The popularity of headless technology is increasing every year. According to a study conducted by WPengine, over 64% of enterprise level companies declared in 2021 the use of the headless approach in the scope of technologies they use. This year we see an additional increase in the popularity of headless technology, especially in the area of eCommerce. However, it is worth asking the question if headless commerce technology is for everyone and what conditions must be met in order to take advantage of this technology to the greatest extent? We will try to answear the question is Hadless Shopify more expensive and when you shoud go headless on Shopify.
Headless Shopify pricing – how much does it cost?
Of course, the cost of implementing an eCommerce website in Headless Commerce technology can vary based on different circumstances. The difference is mainly due to the used technology and the scope ot the project. Therefore, it is worth considering a specific example when calculating the cost of the headless eCommerce website implementation. Below is an analysis of the eCommerce website migration and implementation in headless commerce technology based on Shopify Plus, where Shogun Frontend was used as a headless storefront.
Presented below estimated costs of implementing and migrating an eCommerce website in the headless technology are based on the experience of our agency and market data. This is the cost range that includes not only the construction, but also the monthly costs of the license, development and maintenance of the website.
- $20,000 to $200,000 – the average cost of implementing and migrating a Headless Shopify Plus online store by an agency based on headless commerce (depends on the scope of the project and the complexity of the website);
- $2,000 + per month – Shopify Plus license cost, starting at $ 2,000 per month; this increases depending on the turnover of the online store;
- $2,000 + per month – Shogun Frontend license cost (annually: $25,000); this increases depending on the turnover of the online store;
- $4,000 – $8,000 per month – costs of maintaining and developing an online store under the SLA agreement with the agency;
- $500 per month – average annual costs of applications and plugins extending the operation of the eCommerce website;
- $250 per month – other possible fees for extensions and additional services (including e.g. hosting for headless storefront).
The abovementioned costs are just an estimate and always dependent on the scope of the project. However, if you compare the abovementioned costs with the standard implementation and migration of the system to Magento 2, where the cost of the implementation itself usually begins from $100,000 upwards, they seem very competitive. On the other hand, the migration and implementation costs presented above are significantly higher than the standard construction and implementation of the store based on a ready made Shopify Plus template / theme.
Headless Shopify Plus – when does it pay off?
The eCommerce business is primarily about financial results and the calculation of the expected return on investment. Looking from the perspective of costs and benefits related to the implementation of headless commerce technology, it is therefore necessary to count when and on what conditions an investment in a new technology will bring a return.
The results from NYU Stern School of Business study for a U.S.-based company as of January 2021 show that the average net margin for an e-commerce company is around 5%, while the average gross margin is 42.5%. According to generally available market data, the implementation of a new graphic layer of the store and the implementation of headless commerce technology can increase the conversion of the eCommerce website by up to 50%. Taking into account the values presented above, it is worth considering how big turnover should be generated by an eCommerce website so that the implementation of headless commerce technology pays for itself in a predictable period of time. Consider some of the scenarios I have outlined below:
| Scenarios | I | II | III | IV | V | VI |
| Monthly revenue: | $250,000 | $500,000 | $750,000 | $1,000,000 | $1,500,000 | $2,000,000 |
| Gross margin monthly: | $106,250 | $212,500 | $318,750 | $425,000 | $637,500 | $850,000 |
| Net margin monthly: | $12,500 | $25,000 | $37,500 | $50,000 | $75,000 | $100,000 |
| Headless implementation | ||||||
| Monthly revenue increase | $125,000 | $250,000 | $375,000 | $500,000 | $750,000 | $1,000,000 |
| Gross margin monthly increase | $53,125 | $106,250 | $159,375 | $212,500 | $318,750 | $452,000 |
| Net margin monthly increase: | $6,250 | $12,250 | $18,750 | $25,000 | $37,500 | $50,000 |
Headless Commerce Shopify ROI – how much does it cost to build Headless Commerce Shopify store?
Taking into account presented above calculations and the fact that the company that operates in the eCommerce area pays anyway for the maintenance and development of the website (most often more than in the case of the implementation of the Shogun Frontend and Shopify Plus combination), in calculating the return on investment, we should focus on the cost of migration and eCommerce website implementation. According to the data presented on the first paragraph, the average implementation cost is approx. $100,000. Based on that below we prepare the calculation of the return on investment according to the final net margin. Please bear in mind that, this is quite a simplification, cause we assume that the store finance the implementation process from profit, not from a part of the margin intended for reasearch and development part of the business.
| Scenarios | I | II | III | IV | V | VI |
| Net margin monthly increase: | $6,250 | $12,250 | $18,750 | $25,000 | $37,500 | $50,000 |
| ROI time needed in months | 16 | 8 | 6 | 4 | 3 | 2 |
As you can see, it seems that the Shopify Plus headless technology investment will pay off within 2 to 16 months depending on the turnover generated by the eCommerce website. In the case of a turnover of $250,000 per month ($3,000,000 per year), it will be 16 months. However, if we consider a store with twice the turnover ($500,000 per month), the return on investment will be achieved in just 8 months. The higher the turnover generated by the eCommerce website is, the faster return on investment (ROI) in Headless Commerce business will receive.
When should you go headless on Shopify?
From our experience, Shopify Plus is a platform that will be perfect for larger enterprises that generate over $ 100,000 in monthly revenues and have plans for further dynamic development. In this case, both the cost of implementation and the possibilities offered by the platform itself can be well used, bringing a valuable ROI.
In the case of the question about the sizeof the eCommerce business (in terms of turnover it generates) for which it pays off to invest in Headless Commerce is „it depends”. For some merchants, the return on investment in a period of 16 months will be fast, for others it is far too long for a given business size. This question should be answered by every eCommerce owner himself, comparing the costs and ROI in technology to other eCommerce development opportunities (if such are not already included in operating costs).
As Blue Owl, we are at your disposal and we will be happy to advise you if and when it is worth changing from traditional eCommerce to the one based on Headless Commerce. Contact us for a free quote or consultation.
