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Making money building Shopify micro-SaaS apps

247 points by gk1 6y ago

pw6hv 6y ago
Do I understand it correctly? Basically, a developer would create new functionalities for the Shopify platform and Shopify will take 10/20% commission depending on the store plan from the developer? I personally would suggest to start a business creating WooCommerce websites. At least you'll be owning the whole profit and would not depend from the whishes and decisions of a wannabe BigCorp. As an additional plus you help spreading open source software.
- zhobbs 6y ago
  User acquisition is very hard. If you can outsource that to a marketplace the commission is probably worth it, especially if your goal is to be a very lean micro-SaaS.
- jariel 6y ago
  It's deeply integrated into Shopify platform, it's easily worth the 20% bump if only for the exposure, cred, billing etc..
- heipei 6y ago
  The true problem I see with these kind of integrations is that a company like Shopify can very easily figure out which third-party extensions are turning around the most revenue and then re-build those in house, only better since they have direct access to the folks building the platform.
  - valuearb 6y ago
    Being Sherlocked is a problem you should always consider closely for any App Store product. The benefit of App Stores is getting a access to a mass number of qualified customers anxious to add compelling features to the platform they bought, be it a web store front or iPhone. The negative is the platform has to always keep moving ahead, and sometimes your app is right in its path. We used to call it picking up nickles in front of the SteamRoller back in my Photoshop Plug-ins days. Was very frustrating, but still very lucrative. I have often talked about giving a demo of my next brilliant plugin to the Photoshop team lead and product manager just before the release of Photoshop 3. Three weeks later Photoshop3 was released with their version of my plugin in it.
  - pixelbash 6y ago
    Shopify doesn't seem to do this, and actually it's a bit of a problem because some of the apps have the craziest workaround for gaps in the backend. Can't have multiple discounts in the cart? Splution: create custom discount codes on the fly for absolutely everyone in real-time.
  - sdf131 6y ago
    This would be pretty short-sighted. Shopify benefits from the app store ecosystem (and can generate revenue from it) while allowing developers to invest in the platform in exchange for building their credibility as Shopify partners & developers (which generate more Shopify business for them) Stealing the good ideas and adding them to the core platform would generate more money short term but would destroy the app store
- valuearb 6y ago
  This is a silly and doomed to failure mindset for an aspiring entrepreneur. The question should be, how large is my addressable market and how much gross profit can I generate to cover my overhead. Shopify Merchants are selling roughly $80B a year, at least 5x WooCommerce merchants. Paying Shopify 20% means you net at least three times higher monthly revenues over paying WooCommerce zero commission. Apple charges devs 30%, but in return you get access to the worlds highest volume App Store paying developers $35B a year. You can also make iOS apps using an enterprise certificate, and distribute to tens of thousands with zero commission, but no one will ever find you on the store search, or give you public App Store ratings, you’ll never appear in a top category list or get featured by Apple, and any potential customers you reach will be leery of using your custom payments or subscription system, leading to lower paid conversions.
  - claudiulodro 6y ago
    > Shopify Merchants are selling roughly $80B a year, at least 5x WooCommerce merchants. Paying Shopify 20% means you net at least three times higher monthly revenues over paying WooCommerce zero commission. This seems a weird way to calculate potential eCommerce platform plugin profits because (unless you are a payment gateway), the quantity of stores is more important than the volume those stores sell, and WooCommerce is by far the most popular eCommerce platform. For example, Kylie Jenner's Shopify store has approx. $330mm[1] in revenue a year as far as I can tell, but that's only going to translate into one potential plugin purchase. [1] https://www.theedgemarkets.com/article/tech-how-shopify-turned-reality-tv-star-billionaire https://www.theedgemarkets.com/article/tech-how-shopify-turn...
    - Androider 6y ago
      You also don't want to just target the largest number of users, but the largest amount of users who are willing to pay for your plugin. I'm not familiar with the demographics of this particular market, but perhaps it's akin to iOS vs Google? Even though the latter has a hojillion users, app developers make way more money on iOS.
    - valuearb 6y ago
- flir 6y ago
  Your customers don't want to host WooCommerce sites. Or pay a small software shop to do it for them. They want to SaaS that for a few bucks a month, which is what Shopify gives them.
- fiftyacorn 6y ago
  You access their customers and shopify handle the billing. Not that bad a deal. Plus you can factor it in to your price
- martin_bech 6y ago
  Do you want 80% of a big nice pie or 100% of a nasty imaginary non existent pie?
- addicted 6y ago
  You are paying Shopify for discovery and the usage of certain APIs (such as payment APIs etc). Otherwise it’s possible for someone to integrate your stuff into their store even outside of the Shopify store (by integrating JS snippets for example).
andygcook 6y ago
