Let’s talk transaction fees: The real cost of your Shopify subscription billing software
To process recurring payments in Shopify, you’ll need a subscription app. However, figuring out how much you’ll pay for your subscription app isn’t as simple as looking up the cost of the app. While your subscription app may be free or charge a flat fee per month, there will be additional transaction fees that you’ll need to consider.
As you read on, we’ll show you:
The most cost-effective payment gateway to enable
The minimum cost for a sample subscription box using these 3 industry-standard subscription apps:
The most cost-effective payment gateway for your subscription app: Shopify Payments
Your subscription app will use a third-party payment gateway to process recurring payments. Most payment gateways will come with their own overall cost and fees that you’ll need to cover on top of the ones included with your subscription app.
However, you can actually bypass some of these fees using Shopify’s built-in payment gateway, Shopify Payments. Shopify Payments only requires that you pay a credit card fee specific to your Shopify plan, with:
No setup cost for the payment gateway
No additional transaction fees for use of Shopify Payments
No additional transaction fees for external payment gateways if they’re enabled together with Shopify Payments (in most countries)
Note: Shopify Payments is not available for certain products and/or may not be available in your country. If this is the case for you, you’ll need to enable a third-party payment gateway, which will require some additional fees that we’ll go over later.
How much will you pay in total for a subscription app in Shopify?
The real cost for using a subscription app breaks down to the:
Cost of the actual subscription app
Additional cost of subscription app transaction fees per recurring order
Cost and additional fees from your payment gateway
It’s important to know this information in advance so that you can save time, plan around your expenses, and make sure you don’t run into any unwelcome surprises. Now, let’s see it in action using an example scenario:
The starter subscription box scenario
You’re selling a jewelry box subscription for $20 a month, and your business receives 100 recurring orders every month. You’ve already set up Shopify Payments as your payment gateway on the Shopify Basics Plan, and now you’ve just installed the most basic plan available on a new subscription app.
Note: All of these calculations will be done using USD fees
If you use Recharge Subscriptions, how much will your fees cost per month?
| Plan/Fee | Cost |
|---|---|
| Recharge Standard Plan | FREE |
| Recharge transaction fee | 1% of order cost + $0.10 flat fee |
| Shopify credit card fee | 2.9% of order cost + $0.30 flat fee |
In our scenario, you would pay:
Recharge costs
Recharge Standard plan: $0
Transaction fee: 1% of order cost + $0.10 flat fee = $0.30 per order
Subtotal: $30/mo ($0.30 x 100 orders)
Shopify costs
Shopify credit card fee: 2.9% of order cost + $0.30 flat fee= $0.88 per order
Subtotal: $88/mo ($0.88 x 100 orders)
Total cost for 100 orders
Total: $118/mo ($30 for Recharge + $88 for Shopify)
You pay a total of $1.18 in fees per $20 subscription box using Recharge. This comes out to 5.9% of your subscription box cost, which makes Recharge the most cost-effective option of the three subscription apps we’ll cover.
If you use Paywhirl Subscription Payments, how much will your subscription box cost per month?
| Plan/Fee | Cost |
|---|---|
| Paywhirl Starter Plan | FREE |
| Paywhirl transaction fee | 3% of order cost |
| Shopify credit card fee | 2.9% of order cost + $0.30 flat fee |
In our scenario, you would pay:
Paywhirl costs
Paywhirl Starter plan: $0
Transaction fee: 3% of order cost = $0.60 per order
Subtotal: $60/mo ($0.60 x 100 orders)
Shopify costs
Shopify credit card fee: 2.9% of order cost + $0.30 flat fee = $0.88 per order
Subtotal: $0.88 x 100 orders = $88/mo ($0.88 x 100 orders)
Total cost for 100 orders
Total: $148/mo ($60 for Paywhirl + $88 for Shopify)
You pay a total of $1.48 in fees per $20 subscription box using Paywhirl. While Paywhirl’s free plan looks attractive, its total fees come out to 7.4% of your subscription box cost, which may add up quickly if you reach a high volume of subscriptions.
If you use Bold Subscriptions, how much will your subscription box cost per month?
| Plan/Fee | Cost |
|---|---|
| Bold Core Plan | $49.99 |
| Bold transaction fee | 1% of order cost |
| Shopify credit card fee | 2.9% of order cost + $0.30 flat fee |
In our scenario, you would pay:
Bold costs
Bold Core Plan: $49.99/mo
Transaction fee: 1% of order cost = $0.20 per order
Subtotal: $69.99/mo ($49.99 + ($0.20 x 100 orders))
Shopify costs
Shopify credit card fee: 2.9% of order cost + $0.30 flat fee = $0.88 per order
Subtotal: $88/mo ($0.88 x 100 orders)
Total cost for 100 orders
Total: $157.99/mo ($69.99 from Bold + $88 from Shopify)
You pay a total of $1.08 in fees per $20 subscription box using Bold. While this is only 5.4% of your subscription box cost, making it the lowest fee of the three subscription apps, Bold’s plan cost will add an additional $49.99 per month.
What if Shopify Payments isn’t an option for your payment gateway?
If you’re using a third-party payment gateway and you’re unable to enable Shopify Payments with it, you’ll have to cover additional fees. These include:
A Shopify transaction fee, which ranges from 0.5-2% of your order cost depending on your Shopify plan
The cost of the payment gateway
Your payment gateway’s transaction fee
In our scenario, if you were to use another payment gateway instead of Shopify Payments, you would add the total additional cost of your gateway of choice to the total per month that we’ve already calculated for your subscription app:
For Authorize.net
Cost of Authorize.net gateway: $25/mo
Transaction fee: 2.9% of your order cost + $0.30 flat fee = $0.88
Shopify Basic Plan transaction fee: 0.5% of your order cost = $0.10
Total additional cost: $123/mo ($25 + ($0.98 x 100 orders))
For PayPal Express
Cost of PayPal Express gateway: Free
Transaction fee: 3.49% of your order cost + $0.49 flat fee = $1.19
Shopify Basic Plan transaction fee: 0.5% of your order cost = $0.10
Total additional cost: $129/mo ($1.29 x 100 orders)
For Stripe
Cost of Stripe gateway: Free
Transaction fee: 2.9% of your order cost + $0.30 flat fee = $0.88
Shopify Basic Plan transaction fee: 0.5% of your order cost = $0.10
Total additional cost: $98/mo ($0.98 x 100 orders)
Knowing how much your subscriptions really cost means stronger, well-informed business decisions
Your subscription business can only be as effective as the knowledge you use to build it. It’s true with the products, but also with pricing! Understanding exactly how the tools you’ll need are priced will allow you to maximize the effectiveness of your subscriptions within your budget. It’ll also make sure that unexpected fees don’t catch you off guard, and allow you to focus on what’s important for your subscription strategy.