Selling subscriptions in Shopify – the big change merchants need to know
There was a time, not long ago, when subscription boxes were all the rage. The idea was simple – pay a monthly subscription fee and receive a package through the door every month. From underwear to gin, you could get a subscription box for pretty much anything.
Since then, the market has somewhat matured. Subscription boxes still exist but the subscription model has generally become an additional means for more traditional ecommerce retailers to sell their consumable products rather than their sole business model.
Consumers can save cash by subscribing to a product they generally buy on a regular basis with what most retailers refer to as “subscribe and save”. Ecommerce retailers give a discount (typically 10-15%) for committing to automatically order the product on a recurring basis. In return the retailer benefits from a regular and predictable monthly revenue stream.
Retailers using Shopify’s platform have been able to offer subscriptions for some time now, typically using a third party service alongside Shopify. However, the way in which Shopify deals with subscriptions has just been turned completely on its head.
How it used to be
The dominant player when it comes to subscriptions in Shopify has been (and still is) ReCharge. Others have been available such as Bold Subscriptions, but ReCharge has been the go-to subscription service provider for Shopify and for very good reason. It’s relatively simple for merchants to install and configure. Its fees are reasonable for merchants of all sizes, and it integrates fairly well with Shopify. Or, to look at it another way, as well as was previously possible with Shopify – and this here is the key point.
Previously, it was not possible to do anything remotely similar to a subscription payment natively within Shopify. So services such as ReCharge have had to do some clever trickery to get around this. The most noticeable trick is to take customers who were purchasing a subscription through a different checkout than the usual Shopify one, even if the customer is buying normal one-off products at the same time as a subscription. ReCharge are clearly doing their best to make their checkout look like Shopify but the fact is that customers are effectively being lifted out of the Shopify site, pushed in to ReCharge’s checkout, and then dropped back into the original site they were on. This can present several problems:
- Shopify’s checkout is designed the way it is for a good reason. It’s tried and tested for maximum conversion.
- Pushing customers through a different checkout on a different website gives a slightly disjointed experience and can therefore lower conversion rates.
- Customers making subscription purchases will need to pay using a different payment processor to Shopify Payments. The customer might not notice this but the merchant will be subject to different (often higher) fees and will need to manage multiple payment systems, adding an extra level of admin.
Additionally, ReCharge has to create special hidden duplicates of products within Shopify stores which then have to be manipulated through ReCharge’s own admin interface, where most of the data and configurations for subscriptions also live, adding further complication for merchants.
To be honest, I’m probably making it sound a lot worse than it actually is. It’s actually pretty straightforward and easy to get to grips with. However, it does feel a lot like a workaround rather than a flawless solution.
You’d be forgiven for assuming at this point that Shopify have simply added their own subscription facilities into Shopify Payments. It would make total sense wouldn’t it? Not quite. There are a couple of factors to take into account.
Firstly, if Shopify were to do this then they would at best be severely damaging businesses such as ReCharge who have no doubt played a large part in growing Shopify’s user base. At worst, they’d be totally destroyed. Obviously that’s just not a very nice thing to do, or a great message to send to other Shopify Partners (like us!) who have built businesses around the Shopify ecosystem.
Secondly, subscriptions just aren’t Shopify’s core offering. Shopify generally concentrates on building an amazing core product while providing partners with the tools to build products and services to fill the gaps.
And that’s exactly what they’ve done with subscriptions. To put it simply, Shopify has made subscriptions possible within Shopify, but only done half the work! There is no user interface and everything is accessed via APIs (special internet things only developers understand).
So what does this mean?
In a nutshell, it means all the pitfalls of selling subscriptions through Shopify I mentioned earlier can now be eradicated. But… you will still need to use a third party app- for now anyway. In the near future, any developer will be able to make use of Shopify’s subscription APIs which opens the floodgates to all sorts of potential creativity.
The key improvements you will see from using one of these new apps include:
Customers can now pay for subscriptions using Shopify Payments, in the standard Shopify checkout
This removes the disjointed journey, potentially improves conversion rates and reduces the admin and fees from using a different payment processor.
All of your data remains within Shopify
No more moving around different apps. Your customer data and orders all live within Shopify just like an ordinary one-off order would. This makes admin far easier and allows for better reporting.
