TCO Comparison of Shopify Plus and Magento 2

For a business owner or eCommerce manager, choosing a new eCommerce platform is one of the most important decisions you can make. Your choice has a powerful effect on your company’s growth and success. Finding the best platform for your business requires careful consideration of your unique operations, market, and goals. With each platform promoting their own advantages, how can you know where to start?

At Gauge we’re experts in both Shopify and Magento, but more importantly, we’re experts in eCommerce. We’ve worked hand-in-hand with merchants of all sizes to launch many projects, so we have unique in-depth knowledge of the advantages of both platforms. In this article, we’ll highlight the importance of choosing the right platform, and then walk you through some important elements to consider when comparing Shopify and Magento.

Why Platform Choice Is Important

Here’s something we’ve learned through experience: your customers don’t care about your platform. They want a great product at a fair price. If your site loads quickly, works well, and looks great, your customer will be well on their way to making a purchase.

The importance of your platform selection lies in how it impacts you, your business operations, your team, and the future of your company. If you exclusively sell online, the impact of your platform selection should be apparent; your eCommerce platform is the technical foundation for your entire business. For multichannel businesses, your eCommerce website will likely outperform its brick-and-mortar counterparts, and may account for more than 10–50% of your total annual revenue. For companies with online business-to-business (B2B) and wholesale channels, your website is often your most powerful sales tool.

Total Cost of Ownership (TCO)

When you’re considering a new platform, it’s incredibly important to understand—and budget for—the total cost of ownership (TCO) before making any decisions. Most merchants start by looking at build cost. While the build cost is significant—typically a large, upfront cost—it’s important to remember it’s only one element to consider. The total cost of ownership typically also includes expenses like:

  1. Platform cost
  2. Hosting
  3. Apps or extensions
  4. Third-party services
  5. Maintenance & support
  6. Future feature development
  7. Future platform upgrades

This list includes the essential costs of any website, and it’s by no means exhaustive. Depending on your business operations, you may also need to consider the cost of training your team on your new platform, hiring additional qualified staff, and marketing.

Platform & Hosting Costs

Both Magento and Shopify offer a number of options which can be confusing. In the simplest terms, each company offers two options:

Vendor Edition Price Hosting Price
Magento Open Source1 Free $60+/month (Based on MageMojo)
Magento Commerce Cloud2 $2,000–$5,000/month
for GVM less than $10M/year3
Shopify Shopify $30–$300/month (See latest pricing) Included
Shopify Shopify Plus $2,000/month
for GVM less than $10M/year4

As you can see, even a “free” platform like Magento’s Open Source edition has additional costs that factor into the TCO. Because Magento Open Source is considered an “on-prem” (i.e. on-premise) solution, hosting is not included. For a simple Magento sight with light traffic, hosting may cost as little as $60 per month. On the other hand, hosting for a complex, high-traffic Magento website, optimized for speed and architected for redundancy, can easily cost hundreds or thousands of dollars per month.

When calculating the TCO of platform and hosting costs, it is useful to consider the total cost over the lifetime of the website. With the rapid evolution of technology, we’ve found that most websites are redesigned every 4—5 years. While a replatform is not a requirement of a redesign, if your business is growing, a redesign presents an opportunity to reevaluate platform options which may better support continued growth.

Takeaway: For merchants with annual online sales below $1M, both Shopify and Magento offer comparative options. For sales above $1M, though, higher licensing costs for Magento Commerce and additional hosting and optimization costs for Magento Open Source make Magento a more expensive option than Shopify.

Build Costs

To understand how your platform choice affects the cost of your site build, it’s helpful to understand how each platform works.

Magento Basics

Magento’s strength is its ability for nearly limitless customization. Magento is built with a programming language called PHP, on top of the powerful Zend Framework. Because Magento developers have full access to the entire source code of the platform, a proficient developer can modify any element of the system. Developers can overwrite and extend Magento’s built-in functionality and perform direct operations on the entire database.

Dynamic functionality can be added to Magento through customizations, or by installing extensions from Magento’s Marketplace. The Marketplace offers a variety of extensions which have been independently validated by Magento. Verified extensions are open too; their code can be modified and customized. And if you can’t find an existing extension to customize, Magento developers can custom-build one. In short, with Magento, you have unparalleled customization options. If you can’t find a feature you need, you can build it.

You may have noticed that one word keeps popping up: developers. Building a Magento site requires highly skilled developers who understand both frontend and backend technologies, and how they interact with the platform. Because any element of Magento may be modified, any element may also be broken. To get a Magento site up and running smoothly, you’ll need expert developers who have mastered the platform. As with all experts, their skilled labor comes at a cost.

Shopify Basics

Shopify’s strength lies in its relative simplicity and low technical overhead. Shopify is built with a programming language called Ruby, on top of the popular Ruby on Rails framework. In practical terms, though, the programming language doesn’t matter, because Shopify doesn’t allow you to modify the backend code anyway. Instead, Shopify themes are built with Liquid, a frontend templating language developed by Shopify which inherits some language constructs from Ruby.

Shopify development is almost exclusively limited to the frontend. Liquid can be used to include only rudimentary logic in template files. This limits a developer’s ability to create dynamic functionality directly within the platform. But there’s a significant benefit of these limitations—these restrictions allow Shopify to generate essentially static files which are easily cacheable and therefore highly performant. In other words, the tradeoff for direct platform customization is enhanced reliability and performance; fewer elements to modify means fewer elements can be accidentally broken, and this give Shopify parameters by which they can optimize their hosting performance.

