Shopify Advanced vs Shopify Plus: Maximizing Profitability
Table of Contents
- Introduction
- The Difference Between Shopify Advance and Shopify Plus
- Understanding the Transactional Element
- Variable and Fixed Fees
- Credit Card Rates
- Revenue Levels
- Calculating Yearly Savings
- Choosing the Right Plan
- Considerations for Cash Flow Positive Brands
- Total Shopify Yearly Fees
- Fixed Fees for Basic, Standard, Advanced, and Plus Plans
- Transitioning from Basic to Standard Plan
- Advantages of the Advanced Plan
- The Value of Shopify Plus
- When to Make the Migration
- Utilizing the Value of Shopify Plus Success Team
- Conclusion
Shopify Advance vs. Shopify Plus: Understanding the Transactional Element
In this episode of Shopify Advance versus Shopify Plus, we will delve into the transactional aspect of these two platforms. Many brands struggle when deciding which plan to choose, as the information provided by Shopify and other agencies often lacks the necessary details for making an informed decision. To address this gap, we have created a Google Excel template that outlines the variable and fixed fees based on different revenue levels. By going through these calculations yearly, we can determine the most suitable plan for your brand at each stage of its journey.
1. Introduction
When considering Shopify Advance versus Shopify Plus, it is crucial to understand the transactional element and how it affects your brand's profitability. This article aims to provide a comprehensive guide, breaking down the various fees, revenue levels, and savings associated with each plan. By examining these factors, you can make an informed decision about which plan best suits your brand's needs.
2. The Difference Between Shopify Advance and Shopify Plus
Before diving into the transactional element, it is essential to clarify the difference between Shopify Advance and Shopify Plus. Shopify Advance is geared towards startups and low-revenue brands, offering basic features at a more affordable price point. On the other hand, Shopify Plus caters to established brands with higher revenue levels, providing a comprehensive suite of advanced features and personalized support.
3. Understanding the Transactional Element
The transactional element refers to the fees charged for each transaction made through your Shopify store. These fees can vary depending on the plan you are on and the revenue generated by your brand. It is crucial to examine these fees closely to determine the most cost-effective plan for your brand.
4. Variable and Fixed Fees
To better understand the transactional element, let's examine the variable and fixed fees associated with each plan. The variable fees include credit card rates, which are a percentage of the transaction value. The fixed fees, on the other hand, remain constant regardless of the transaction amount. Both these fees contribute to the overall cost of owning and operating your Shopify store.
4.1 Credit Card Rates
Credit card rates refer to the percentage of each transaction that Shopify charges for processing payments. The rates decrease as you upgrade from the Basic plan to Shopify Plus. For example, at a revenue level of £5 million per annum, the variable fees amount to £100,000 on the Basic plan, £35,000 on Shopify Advance, and £65,000 on Shopify Plus. These savings become significant as your brand's revenue grows.
4.2 Revenue Levels
It is essential to consider your brand's revenue levels when comparing the variable and fixed fees across different plans. By examining the revenue thresholds, you can determine the most cost-effective plan for your brand. For example, for a brand generating £1 million per month, it makes more sense to upgrade to the Advanced plan for an additional £600 per annum, given the access to advanced features and streamlined workflows.
5. Calculating Yearly Savings
When considering the transactional element, it is crucial to calculate the yearly savings associated with each plan. By examining the fixed fees for each plan, we can determine the total cost of ownership. For example, the yearly fees for the Basic plan for a brand with revenue over £100,000 amount to £2,478, while the Standard plan costs £2,538. By moving up to the Advanced plan, the fees increase to £4,858, and Shopify Plus charges 20% of revenue. These calculations help identify the most affordable plan for your brand.
6. Choosing the Right Plan
Selecting the right plan for your brand depends on various factors, including revenue levels, cash flow, and specific requirements. Cash flow positive brands can benefit from yearly plans, as substantial savings can be achieved. However, it is crucial to have a clear understanding of your brand's needs and goals when considering Shopify Advance versus Shopify Plus.
7. Considerations for Cash Flow Positive Brands
For cash flow positive brands, utilizing yearly plans is highly recommended. By opting for the Advanced or Plus plan on a yearly basis, significant savings can be achieved compared to monthly payments. By aligning your cash flow with your payment cycle, you can make the most out of the cost-saving opportunities.
