There are a lot of articles online already regarding what Magento can give you compared to Shopify as an e-commerce platform, so we won’t try to reinvent the wheel. The truth is they are both great and each has a wide variety of options that enables the creation of lucrative e-commerce stores. Choosing between the two will very much depend on the shape of your business.

For example, If your business is small and just starting out, then Shopify wins hands down. Its “Basic Shopify” solution at $29/month gives a start-up business everything it needs to get trading online - which is probably why there are more sites based on the Shopify platform than any other.

However, “Basic Shopify” has so many limitations that, once established, businesses are likely to need to move quickly to a full Shopify solution and face the additional cost that this upgrade will incur.

In comparison, the upfront cost of employing a web developer to design and build a fully customised Shopify site is much the same as building a site on Magento so there’s nothing to separate the platforms there either.

So, if you really want to discern which of these two e-commerce platforms is best for your business, then you need to consider the ongoing running costs that your site requires.

In this article, we’ll pick through these running costs, and help you to make the best online decision for your company.

High Card Fees Punish Shopify Users

The main difference between Shopify and Magento is that the former is a cloud-based solution. This means that you rent the website platform from Shopify at a current cost of $79/month (for the standard version). In contrast, a business operating on a Magento website typically owns the platform and so does not have to pay a monthly charge (unless they opt for the Enterprise version). However, they will have to pay hosting fees, which would typically be in the region of £200/month.

On the face of it, this seems like Shopify should always be the first choice for an e-commerce business. However, there are two significant drawbacks to the platform:

There are some key constraints to the system that cannot be changed without paying a higher subscription. This includes a limit on the number of administrators that can use the site at any one time.
It requires the user to purchase additional services from their chosen suppliers. One such requirement is for that you must use the built-in Stripe payment gateway for which the charges are rather high

Stripe charges retailers 1.9% of all revenues in addition to 20p for every transaction, this is non-negotiable. Retailers using Magento are free to purchase from whatever payment gateway and merchant services providers they wish, meaning they’re able to negotiate rates as low as 1% of revenue plus £20 a month, although 1.5% might be typical.

It’s this differential in the rates a retailer must pay that kills the cost-effectiveness of Shopify for more established businesses. Our calculations tell us that if a business is turning over more than around £200,000 Magento is likely to be the most cost-effective.

What’s Best for Your Business?

We’ve run the comparative numbers for a range of different businesses, which is closest to yours?

These figures all assume businesses will use the standard Shopify service, however, most businesses are likely to need Shopify Plus (which is an even more expensive solution) once they grow and have any back-office function. Shopify’s monthly fee for this is a minimum of £2,000/month, plus transaction fees.

Magento: The Most Cost-Effective Solution for Established Businesses

Magento is ultimately a more flexible platform than Shopify, giving businesses much more opportunity to customise the experience for their users, and for many companies, it is also more cost-effective.

By switching to Magento, the savings you will make could go towards supporting your online growth through digital marketing activity - and as your website revenue increases you won’t have to give a slice of that profit to your platform provider.

I-COM and Your Business

We’re here to help you grow your business. I-COM is a full-service agency, which means we have the full set of skills, services and know-how to transform your online presence and grow your business both online and offline. We can offer you all of the marketing support you need to achieve your business plan, from developing a brand presence, increasing awareness and driving profitable sales conversions.

If you’d like to discuss your next website we’d love to talk to you about it. Call us on 0161 402 3170 or complete the form and we’ll get in touch to let you know whether Shopify or Magento would make the most sense for you.