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Shopify Idea Proposal (SHOP)

Shopify Idea Proposal (SHOP)

Will Shopify’s transition from fixed to variable pricing for Shopify Plus slow growth or be the catalyst for profits?

Report Available: May 3, 2017


Blueshift’s initial research found SHOP implementing a change in pricing for its rapidly growing enterprise-level ecommerce solution, Shopify Plus. The company believes the change is a natural evolution which better aligns what a merchant pays for the use of the platform with the value they receive from Shopify Plus.  Some merchants are pushing back and considering leaving the SHOP platform. It remains to be seen what effect this migration will have on SHOP’s growth and pursuit of profitability in 2017.



  1. SHOP reported an impressive Q4 and full year 2016 without producing a profit. SHOP posted revenue of $130.4 million and breakeven earnings per share. Analysts were expecting a $0.02 loss per share on $121.7 million in sales. The number of merchants using the program at the end of 2016 reached 377,500 compared to 243,000 at the close of 2015.
  2. Shopify Plus, SHOP’s enterprise-level platform and a key element in the company’s growth initiative added a record number of merchants in Q4 and more than doubled the monthly recurring revenue coming to SHOP from Plus subscriptions compared to 2015. In 2016, 1,500 merchants were signed on to Plus bringing the total to 2,500.  In preparation for continued growth on the Plus platform SHOP has added Shopify scripts, built a new partner program, moved into new offices, hired over 100 new employees, and added a development team from an acquisition made to accelerate Plus’ growth.
  3. On Feb. 1, SHOP sent a letter to all of its Plus merchants announcing a change in the pricing model for the platform. The new variable rate pricing ties the monthly cost of the platform to merchants’ sales volume.Plus merchants will now be charged at 0.25% of monthly eligible platform transactions or $2,000 monthly, whichever is higher, to a maximum of $40,000 per month. The new pricing model starts immediately for new customers and will be phased in for existing accounts.
  4. There is some resistance to the price increase in the form of anonline petition. The site displays comments by merchants threating to leave the SHOP platform, but it is unclear if there will be a meaningful exodus of customer to threaten SHOP’s growth. Sample of comments from some petition signers:
  1. Petition supporter, CA: “I guarantee you we will leave Shopify, I have my web people on it already. We left Big Commerce for this reason, they gave us little warning that they were changing pricing structure to double our fees. We are new at shopify and feel very deceived. … You’re done Shopify… just look at your numbers in 2 years, thats how long it will take your core to leave you.”
  2. Petition supporter, FL: “I’m signing because the fee increase is outrageous and unfair. I will be switching platforms if not retracted.”
  3. Petition supporter, CO: “Our clients are seriously going to re-platform if rates remain and that means a headache for us. We have been recommending Shopify for our clients considering re-platforming, but that will have to stop if the rates go up and this precedent is set.”


  1. In Blueshift’s July 21, 2016 report, sources expected SHOP’s growth to continue as the best-in-class ecommerce solution for mom-and-pop businesses and SMBs that want to expand to the internet. However, they said it was unlikely SHOP would successfully scale up to meet the needs of big brands and large-volume ecommerce merchants.


Can SHOP continue to add Plus customers at or near its current rate? How will the new variable pricing model for Shopify Plus impact SHOP’s growth? What is the satisfaction level of Plus customers? Will Shopify Plus gain market share in the high volume merchant market segment? Will Shopify Plus customers and prospects reject the new pricing and re-platform with a SHOP competitor? To answer these and other questions, Blueshift will issue a market research report by gathering data from independent sources in the following areas: SHOP customers, SHOP partners, App developers, Competitors, Competitors’ customers, and Industry specialists.


Companies: Shopify Inc., (SHOP),GoDaddy Inc. (GDDY),Square, Inc. (SQ), Ltd. (WIX),, inc. (CRM), Intuit Inc. (INTU), PayPal Holdings, Inc. (PYPL)


Research Begins: April 17, 2017