Earlier this week, sellers received an email from Shopify, announcing new plan prices for 2023. While users are not too happy about the change, investors have a different view.
A Long Overdue Price Increase?
For over a decade, Shopify’s pricing tiers remained largely unchanged. For the first time in 12 years, Shopify’s plans are increasing significantly, by an average of ~33%.
|Shopify Plan||Previous Price (Monthly)||New Price (Monthly)||Increase|
The price increase is effective immediately for all new sellers, but current merchants can enjoy the old prices until April 23, 2023, if they are subscribed to the annual plans.
In a blog post, the company explained that the resources required to serve merchants “dramatically changed” since they started, and they had to raise their prices in order “to not change the value of Shopify.” The company has invested in the improvement of the platform for years without corresponding price changes, and the price hike is expected to make up for them and to fuel Shopify’s continued growth.
Despite the explanation, some sellers are still disappointed about the increases, with some comparing the ~33% increase to the 9.1% inflation peak in June 2022.
Shopify’s Stock Is Up
After the announcement on Tuesday, Shopify’s stock saw an increase in the double digits, showing how investors feel about the move. We have yet to see how the changes will affect renewal rates and new sign-ups, but analysts predict that it will result in a profitability boost and a bullish trend.
Just like a lot of e-commerce companies, Shopify had invested heavily in its growth during the pandemic, only to realize the demand could not be sustained after physical stores started reopening.
The company did not escape the massive lay-offs also experienced by Big Tech companies, including Meta and Amazon. Shopify laid off two engineering VPs earlier this month and is set to lay off 6% of its staff soon.
On the other hand, the company also implemented a “calendar purge” this month, automatically removing recurring meetings involving more than two people to facilitate productivity.
Meetings are a usually a bug.
If you properly root cause them, you will find a trust issue, a clarity issue, or a missing API. Meetings can paper over these, but it’s much better to fix root cause.
— tobi lutke (@tobi) January 3, 2023
It seems like Shopify is doubling down on increasing revenues and productivity this year. However, it still has to contend with an unpredictable economy and possible threats to its growth including the now more widely available Buy with Prime.