One of the best points the author hits on is the benefit of platforms for MicroSaaS companies. Having a reliable source of highly qualified prospects makes it much easier to build out a profitable SaaS business because you can spend most of your time building while still closing customers. The tough thing about this is that the ease of building into the platform also attracts a lot of competition (which the author mentions in the post too). Getting in on a fast growing platform early is really beneficial because you can arbitrage the opportunity before others get into the platform. My startup was probably one of the first 50 apps in the Slack app store when it launched in December 2015. Since then, there's been about 5 dozen startups who are in the space now, but that early Slack platform momentum gave us enough of a lead to build a real business closing in on $1M ARR with 5 people.
- dakna 6y ago
  > Getting in on a fast growing platform early This depends on good timing. As a small team or single developer you don't want to invest months into building a plugin or service for a platform that won't take off. And at the time the platform has great traction, chances are that someone already took the higher risk and implemented something close to your idea. I would be interested in knowing more about the decision process that made you confident enough in 2015 to pour resources into a Slack plugin, if you would like to share that.
  - andygcook 6y ago
    Agreed and happy to share because you asked. At the time, the "company" was just my co-founder and me. We were essentially going to fail/give up by taking on consulting work. The decision to integrate with Slack was a bit of a bet-the-company move. We were building an internal wiki to compete with Confluence. Our early beta users told us they'd use our MVP, and when we gave it to them, no one actually did. When we asked, they just said, "We just keep forgetting. Still interested." We then asked about hooking up our wiki to Slack so you could search from Slack and get notifications for new content, and they wanted that desperately. Some teams even pre-paid us to build it for them. So we scrapped our whole MVP and three months of work, and rebuilt the entire product on top the Slack platform in two weeks over the holidays. When I say, "on top of Slack", I mean we literally used Slack's APIs as our backend and just rebuilt a "wiki" front end serving up Slack files from the APIs. We even deep linked to their Post as the editor in our wiki. The goal was to validate demand so we did it as leanly as possible. Once we launched, we got about 200 sign ups in 48 hours. From there, we built a real product, which is now tettra.com. I wrote an article about the pros and cons of building on another company's platform about a year after that which goes into more details if you're interested: https://thinkgrowth.org/building-on-slack-saved-our-startup-94953fdaf27a https://thinkgrowth.org/building-on-slack-saved-our-startup-...
valuearb 6y ago
Before I quibble, let me first state that this is an excellent, well written and comprehensive guide that any aspiring Shopify app developer should read carefully. Two Quibbles. First, the API is very good but Shopify support will not answer developer questions about it and will push you to their developer forums. There if you are lucky you might get a useful answer within a day or two, if unlucky you won’t. It’s shocking that a company whose entire business revolves around these APIs (its not just used by app developers but by merchants themselves) refuses to offer technical support. Secondly, it’s a tiny market. The best data have found indicates about $50M a year total to App developers, so if you want to build that $1M MRR app, look elsewhere. Author, please correct me if this is wrong, as I’m working on a Shopify app as my side project and it would really help my motivation if my estimate is way low.
- jacobr1 6y ago
  > Secondly, it’s a tiny market. The author suggested $2k/month gross revenues ~ $20k/year net, was a reasonable expectation for a niche app. So this presumes you have maybe 5 apps, developing a new one or redeveloping an existing one on a pretty regular basis. Or it presumes a side-gig. It doesn't really presume a startup company.
- lxxvii 6y ago
  > The best data have found indicates about $50M a year total to App developers The Shopify Developers homepage https://developers.shopify.com/ https://developers.shopify.com/ (scroll down one screen) claims $90M in 2018, unless you have some reason to doubt their claim?
  - valuearb 6y ago
    Thanks, I’d never seen that before and it’s good news.
  - adventured 6y ago
    Which might imply closer to $180-$200 million today, given their sales have doubled since 2018.
vemv 6y ago
> You’re likely to copy an existing app and make a slight improvement in terms of product, pricing, or both. Guess what, the next smart person with the same idea can do the same to you. Yeah that's a game that personally I could never bother playing. It sounds to me like trying to be the alpha fish in a tiny aquarium... that is closely observed and experimented with. Going indie is no small effort, so if I did it I'd try to play a bigger game, with more freedom, where I can give my best without fear of being outmarketed because someone beat my price by a couple dollars. I reckon the same applies to most 'app store' ecosystems.
rwhitman 6y ago
