How Shopify and Shop Pay Make Money

Shopify makes money from subscriptions and various platform fees

Fact checked by Vikki Velasquez
Reviewed by Katie Miller

Shopify’s e-commerce platform connects merchants and consumers by allowing companies to list and sell products and services online. Shopify primarily makes money by selling its plans via subscription models, and through various platform fees.

Shopify’s most significant revenue-generating segment is its Merchant Solutions component, which generates more than 73% of its total revenues. The company invests heavily in discovering ways to include artificial intelligence and machine learning in its products and services to drive future growth.

Key Takeaways

• Shopify is an e-commerce platform that makes money through subscription services and fees.
• In 2024, the company had a net income growth of 1,429.55% and revenue growth of 25.78%, with its Subscription Solutions segment experiencing the most growth for the year.
• Shopify’s strategy for the future is to integrate artificial intelligence and machine learning into its services to help merchants and users save time and money and match prospective buyers to merchants.
• Shopify controls more than 12% of its industry’s U.S. market share.

Shopify’s Financials

• 2024 Revenue: $8.88 billion
• Growth in revenue: 25.78%
• 2024 net income: $2.02 billion
• Growth in net income: 1,429.55%
• Total subscription solution revenue: $2.35 billion
• Total merchant solution revenue: $6.53 billion
• Growth in Subscription Solutions revenue: 27.93%
• Growth in Merchant Solutions revenue: 25.02%

Net income saw such large growth primarily due to an impairment charge on the sale of Shopify’s logistics businesses in 2023 of $1.34 billion, which severely impacted income.

Note

In 2024, Shopify had more than 875 million unique shoppers making purchases and controlled more than 12% of its industry’s market share.

Shopify’s Business Segments

Shopify divides its revenue-generating segments into two “solutions.” These are (1) Subscription Solutions and (2) Merchant Solutions. The company’s research and development component doesn’t generate any revenue or income, but it is critical to Shopify’s future success as it develops solutions to meet the growing needs of merchants.

Subscription Solutions

Shopify’s Subscription Solutions segment is the revenue generated from selling platform subscriptions, including its POS Pro service, apps, domain registrations, and themes. Shopify offers different pricing plans for this segment to accommodate the differing needs of various merchants.

The majority of gross merchandising volume comes from Shopify Plus users, who need advanced features as their businesses grow. Subscription terms are generally one month but many Shopify Plus users subscribe for one year or more.

The Subscription Solutions segment generated $2.35 billion in revenue in 2024, growing 27.93% from 2023. Subscription solutions made up 26.46% of total revenues in 2024, similar to 2023.

Merchant Solutions

Shopify’s Merchant Solutions segment is a one-stop shop for merchants who use various apps and services such as accepting payments, shipping, and accessing working capital.

Revenues from Merchant Solutions are primarily generated from payment processing fees and currency conversion fees. This segment also generates revenues from Shopify’s lending and financial service products, which include sales from selling shipping labels and referral fees from partners.

The Merchant Solutions segment generated $6.53 billion in revenue in 2024, growing 25.02% from 2023. Subscription solutions made up 73.54% of total revenues in 2024, similar to 2023.

Note

Shopify’s platform allows any developer to create applications and themes from which merchants can choose. Developers are paid by merchants who choose their creations.

Shopify’s Recent Developments

Artificial intelligence and machine learning are significant advancements for nearly every industry, and Shopify spent more than $1 billion on R&D in 2024, some of which included developing ways to integrate third-party AI solutions into its services.

In 2024, Shopify hired a new CTO, Mikhail Parakhin, who has a strong background in machine learning. He previously led Microsoft’s AI advancement. He will oversee all engineering and data organization at Shopify.

How Does Shopify Make Most of Its Money?

Shopify makes most of its money through its merchant subscriptions and various fees for services and products.

Do You Actually Make Money on Shopify?

You can make money on Shopify selling products and services, and you can also develop applications and storefront themes and sell them on the e-commerce site.

How Much Does Shopify Take Per Sale?

It depends on the package you choose and where transactions occur. There are separate currency conversion fees, duties, and import taxes charged on international transactions.

What Is the Downside of Shopify?

Shopify’s model depends on third-party apps for storefront customization, making merchants spend more to purchase the customizations they might want to differentiate themselves. It also includes transaction fees for its third-party payment gateways, adding more expenses.

The Bottom Line

Shopify is a global e-commerce product and services provider that connects merchants and consumers. It experienced significant growth in 2024, in terms of both revenue and net income. The company also witnessed growth in cash and marketable securities as well as a decrease in long-term liabilities.