Fifteen common expenses new Shopify store owners forget until it’s too late
Starting an online store with Shopify is an exciting venture, but many new store owners underestimate the operational expenses involved. Some costs might seem trivial at first, but their cumulative impact can be substantial. Here’s a comprehensive breakdown of 15 often-overlooked expenses that can catch Shopify store owners off guard if not anticipated.
1. Payment Processing Fees
Every time a customer makes a purchase, payment processors (like Shopify Payments, PayPal, or Stripe) take a percentage of the sale. Shopify Payments charges a base rate depending on your subscription plan, while third-party processors might charge higher fees. This can add up, especially for high-volume stores. New owners often neglect to factor these fees into their profit margins.
2. Transaction Fees for Third-Party Gateways
If you opt to use a payment gateway other than Shopify Payments, Shopify imposes an additional transaction fee ranging from 0.5% to 2%, depending on your plan. This expense can erode your profitability, especially if you already pay processing fees to the third-party gateway.
3. Recurring App Fees
Shopify’s App Store offers tools for SEO, marketing, inventory management, and more. Many apps come with monthly fees that can range from $5 to $200 or more. As your store scales, it’s easy to accumulate subscriptions, and forgetting to account for these recurring costs can strain your budget.
4. Custom Domain Costs
While Shopify provides a default domain (e.g., mystore.myshopify.com), most brands prefer a custom domain for professionalism. Custom domains usually cost between $10 and $30 annually, but premium domains can run into hundreds or thousands of dollars. There’s also the potential cost of renewing your domain or purchasing privacy protection.
5. Product Samples for Quality Assurance
For dropshipping or print-on-demand businesses, it’s essential to order samples to verify product quality. This cost often goes unbudgeted and can be significant if you’re testing multiple suppliers or items.
6. Shipping and Fulfillment Costs
Shipping expenses are not limited to customer delivery. They include the costs of shipping products to your location (if not dropshipping) or the costs of warehousing and fulfillment services. Additionally, unexpected rate hikes from carriers can strain your budget if you don’t plan ahead.
7. Packaging Materials
Branded packaging can enhance the unboxing experience and improve customer satisfaction, but it’s not free. Boxes, bubble wrap, branded inserts, and tape add up quickly. Many new store owners overlook these costs when calculating their profit margins.
8. Refunds and Chargebacks
Not all sales are final. Refunds, chargebacks, and disputes can be costly, especially if you’re in a niche with high return rates. Some payment processors charge additional fees for handling disputes, and you might also lose the initial transaction fees on refunded orders.
9. Advertising and Marketing Costs
Paid advertising, whether through Google Ads, Facebook, or Instagram, is often underestimated. Running effective ad campaigns requires consistent spending, split testing, and adjustments. Without proper budgeting, it’s easy to overspend without seeing immediate returns.
10. Content Creation
High-quality product photos, videos, and promotional materials are crucial for building trust. While DIY options exist, professional services can cost hundreds or thousands of dollars. Similarly, hiring content creators or influencers for social media promotions adds to your expenses.
11. Website Design and Development
Although Shopify offers templates, many store owners want customization to stand out. Hiring a designer or developer for theme modifications, custom coding, or troubleshooting can be expensive. Freelancers and agencies charge anywhere from $50 to $150 per hour, depending on complexity.
12. Taxes and Regulatory Compliance
Sales taxes, VAT, and customs duties vary depending on your location and target markets. Many new owners forget to register for tax compliance or miscalculate their obligations. Late payments or errors can result in fines and additional costs.
13. Subscription Plan Upgrades
Shopify’s basic plan might suffice at first, but as your store grows, you may need to upgrade to higher-tier plans to access advanced analytics, lower transaction fees, or additional staff accounts. These upgrades can increase your monthly expenses significantly.
14. Customer Support Tools
Exceptional customer service is a key differentiator in e-commerce. Live chat tools, help desk software, and CRM integrations often require additional subscriptions. Providing multilingual support or hiring customer service reps also adds to your operational costs.
15. Inventory Shrinkage and Loss
For stores that hold physical inventory, shrinkage due to theft, damage, or miscounts is an often-overlooked expense. These losses can quickly affect your bottom line if you don’t implement proper tracking and inventory management systems.
Conclusion
Running a Shopify store involves more than the upfront cost of products and a subscription plan. By anticipating these 15 operational expenses, new store owners can better prepare themselves financially and avoid unwelcome surprises. Carefully planning for these costs ensures a sustainable and profitable business, setting you up for long-term success in the competitive world of e-commerce.
A human being
Art can change the world – and everybody is an artist. Those who scribble stickmen. Those who paint chapel ceilings. Those who tattoo biceps. Those who are careful with pigment on canvas. Those who create fantasy characters. Those who paint pet portraits. Those who yarn bomb. Those who write poems on crappy old cardboard.
My art lives on the bottom of skateboard decks. It's designed for you to destroy. For you, the rider, my art may come second to the deck’s ability to perform – and that’s awesome. To me, art comes first. Always.
It’s how I think. It’s who I am. It’s what I am.
A machine
This article has been created with the help of artificial intelligence platforms ChatGPT and Bard. If there are inaccuracies or there are opportunities for improvement, please let me know.
BellyRash