Hmm... my company builds Shopify apps for large companies. We have had several in the app store that we maintain, that we're either moving to end-of-life or planning to. Personally I believe the days of a solo engineer being able to build a viable Shopify app business are nearly over. Shopify has instituted new process for assessment and approval of new apps in the app store, similar to Apple. We are finding the approvals can take weeks and sometimes require big rewrites to meet as-yet-undocumented business requirements. Also Shopify stores can explode in bursts of traffic at a moments notice. And these apps sometimes are mission critical to the merchant's business. It is very challenging and expensive to scale an app rapidly when the folks who have installed it get large bursts of success without any forewarning. If a DTC brand launches their store with some cheap / free apps and their product goes viral, that means the indie solo app developer has to scale to meet the demand. These new DTC merchants often don't understand very much of the business of maintaining SaaS and aren't very forgiving when an app fails to keep up with the demand put on it. The challenge is if an inexperienced developer offers the app for free or a nominal fee like $50/mo that means they have to scale up infrastructure and support and often re-write the app for a small number of merchants who are still only paying $50/mo. This happens to more Shopify app developers than I want to admit, and many many bootstrapped folks are operating at a substantial loss, looking for a way out without irking customers who depend on their app. With that in mind, be very careful if you enter any type of SaaS marketplace. It seems tempting and low barrier to entry but you may be biting off much more than you can chew.
- klausjensen 6y ago
  DTC in this context is "Direct to Consumer" - I wasn't sure, so I looked up so you don't have to. :)
- DevX101 6y ago
  Any unofficial details on the business requirements Shopify looks for before approving apps? I'm working on an app and would like to avoid being blindsided.
  - rwhitman 6y ago
    My company has a partner relationship with Shopify so I can't go into too much detail but. My rules of thumb: 1) The value of the app to merchants in the app store is taken into account. They look at whether the app fits into the ecosystem and adds value for merchants. 2) Your monetization strategy should involve revenue share with Shopify from the get-go, in a way that scales with the success of your app. 3) The user should not leave Shopify for account registration or authentication. 4) As much functionality should be embedded in Shopify as possible. 5) Do not ever attempt to build something that side steps Shopify's checkout or order data in any way. Shopify payments and transaction fees is how they make money.
zaroth 6y ago
So Shopify charges 2.9% + $0.30 to retailers for purchases in the store, but they charge 20% for developers to sell those retailers an app... Hard not to compare this against Apple, where the total revenue generated by the Shopify App Store is perhaps around $50 million versus the Apple App Store which is more than $50 billion in digital goods & services ($500 billion including physical goods & services).
- pikelet 6y ago
  And with the only payout option being PayPal, the fees are even higher…
- nickjj 6y ago
  That's what happens when you have a monopoly on your own app store. I have nothing against Shopify (I've even built an app for a customer once like 8 years ago), but the only reason they charge 2.9% + $0.30 and not 20% for transactions is because Stripe, Square and PayPal all charge 2.9% + $0.30. What's really interesting is I wonder how much price collusion is involved with the 2.9% + 30c price for payment merchants. If there were no price fixing surely one of them would drop to 2.8% + 30c to gain an edge in market share but they don't.
  - adventured 6y ago
    > hat's really interesting is I wonder how much price collusion is involved with the 2.9% + 30c price for payment merchants. Most likely none. To be collusion they have to be actively working together to do it. Pricing to match or at least be competitive with your peers, isn't collusion. If you are competing with the other players and you look at their prices (in this case, entirely public prices), then match, it's not collusion. It's extremely unlikely they're secretly conspiring to hold that line. At this point the business margins are doing the work to provide resistance to compete on undercutting the 2.9% + $0.30. It's nothing more than a: you move and we'll move stalemate; you don't move, we won't move. It's unspoken and very common in business. The cloud companies such as DigitalOcean, Vultr, Linode do it as well. Their plans have been quite similar for many years now. The processors are not aggressively undercutting to advantage for the same reason those cloud companies have stopped doing that frequently, the margin has gotten a lot tighter and nobody is eager to go further. Each notch they go lower becomes increasingly painful.
semireg 6y ago
Does anyone know if there’s a need for better label printing integration? I noticed Shopify’s docs specifically mention DYMO printers and they discontinued Zebra printer support. That seems crazy to me. I’m a solo dev that’s built a desktop label printing app. I’d love to integrate it with Shopify. Read more at https://label.live https://label.live Anyone want to help me better understand the need for product labels, shelf tags, or fulfillment labels? Also thinking a FSBA integration would be important, too.
- theatrus2 6y ago
  The direct ZPL deprecation was dumb. Thankfully Shippo fixes that already. Shipping is real, and the more carriers you can support seamlessly the better.
donutdan4114 6y ago