While Shopify development doesn’t require the same niche expertise that Magento development requires, it should not be trivialized. During any site build, regardless of platform, a significant portion of development happens on the frontend. Because of Shopify technical limitations, frontend developers may need to do some creative problem-solving to accomplish your goals. To build a Shopify site, you’ll still need flexible and talented frontend developers—but they won’t generally need to be masters of backend development.

Extending Shopify via Apps

If you don’t think Shopify can do something, you’re not thinking creatively enough.
– Nathan Lodge, Shopify Developer

While Magento allows you to install extensions alongside core code, dynamic functionality can only be added to Shopify via “apps”, which are essentially distributed “microservices” that often rely on assets and data hosted on third-party servers.

Shopify’s App Store offers a host of ready-made solutions that can be easily added to your Shopify store. Some third-party services also offer private Shopify apps which are only available via the service provider. And like Magento, if you can’t find what you need, custom Shopify apps can be built to provide entirely unique functionality. Thanks to Shopify’s rich REST API, almost anything can be done “on Shopify.”

“Headless” websites and apps allow developers to create entirely independent frontend experiences using an API essentially as a database and processor. For a practical example, let’s look at a Shopify app called ReCharge. Shopify’s native checkout process doesn’t allow merchants to offer their customers product subscriptions. A developer can’t go into Shopify’s backend code to create this functionality directly within the platform, so the ReCharge app was designed to replace Shopify’s built-in checkout process with a checkout process hosted on ReCharge servers, integrated via Shopify’s API.
Custom-built apps and apps like ReCharge require their own server. They often require a database, and depending on their purpose, they may require additional infrastructure. Shopify apps may be written with any programming language a developer chooses, which makes them highly customizable. App development frequently requires knowledge of both frontend and backend technologies. Sound familiar?

For many merchants, Shopify’s appeal lies in its relative simplicity and lower technical costs. The primary drawback for custom-built Shopify apps is that they add a layer of technical complexity and raise the platform’s total cost of ownership. That makes them impractical for many merchants. Typically, if you’re considering having a custom app developed specifically for your Shopify store, you may want to consider another platform.

Takeaway: Magento builds will typically be more expensive than Shopify builds because Magento development requires a team of highly skilled individuals. However, Shopify has limitations that may be expensive to work around.

Maintenance & Support Costs

The development considerations which apply to a site build and platform migration also apply to ongoing support and maintenance. Over the lifetime of a website, you may actually spend more money on support services like website maintenance and marketing than the initial investment in the build.
Magento’s technical architecture and PaaS (Platform as a Service) model makes merchants responsible for core platform maintenance and security. Magento periodically releases new features and security updates which must be manually applied by either the merchant or a partner like an agency. Those are guaranteed costs, and choosing not to upgrade isn’t a viable option, because these upgrades fix platform bugs and more importantly, resolve known security vulnerabilities.

The version of Magento you choose also affects the maintenance you’re responsible for. On Magento Open Source, maintaining infrastructure and responding to downtime events falls to the merchant. With Magento Commerce Cloud, on the other hand, Magento becomes responsible for optimizing infrastructure and maximizing uptime.

In contrast, Shopify’s technical architecture and SaaS (Software as a Service) model makes Shopify responsible for maintenance and security of the core platform and infrastructure. New features are released periodically to all customers, and updates happen with no merchant involvement. Shopify optimizes infrastructure and maximizes uptime. This model lets merchants invest more money in marketing and new feature development, and less money in technical debt and maintenance. However, if a downtime event occurs, you’ll have no control over the situation.

Note: Custom apps developed on Shopify require separate servers which have additional hosting and maintenance costs. Depending upon the level of integration, app uptime may be essential which could increase support costs.

Takeaway: Magento will typically be more expensive to support than Shopify because Magento development requires a larger investment in platform and infrastructure maintenance. Generally, Shopify websites are less susceptible to downtime.

Feature Comparison

Here’s a comparison of commonly used features available “out of the box” in Magento 2 and Shopify Plus. This list doesn’t outline every feature available, so we recommend starting here and doing more further research into the features and functions that matter most to you.

Feature Magento Shopify
Wishlist Built-in Requires app
Blog Requires extension Built-in
Coupon Codes Built-in Built-in
Paypal Express Built-in Built-in
Apple Pay Requires extension Built-in
Amazon Pay Requires extension Built-in Built-in Built-in
Google Analytics Built-in Built-in
URL Redirects Built-in Requires app
Product Comparison Built-in Requires app
Related Products Built-in Requires theme modification

What’s Next?

Moving to a new platform is a long-term investment. To see a positive return, you can’t simply match your site’s existing functionality and performance—you must exceed them. This makes the cost of poor platform selection, or a failed implementation, extremely high. The time you invest into researching and understanding your platform options will be time well spent.

At Gauge, we believe that anything that’s worth doing is worth doing well. That is why we’re extremely thorough when it comes to project planning and execution. When we work with a client to make a platform recommendation, we must understand the business and its goals. Only then can we make sure that the capabilities of the platform can support the merchant’s needs.

If you need help determining which is the right platform for you, don’t hesitate to reach out to us. We’d be happy to help you examine your needs and find the best solution.

  1. Magento Open Source was previously referred to as Magento Community Edition. 
  2. Magento Commerce Cloud was previously referred to as Magento Enterprise Edition. It’s also offered as an on-premise solution for similar licensing costs. 
  3. Magento Commerce Cloud pricing is tiered based on annual online revenue or “GMV” (i.e. Gross Merchandise Value). Higher GMV equates to a more expensive licensing cost. 
  4. Shopify Plus pricing is based on monthly Eligible Platform Transactions (EPT). The cost is $2,000/month or 0.25% of EPT, whichever is higher, with a maximum cost of $40,000/month (roughtly $16M EPT)