34% price increase see SME customers walk away?

In Australia over 100,000 businesses rely on the Shopify platform to run their e-commerce stores. For 12 years, Shopify store owners have enjoyed a stable price for their Shopify platform fee.

So, last week when Shopify announced a 34% price increase to its basic monthly plan, many started to ask the question: is Shopify still the best option for my business?

A website is a necessity for retail businesses. Whether it’s for e-commerce or just brand awareness, customers expect some sort of online presence. And website maintenance is now an integral skill for retailers. However, loading new products onto an online store, ensuring website content is relevant and up-to-date, and keeping customer data secure, are tasks that often present a challenge for store owners.

Therefore, they rely on the intuition and integrity of their website platform to make that component of their business operations less frustrating and time-consuming.

E-commerce website disruptor

What Canva has done for design, Shopify has done for e-commerce web development. Shopify entered the marketplace in June 2006 as an e-commerce website builder that required no coding or development knowledge.

The platform alleviated many of the challenges and obstacles that small business owners faced when starting and growing their e-commerce brand. A fresh professional design was aided by the use of plug and play templates, and hosting was built into with no need for an external provider.

When Shopify Payments launched in 2013, it meant finding and connecting a third party merchant was also no longer a frustrating exercise for store owners to navigate.

The Shopify revenue model was intentionally simple: for an annual or monthly fee and percentage of sales revenue, you are provided with access to software, hosting and updates that supports online business growth. Customers flocked to the platform and Shopify grew from 165,000 merchants in 2015 to 4.4 million by 2022.

Australia is Shopify’s third largest market

According to BuiltWith, Australia is Shopify’s third largest market, outnumbered by only the US and UK. Even Shopify’s founding country Canada comes in as the fourth largest Shopify market.

Last year, Shopify Unite, the platform’s conference for developers, was hosted in three cities worldwide, London, Toronto and Melbourne, further demonstrating Shopify’s commitment to the land down under.

Shopify gives Australian businesses access to the same platform that’s used by large Australian retailers such as Mister Zimi, Frank Green, Boori, Sage and Clare and Rollie Nation.

E-commerce innovation

In Shopify’s letter to merchants last week outlining the price increase, the company said the decision to increase plan pricing “will allow us to continue innovating and empowering our merchants with the scale they demand”.

Some of these innovations have all been added to the platform. During COVID-19, Shopify upgraded its gift card product from the second-tier level to the lowest priced plan. More recently, it has introduced Shopify Markets, which facilitates cross border, international expansion for Shopify stores. Shopify Flow was added in 2022 to aid automation of tasks and processes. Shopify Email, a simple email marketing platform was also added in 2022, as was Shopify inbox allowing chat-like facility on your e-commerce website.

For many business owners, the convenience of an intuitive platform, 24/7 support, and a commitment to continually improving functionality is worth the monthly investment, regardless of the increase.

This sentiment was articulated by Shopify store owner Paul Gee: “I’m on the base plan. It’ll go from US$29 to US$39 per month. For the utility it provides, I think I — and most of us — can bear that.”

But that’s not to say there hasn’t been strong criticism from others, who have labelled Shopify’s price decision as pure greed and poorly timed.

How do the alternatives compare?

Shopify’s competitors with similar no-website code solutions include Squarespace, Wix and BigCommerce. All have similar monthly or annual fees and transaction fees.

WooCommerce, an e-commerce plugin for WordPress is another popular choice for Australian e-commerce stores. The open source properties of this solution means business owners avoid monthly platform fees, however, this model requires fees for functionality and website hosting, as well as regular maintenance and updates done by a developer.

Often, on a full cost comparison with the fee-based model, the required ongoing investment is comparable.

Will small businesses walk away?

Despite the initial knee-jerk reaction to the steep price increase, I don’t believe we will be see a mass Shopify walk-out. But we will see business owners ask questions about alternatives and start to investigate their platform choices.

As a business owner, knowing who controls the strings of the platform you choose to run your business from should be considered essential business risk assessment.

But for most, the cost and risk for migrating platforms is too great for little or no gain. Instead, Shopify shareholders will remain happy and will maintain their investments in the company.

This investment will fuel further Shopify innovation and businesses will continue to choose Shopify as the chosen e-commerce website platform.

Kerri Bennett is founder of Yellow Door Digital, an e-commerce agency and Shopify Partner.