Very nice write up. I too am a Shopify app developer with 4 apps in the App Store, currently doing around $56k/mo and growing ~$2k/mo for the last 2 years. Biggest thing is that the ramp up time is very slow. You're not going to get a bombastic number of installs starting off, no matter how much marketing you purchase. It's a slow climb up and the best time to launch your app is yesterday. Plan on one to two years to see decent revenue, and then hopefully continue to grow it for the next few years after that. Shopify Plus customers and traffic spikes are definitely a big concern, especially when it comes to your pricing model. Everytime I've come up with a "worst case" scenario it has happened so you need to always have built-in contingencies around that. Whether that means reaching out to the store to create a unique plan/pricing for them and possibly adding more value services. For example, one of our apps gets between 25k to 100k webhooks per hour and the spikes are unpredictable. Our app also has a queue system to process jobs in the background which can mean there are anywhere from a thousand tasks in queue, or 500k. (Shopify API is slow and limiting for big, heavy tasks). If you are also an actual Shopify developer (theme or private app developer) there is a lot of opportunities for upsells depending on what your app does. It seems a lot of app developers in the App Store simply have apps out there to get leads for development (service) work. Overall, developing on Shopify has been really good. There are some annoyances with their REST API vs. GraphQL API, their documentation, their support, etc... But generally it's been smooth sailing for the past few years. But we've had very, very slow growth and only in the past couple years have paid more attention on trying to maximize our business around Shopify apps.
- apollo1213 6y ago
  You're very successful. There're too many copycats on shopify. Do copycats have significant impact on your business?
  - donutdan4114 6y ago
    Our highest growing app was launched over 3 years ago so there wasn't much competition in that specific space. Lately we have had a lot of copy cats (even taking the exact same name). Our goal is always to be improving the apps and adding features that the copy cats just can't do. We invest a significant amount of time in improving the apps. No doubt we have lost some market share to the competition but it only motivates us more to keep on improving.
edge17 6y ago
Please excuse my ignorance, but what is a Shopify micro-SaaS app? Is it just a SaaS product that uses Shopify as the payment processor?
- lreeves 6y ago
  An app that would be installed on a merchant's shop to provide some benefit for them (usually in exchange for money). They can be custom apps for a single shop or a public app on the Shopify App Store.
- tarsinge 6y ago
  Yeah I’m confused too, I thought Shopify was a platform like Wix where you could only customize the UI. Are these apps for hosted installations where you can run arbitrary code?
  - detaro 6y ago
    They are apps that use Shopify APIs to add features. They don't run on Shopify servers, but talk to them through the API, can embed UI in Shopify backend dashboards, ...
lumberjack 6y ago
There is also Magento. Lots of the older web retailers are probably running Magento if not their own in house stuff.
areoform 6y ago
There seems to be quite a bit of shadiness going on in the Shopify App Store. A cursory review led to apps that give away the sun and the moon for free, which begs the question; how are they actually making money? For example, this recommendation engine is "100% free", https://apps.shopify.com/orcinus-product-recommendation https://apps.shopify.com/orcinus-product-recommendation Company page: https://autocommerce.io https://autocommerce.io , and there isn't a pricing plan in sight. How exactly do you pay for the servers and dev costs? ML experts aren't cheap. They seemed to be backed by an app studio, https://www.innonic.com/en/ https://www.innonic.com/en/ . Is this a loss leader? Are they harvesting datasets and selling them to PE? Is it part of some master plan? Or, is it simply an influx of cheap capital in the wrong hands? What's going on here? This example is one of several I've found that seem to be data harvesting operations. Could someone trick non-technical folks into introducing severe vulnerabilities for all their customers via this? Tracking them across the internet for fraud or scummy marketing? Edit: More examples, https://apps.shopify.com/zoorix https://apps.shopify.com/zoorix https://apps.shopify.com/upsell-funnel-engine-upsells https://apps.shopify.com/upsell-funnel-engine-upsells Further cursory research shows that this isn't the only category with an impossible value : price ratio. What in the name of Baphomet is going on?
- apollo1213 6y ago
  The recommendation engine may not require ML. The recommendation can be based on statistics of customers browsing history.
  - areoform 6y ago
    While that may be true, any such application requires dev costs and some non-zero amount of computation. How do you pay for it while giving it away in a B2B capacity?
    - apollo1213 6y ago
      Agree, those apps can be free for a short period time to attract customers and they have to introduce pay plans to pay for all the costs.
drchiu 6y ago
From experience, Shopify's app store is great for developers who want to build something and don't want to involve themselves into thinking about distribution. It was one of my first forays into building a SAAS, and I was able to scale to 5-figure ARR. Churn is incredibly high, unfortunately. And merchant reviews are ruthless. There's some consensus amongst Shopify devs (at least in a particular Facebook group) that Shopify isn't doing enough in weeding out unreasonable reviews and fake reviews. So it's quite possible you launch your app and get killed in your first week. I've experienced it (as well as others) where merchants take you (the dev) hostage by threatening to write a poor review (which will affect your ranking) if you don't create a feature just for them. I no longer need to develop for their app store anymore, but it's still a good start if you're just breaking into side projects and want to monetize them.