8. Total Shopify Yearly Fees
To gain a comprehensive understanding of the transactional element, it is crucial to examine the total Shopify yearly fees associated with each plan. These fees include the fixed fees for the Basic, Standard, Advanced, and Plus plans and provide a clear overview of the costs involved in operating your Shopify store.
8.1 Fixed Fees for Basic, Standard, Advanced, and Plus Plans
The fixed fees for each plan vary depending on the revenue levels of your brand. For example, for a brand generating £500,000 per annum, it is more cost-effective to opt for the Standard plan rather than the Basic plan, saving £11,500. As your brand's revenue grows, the difference in fees becomes even more significant, making the Advanced or Plus plan a more viable option.
9. Transitioning from Basic to Standard Plan
For startups and low-revenue brands, starting with the Basic or Standard plan is recommended. These plans offer an affordable entry point, allowing brands to establish themselves before transitioning to more advanced plans. The transition from the Basic to the Standard plan can be a significant milestone in your brand's growth journey.
10. Advantages of the Advanced Plan
The Advanced plan offers several advantages for brands that have outgrown the Basic and Standard plans. Advanced features like advanced carrier calculated shipping rates and customizable checkout enhance your brand's capabilities. Additionally, the Advanced plan grants access to Shopify Flow, a powerful tool for streamlining backend operations and workflows.
11. The Value of Shopify Plus
For brands with revenue over £1 million, Shopify Plus becomes a compelling option. The additional features and personalized support offered by Shopify Plus can significantly impact your brand's success. However, it's crucial to evaluate whether your brand can leverage the value provided by Shopify Plus before making the migration.
12. When to Make the Migration
Determining the ideal migration point from Shopify Advance to Shopify Plus depends on various factors. While revenue levels are important, it is crucial to consider your brand's specific tech requirements and solution needs. Engaging with the Shopify Plus team and understanding the migration process is essential to ensure a smooth transition and maximize the benefits of the advanced features.
13. Utilizing the Value of Shopify Plus Success Team
One of the key benefits of Shopify Plus is access to the Shopify Plus success team. These experts offer personalized support and guidance, allowing your brand to fully utilize the platform's capabilities. Starting the conversation with the Shopify Plus team at the £1 million revenue mark can help you harness the full potential of the platform.
14. Conclusion
In conclusion, understanding the transactional element and the differences between Shopify Advance and Shopify Plus is crucial for brands looking to maximize their profitability. By carefully examining the fees, revenue levels, and savings associated with each plan, you can make an informed decision that aligns with your brand's goals and requirements. Whether you choose Shopify Advance or Shopify Plus, both platforms offer valuable tools and support to help your brand thrive in the competitive e-commerce landscape.
Highlights
- Understanding the transactional element of Shopify Advance and Shopify Plus
- Examining the variable and fixed fees associated with each plan
- Calculating yearly savings based on revenue levels
- Choosing the right plan based on cash flow and specific requirements
- Transitioning from the Basic to Standard plan as a milestone in brand growth
- Leveraging the advanced features and personalized support of the Advanced and Plus plans
- Timing the migration from Shopify Advance to Shopify Plus based on revenue and tech requirements
- Accessing the value provided by the Shopify Plus success team
FAQ
Q: What are the main differences between Shopify Advance and Shopify Plus?
A: Shopify Advance is designed for startups and low-revenue brands, while Shopify Plus caters to established brands with higher revenue levels. Shopify Plus offers more advanced features and personalized support.
Q: How can I calculate the yearly savings associated with each plan?
A: By examining the variable and fixed fees, as well as the revenue levels, you can calculate the yearly savings. This calculation helps determine the most cost-effective plan for your brand.
Q: When should I consider migrating from Shopify Advance to Shopify Plus?
A: The ideal migration point depends on factors such as revenue levels, tech requirements, and solution needs. It is recommended to start the conversation with the Shopify Plus team at the £1 million revenue mark.
Q: Can I leverage the value of the Shopify Plus success team?
A: Yes, the Shopify Plus success team offers personalized support and guidance. Engaging with this team can help your brand fully utilize the capabilities of the platform.