No more jiggery-pokery and workarounds
Subscriptions can be set up within your normal Shopify admin interface and there’s no need for hidden duplicate products.
Which apps should I be considering then?
So far, ReCharge do not appear to have released a new version that makes use of Shopify’s new subscription features. But, do not completely discount ReCharge as an option. It’s still very good:
UPDATE April 2021: ReCharge are releasing a version that works with Shopify Payments early 2021. What will happen to the existing version is unclear at present.
We’ve used ReCharge on a number of projects and we’ve had no complaints. A good developer will be able to customise the design of the frontend interface although it can be a little fiddly.
Bold Commerce on the other hand have completely ditched the original version of their Subscriptions app (which was along the same lines as ReCharge) and released a brand new one that fully integrates with Shopify subscriptions. This may very well be because Bold’s original subscription app was in my opinion, absolutely terrible. So they had nothing to lose. Although this has however left merchants using their original subscription app (including one of our clients) in a bit of a pickle because there doesn’t yet seem to be an upgrade path to the new version.
Bold’s new subscription app has so far been well received and therefore worth looking into:
Bold’s app is extremely flexible when it comes to customising the user interface and gives an extensive API allowing developers to build new features and integrations.
Similar to Bold, PayWhirl has gone all out with only offering an app that integrates with Shopify’s new subscription API, and it seems to be gaining decent traction already:
PayWhirl have deeply integrated their app into Shopify’s admin interface making it very simple to use, even for the most inexperienced Shopify merchants. We’ve tried it out and you really can set up a subscription in a matter of minutes.
All the apps mentioned above will also allow your customers to self-manage their subscriptions within your store’s account section.
Of course any sensible business owner is going to want to know the difference in price between the different options. Pricing is complicated because there a number of factors to take into account:
- All subscription apps charge a monthly fee, whether you make a sale or not.
- Subscription apps will also charge a percentage fee on each transaction. Both this and the monthly fee will depend on the plan you choose with the app.
- Shopify charges a percentage fee on each transaction made through Shopify Payments. So this applies to payments made using their new subscription service. This fee varies depending on which Shopify plan you are on.
- Shopify also charges a percentage fee for any transaction made using a payment processor other than Shopify Payments. So this will apply to the first payment made through ReCharge. Subsequent payments for a subscription won’t be applicable since these are made outside of Shopify. This fee also varies depending on which Shopify plan you are on.
- Just to make things even more complicated; services not using Shopify Payments such as ReCharge will use a payment processor such as Stripe who, you guessed it, will also take a percentage fee.
To make a comparison, we’ve drawn up a table showing the fees involved for subscriptions between ReCharge, Bold Subscriptions and PayWhirl’s three plans. We’ve based it on a £25 subscription and shown the fee per sale, and total fees for 100 and 1000 sales in a month. We’ve based it on a standard Shopify plan and Stripe’s fees if using ReCharge. Currency conversions (USD to GBP) and all fees are correct as of 03/02/21.
|Shopify transaction fee
|Subscription transaction fee
|Payment processor transaction fee
|Total fees per INITIAL transaction
|Total fees per transaction
|Total for 100 transactions*
|Total for 1000 transactions*
|1% + 4p
|1.4% + 20p
|1.9% + 20p
|1.9% + 20p
|1.9% + 20p
|1.9% + 20p
It’s incredibly difficult to make a comparison on price because there are so many variables at play. For ReCharge, you are charged additional fees by Shopify, but only on the very first payment of a subscription. In our table above we’ve based our comparison on 5% of the transactions being new subscriptions, but this could be wildly different for your business.
Overall, ReCharge comes out cheapest for a high volume of subscriptions but that’s based on 5% being new subscriptions. If this percentage is higher then it could work out more expensive.
PayWhirl is cheapest for a low number of subscriptions, but Bold and ReCharge aren’t far off.
Hopefully this gives you a decent overview but ultimately the best value choice comes down to your own situation.
Subscriptions in Shopify Payments have only been around since the end of 2020 so there will be some way to go before things have settled down. New apps will surely appear and fees will probably change.
The key takeaway is this – ReCharge is no longer the go-to option. All the apps mentioned perform well, have free trials and the ability to test without making an actual payment. Have a play with them and see which one works best for you.