247 points by gk1 6y ago

Do I understand it correctly? Basically, a developer would create new functionalities for the Shopify platform and Shopify will take 10/20% commission depending on the store plan from the developer? I personally would suggest to start a business creating WooCommerce websites. At least you'll be owning the whole profit and would not depend from the whishes and decisions of a wannabe BigCorp. As an additional plus you help spreading open source software.

zhobbs 6y ago
User acquisition is very hard. If you can outsource that to a marketplace the commission is probably worth it, especially if your goal is to be a very lean micro-SaaS.
jariel 6y ago
It's deeply integrated into Shopify platform, it's easily worth the 20% bump if only for the exposure, cred, billing etc..
heipei 6y ago
The true problem I see with these kind of integrations is that a company like Shopify can very easily figure out which third-party extensions are turning around the most revenue and then re-build those in house, only better since they have direct access to the folks building the platform.
- valuearb 6y ago
  Being Sherlocked is a problem you should always consider closely for any App Store product. The benefit of App Stores is getting a access to a mass number of qualified customers anxious to add compelling features to the platform they bought, be it a web store front or iPhone. The negative is the platform has to always keep moving ahead, and sometimes your app is right in its path. We used to call it picking up nickles in front of the SteamRoller back in my Photoshop Plug-ins days. Was very frustrating, but still very lucrative. I have often talked about giving a demo of my next brilliant plugin to the Photoshop team lead and product manager just before the release of Photoshop 3. Three weeks later Photoshop3 was released with their version of my plugin in it.
- pixelbash 6y ago
  Shopify doesn't seem to do this, and actually it's a bit of a problem because some of the apps have the craziest workaround for gaps in the backend. Can't have multiple discounts in the cart? Splution: create custom discount codes on the fly for absolutely everyone in real-time.
- sdf131 6y ago
  This would be pretty short-sighted. Shopify benefits from the app store ecosystem (and can generate revenue from it) while allowing developers to invest in the platform in exchange for building their credibility as Shopify partners & developers (which generate more Shopify business for them) Stealing the good ideas and adding them to the core platform would generate more money short term but would destroy the app store
valuearb 6y ago
This is a silly and doomed to failure mindset for an aspiring entrepreneur. The question should be, how large is my addressable market and how much gross profit can I generate to cover my overhead. Shopify Merchants are selling roughly $80B a year, at least 5x WooCommerce merchants. Paying Shopify 20% means you net at least three times higher monthly revenues over paying WooCommerce zero commission. Apple charges devs 30%, but in return you get access to the worlds highest volume App Store paying developers $35B a year. You can also make iOS apps using an enterprise certificate, and distribute to tens of thousands with zero commission, but no one will ever find you on the store search, or give you public App Store ratings, you’ll never appear in a top category list or get featured by Apple, and any potential customers you reach will be leery of using your custom payments or subscription system, leading to lower paid conversions.
- claudiulodro 6y ago
  > Shopify Merchants are selling roughly $80B a year, at least 5x WooCommerce merchants. Paying Shopify 20% means you net at least three times higher monthly revenues over paying WooCommerce zero commission. This seems a weird way to calculate potential eCommerce platform plugin profits because (unless you are a payment gateway), the quantity of stores is more important than the volume those stores sell, and WooCommerce is by far the most popular eCommerce platform. For example, Kylie Jenner's Shopify store has approx. $330mm[1] in revenue a year as far as I can tell, but that's only going to translate into one potential plugin purchase. [1] https://www.theedgemarkets.com/article/tech-how-shopify-turned-reality-tv-star-billionaire https://www.theedgemarkets.com/article/tech-how-shopify-turn...
  - Androider 6y ago
    You also don't want to just target the largest number of users, but the largest amount of users who are willing to pay for your plugin. I'm not familiar with the demographics of this particular market, but perhaps it's akin to iOS vs Google? Even though the latter has a hojillion users, app developers make way more money on iOS.
  - valuearb 6y ago
flir 6y ago
Your customers don't want to host WooCommerce sites. Or pay a small software shop to do it for them. They want to SaaS that for a few bucks a month, which is what Shopify gives them.
fiftyacorn 6y ago
You access their customers and shopify handle the billing. Not that bad a deal. Plus you can factor it in to your price
martin_bech 6y ago
Do you want 80% of a big nice pie or 100% of a nasty imaginary non existent pie?
addicted 6y ago
You are paying Shopify for discovery and the usage of certain APIs (such as payment APIs etc). Otherwise it’s possible for someone to integrate your stuff into their store even outside of the Shopify store (by integrating JS snippets for example).

