Choose the right e-commerce platform from the start. How? By knowing your margins, and planning ahead. When comparing WooCommerce vs Shopify, you need to know how much time, money, and resources it will cost you. Here is a Cost Analysis Template.
A true cost analysis and projected cost analysis will help you determine if one platform is more cost efficient than the other year over year. If you are planning to sell “X” number of items at an average cost of “X” price in your first year, then how much will Shopify cost you will change depending upon what tier level you invest in. Make sure to add up their additional fees and you will see there can be a larger investment than an open source platform like WooCommerce. But that cost will provide you some benefits that are really useful. Still, as you scale you need to plan for it and know what the costs really will be. I think the biggest cost analysis that I can provide is that after the first year Woo Commerce becomes much more cost-effective as a solution than Shopify.
To further make this point I created a full Google Sheet to help you compare your costs and pros and cons. All you need to do is change your average unit price cost, and your annual gross. by changing either of those two numbers all the remaining formulas on my chart should help give you a projection that is fairly accurate as it could be from today’s date. Oh and this file is public so download it, share it whatever I have an excel doc up there as well.
Outside of this you really need to weigh the pros versus cons with features and benefits. WordPress websites that use WooCommerce can do just about anything, while you are quite limited within what you can do on Shopify. Additionally, WordPress is aggressively updating to new features within open-source developer platform much faster. Pigeon-holing yourself into one platform maybe a recipe for long term financial frustration. And ultimately you want to save up because if your e-commerce makes it big, neither platform will be your ultimate goal. You will go custom for the cost, security, and performance benefits. WordPress is great for a start-up and I honestly don’t suggest going custom until you have worked out your business plans accordingly. Plus the databases on WP and WooCommerce will make porting your data that much easier.
Feel free to use this cost analysis chart at your own will. I built this to help clients make better financial decisions when building their next start-up as I have had customers ask for this advice in the past. I make it clear the data input here is from February 23rd, 2019 and it may not be accurate in 6 months or a year out from now. Please make sure to use this as a guide only. And if you have suggestions or feedback for this chart just get in touch!
The most confusing part of using Shopify is their 3rd-party transaction fees. Their formula which is:
The third-party fees include shipping + taxation for each state which is different for each state. I updated the chart to include for this. It significantly raises costs. Still, each 3rd party has its own potential costs that can be applied either with monthly charges or transaction charges so some of this could be altered by your choices, so pay attention if you choose to work with Shopify.
Additionally, third-party costs have different rates based upon their different options for each 3rd party payment vendor. You can look up more information about this all here.
WooCommerce leads with the most e-commerce websites over Shopify*
Their market share is clear in dominance*, and with that, you will have more developers on the marketplace to work with you. And more custom solutions you can create because on an opensource network there is simply more plugins and tools to use. But more doesn’t always mean better. More can mean more headaches too. I accounted for this in my chart by increasing the maintenance costs for WooCommerce year over year. And that can change depending upon the size, complexity, and or custom requirements your WooCommerce website has.
Shopify’s strengths are in its ease of use, metrics out of the box; it’s depth in the tiered levels of accounts, and ease of set-up. As a designer, I’d enjoy building on it, and if a client came to me saying I have a Shopify site I’d like to get help with, I’d jump on it.
But if you’re a business owner, it’s not all about the ease of use, the flexibility, how great it looks and the tools. Sometimes it’s about control, ownership, flexibility, security and many other things that play a factor. All of these points need consideration, and Shopify offers some great tools and great pros in areas outside of cost analysis. They make some of the business management easier on the backend for businesses. And that has its value which can be worth a lot.
Make an informed opinion, as E-commerce is growing at one of the fastest rates in any industry in the world up to 5.1 trillion according to Kevin O’Leary.
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