andygcook 6y ago

One of the best points the author hits on is the benefit of platforms for MicroSaaS companies. Having a reliable source of highly qualified prospects makes it much easier to build out a profitable SaaS business because you can spend most of your time building while still closing customers. The tough thing about this is that the ease of building into the platform also attracts a lot of competition (which the author mentions in the post too). Getting in on a fast growing platform early is really beneficial because you can arbitrage the opportunity before others get into the platform. My startup was probably one of the first 50 apps in the Slack app store when it launched in December 2015. Since then, there's been about 5 dozen startups who are in the space now, but that early Slack platform momentum gave us enough of a lead to build a real business closing in on $1M ARR with 5 people.

dakna 6y ago
> Getting in on a fast growing platform early This depends on good timing. As a small team or single developer you don't want to invest months into building a plugin or service for a platform that won't take off. And at the time the platform has great traction, chances are that someone already took the higher risk and implemented something close to your idea. I would be interested in knowing more about the decision process that made you confident enough in 2015 to pour resources into a Slack plugin, if you would like to share that.
- andygcook 6y ago
  Agreed and happy to share because you asked. At the time, the "company" was just my co-founder and me. We were essentially going to fail/give up by taking on consulting work. The decision to integrate with Slack was a bit of a bet-the-company move. We were building an internal wiki to compete with Confluence. Our early beta users told us they'd use our MVP, and when we gave it to them, no one actually did. When we asked, they just said, "We just keep forgetting. Still interested." We then asked about hooking up our wiki to Slack so you could search from Slack and get notifications for new content, and they wanted that desperately. Some teams even pre-paid us to build it for them. So we scrapped our whole MVP and three months of work, and rebuilt the entire product on top the Slack platform in two weeks over the holidays. When I say, "on top of Slack", I mean we literally used Slack's APIs as our backend and just rebuilt a "wiki" front end serving up Slack files from the APIs. We even deep linked to their Post as the editor in our wiki. The goal was to validate demand so we did it as leanly as possible. Once we launched, we got about 200 sign ups in 48 hours. From there, we built a real product, which is now tettra.com. I wrote an article about the pros and cons of building on another company's platform about a year after that which goes into more details if you're interested: https://thinkgrowth.org/building-on-slack-saved-our-startup-94953fdaf27a https://thinkgrowth.org/building-on-slack-saved-our-startup-...

valuearb 6y ago

Before I quibble, let me first state that this is an excellent, well written and comprehensive guide that any aspiring Shopify app developer should read carefully. Two Quibbles. First, the API is very good but Shopify support will not answer developer questions about it and will push you to their developer forums. There if you are lucky you might get a useful answer within a day or two, if unlucky you won’t. It’s shocking that a company whose entire business revolves around these APIs (its not just used by app developers but by merchants themselves) refuses to offer technical support. Secondly, it’s a tiny market. The best data have found indicates about $50M a year total to App developers, so if you want to build that $1M MRR app, look elsewhere. Author, please correct me if this is wrong, as I’m working on a Shopify app as my side project and it would really help my motivation if my estimate is way low.

jacobr1 6y ago
> Secondly, it’s a tiny market. The author suggested $2k/month gross revenues ~ $20k/year net, was a reasonable expectation for a niche app. So this presumes you have maybe 5 apps, developing a new one or redeveloping an existing one on a pretty regular basis. Or it presumes a side-gig. It doesn't really presume a startup company.
lxxvii 6y ago
> The best data have found indicates about $50M a year total to App developers The Shopify Developers homepage https://developers.shopify.com/ https://developers.shopify.com/ (scroll down one screen) claims $90M in 2018, unless you have some reason to doubt their claim?
- valuearb 6y ago
  Thanks, I’d never seen that before and it’s good news.
- adventured 6y ago
  Which might imply closer to $180-$200 million today, given their sales have doubled since 2018.

vemv 6y ago

> You’re likely to copy an existing app and make a slight improvement in terms of product, pricing, or both. Guess what, the next smart person with the same idea can do the same to you. Yeah that's a game that personally I could never bother playing. It sounds to me like trying to be the alpha fish in a tiny aquarium... that is closely observed and experimented with. Going indie is no small effort, so if I did it I'd try to play a bigger game, with more freedom, where I can give my best without fear of being outmarketed because someone beat my price by a couple dollars. I reckon the same applies to most 'app store' ecosystems.

rwhitman 6y ago

Hmm... my company builds Shopify apps for large companies. We have had several in the app store that we maintain, that we're either moving to end-of-life or planning to. Personally I believe the days of a solo engineer being able to build a viable Shopify app business are nearly over. Shopify has instituted new process for assessment and approval of new apps in the app store, similar to Apple. We are finding the approvals can take weeks and sometimes require big rewrites to meet as-yet-undocumented business requirements. Also Shopify stores can explode in bursts of traffic at a moments notice. And these apps sometimes are mission critical to the merchant's business. It is very challenging and expensive to scale an app rapidly when the folks who have installed it get large bursts of success without any forewarning. If a DTC brand launches their store with some cheap / free apps and their product goes viral, that means the indie solo app developer has to scale to meet the demand. These new DTC merchants often don't understand very much of the business of maintaining SaaS and aren't very forgiving when an app fails to keep up with the demand put on it. The challenge is if an inexperienced developer offers the app for free or a nominal fee like $50/mo that means they have to scale up infrastructure and support and often re-write the app for a small number of merchants who are still only paying $50/mo. This happens to more Shopify app developers than I want to admit, and many many bootstrapped folks are operating at a substantial loss, looking for a way out without irking customers who depend on their app. With that in mind, be very careful if you enter any type of SaaS marketplace. It seems tempting and low barrier to entry but you may be biting off much more than you can chew.

klausjensen 6y ago
DTC in this context is "Direct to Consumer" - I wasn't sure, so I looked up so you don't have to. :)
DevX101 6y ago
Any unofficial details on the business requirements Shopify looks for before approving apps? I'm working on an app and would like to avoid being blindsided.
- rwhitman 6y ago
  My company has a partner relationship with Shopify so I can't go into too much detail but. My rules of thumb: 1) The value of the app to merchants in the app store is taken into account. They look at whether the app fits into the ecosystem and adds value for merchants. 2) Your monetization strategy should involve revenue share with Shopify from the get-go, in a way that scales with the success of your app. 3) The user should not leave Shopify for account registration or authentication. 4) As much functionality should be embedded in Shopify as possible. 5) Do not ever attempt to build something that side steps Shopify's checkout or order data in any way. Shopify payments and transaction fees is how they make money.

zaroth 6y ago

So Shopify charges 2.9% + $0.30 to retailers for purchases in the store, but they charge 20% for developers to sell those retailers an app... Hard not to compare this against Apple, where the total revenue generated by the Shopify App Store is perhaps around $50 million versus the Apple App Store which is more than $50 billion in digital goods & services ($500 billion including physical goods & services).

pikelet 6y ago
And with the only payout option being PayPal, the fees are even higher…
nickjj 6y ago
That's what happens when you have a monopoly on your own app store. I have nothing against Shopify (I've even built an app for a customer once like 8 years ago), but the only reason they charge 2.9% + $0.30 and not 20% for transactions is because Stripe, Square and PayPal all charge 2.9% + $0.30. What's really interesting is I wonder how much price collusion is involved with the 2.9% + 30c price for payment merchants. If there were no price fixing surely one of them would drop to 2.8% + 30c to gain an edge in market share but they don't.
- adventured 6y ago
  > hat's really interesting is I wonder how much price collusion is involved with the 2.9% + 30c price for payment merchants. Most likely none. To be collusion they have to be actively working together to do it. Pricing to match or at least be competitive with your peers, isn't collusion. If you are competing with the other players and you look at their prices (in this case, entirely public prices), then match, it's not collusion. It's extremely unlikely they're secretly conspiring to hold that line. At this point the business margins are doing the work to provide resistance to compete on undercutting the 2.9% + $0.30. It's nothing more than a: you move and we'll move stalemate; you don't move, we won't move. It's unspoken and very common in business. The cloud companies such as DigitalOcean, Vultr, Linode do it as well. Their plans have been quite similar for many years now. The processors are not aggressively undercutting to advantage for the same reason those cloud companies have stopped doing that frequently, the margin has gotten a lot tighter and nobody is eager to go further. Each notch they go lower becomes increasingly painful.

semireg 6y ago

Does anyone know if there’s a need for better label printing integration? I noticed Shopify’s docs specifically mention DYMO printers and they discontinued Zebra printer support. That seems crazy to me. I’m a solo dev that’s built a desktop label printing app. I’d love to integrate it with Shopify. Read more at https://label.live https://label.live Anyone want to help me better understand the need for product labels, shelf tags, or fulfillment labels? Also thinking a FSBA integration would be important, too.

theatrus2 6y ago
The direct ZPL deprecation was dumb. Thankfully Shippo fixes that already. Shipping is real, and the more carriers you can support seamlessly the better.

donutdan4114 6y ago

Very nice write up. I too am a Shopify app developer with 4 apps in the App Store, currently doing around $56k/mo and growing ~$2k/mo for the last 2 years. Biggest thing is that the ramp up time is very slow. You're not going to get a bombastic number of installs starting off, no matter how much marketing you purchase. It's a slow climb up and the best time to launch your app is yesterday. Plan on one to two years to see decent revenue, and then hopefully continue to grow it for the next few years after that. Shopify Plus customers and traffic spikes are definitely a big concern, especially when it comes to your pricing model. Everytime I've come up with a "worst case" scenario it has happened so you need to always have built-in contingencies around that. Whether that means reaching out to the store to create a unique plan/pricing for them and possibly adding more value services. For example, one of our apps gets between 25k to 100k webhooks per hour and the spikes are unpredictable. Our app also has a queue system to process jobs in the background which can mean there are anywhere from a thousand tasks in queue, or 500k. (Shopify API is slow and limiting for big, heavy tasks). If you are also an actual Shopify developer (theme or private app developer) there is a lot of opportunities for upsells depending on what your app does. It seems a lot of app developers in the App Store simply have apps out there to get leads for development (service) work. Overall, developing on Shopify has been really good. There are some annoyances with their REST API vs. GraphQL API, their documentation, their support, etc... But generally it's been smooth sailing for the past few years. But we've had very, very slow growth and only in the past couple years have paid more attention on trying to maximize our business around Shopify apps.

apollo1213 6y ago
You're very successful. There're too many copycats on shopify. Do copycats have significant impact on your business?
- donutdan4114 6y ago
  Our highest growing app was launched over 3 years ago so there wasn't much competition in that specific space. Lately we have had a lot of copy cats (even taking the exact same name). Our goal is always to be improving the apps and adding features that the copy cats just can't do. We invest a significant amount of time in improving the apps. No doubt we have lost some market share to the competition but it only motivates us more to keep on improving.

edge17 6y ago

Please excuse my ignorance, but what is a Shopify micro-SaaS app? Is it just a SaaS product that uses Shopify as the payment processor?

lreeves 6y ago
An app that would be installed on a merchant's shop to provide some benefit for them (usually in exchange for money). They can be custom apps for a single shop or a public app on the Shopify App Store.
tarsinge 6y ago
Yeah I’m confused too, I thought Shopify was a platform like Wix where you could only customize the UI. Are these apps for hosted installations where you can run arbitrary code?
- detaro 6y ago
  They are apps that use Shopify APIs to add features. They don't run on Shopify servers, but talk to them through the API, can embed UI in Shopify backend dashboards, ...

lumberjack 6y ago

There is also Magento. Lots of the older web retailers are probably running Magento if not their own in house stuff.

areoform 6y ago

There seems to be quite a bit of shadiness going on in the Shopify App Store. A cursory review led to apps that give away the sun and the moon for free, which begs the question; how are they actually making money? For example, this recommendation engine is "100% free", https://apps.shopify.com/orcinus-product-recommendation https://apps.shopify.com/orcinus-product-recommendation Company page: https://autocommerce.io https://autocommerce.io , and there isn't a pricing plan in sight. How exactly do you pay for the servers and dev costs? ML experts aren't cheap. They seemed to be backed by an app studio, https://www.innonic.com/en/ https://www.innonic.com/en/ . Is this a loss leader? Are they harvesting datasets and selling them to PE? Is it part of some master plan? Or, is it simply an influx of cheap capital in the wrong hands? What's going on here? This example is one of several I've found that seem to be data harvesting operations. Could someone trick non-technical folks into introducing severe vulnerabilities for all their customers via this? Tracking them across the internet for fraud or scummy marketing? Edit: More examples, https://apps.shopify.com/zoorix https://apps.shopify.com/zoorix https://apps.shopify.com/upsell-funnel-engine-upsells https://apps.shopify.com/upsell-funnel-engine-upsells Further cursory research shows that this isn't the only category with an impossible value : price ratio. What in the name of Baphomet is going on?

apollo1213 6y ago
The recommendation engine may not require ML. The recommendation can be based on statistics of customers browsing history.
- areoform 6y ago
  While that may be true, any such application requires dev costs and some non-zero amount of computation. How do you pay for it while giving it away in a B2B capacity?
  - apollo1213 6y ago
    Agree, those apps can be free for a short period time to attract customers and they have to introduce pay plans to pay for all the costs.

drchiu 6y ago

From experience, Shopify's app store is great for developers who want to build something and don't want to involve themselves into thinking about distribution. It was one of my first forays into building a SAAS, and I was able to scale to 5-figure ARR. Churn is incredibly high, unfortunately. And merchant reviews are ruthless. There's some consensus amongst Shopify devs (at least in a particular Facebook group) that Shopify isn't doing enough in weeding out unreasonable reviews and fake reviews. So it's quite possible you launch your app and get killed in your first week. I've experienced it (as well as others) where merchants take you (the dev) hostage by threatening to write a poor review (which will affect your ranking) if you don't create a feature just for them. I no longer need to develop for their app store anymore, but it's still a good start if you're just breaking into side projects and want to monetize them.