The Intuition Is Usually Wrong
When engineering teams first evaluate the cost of a SaaS e-commerce platform versus building custom, the initial instinct is that the SaaS platform will be cheaper. The logic seems sound: avoid hiring developers to build what Shopify has already built, pay a predictable monthly fee, move on.
This intuition is wrong for businesses above a certain revenue threshold, and it's wrong in a specific way that the platform vendors don't advertise prominently.
The Anatomy of Platform Costs
Any honest platform cost analysis has three components:
Base platform fees — the subscription cost for the platform itself. Shopify Plus runs around £1,600/month at standard tiers.
Plugin and app costs — the ecosystem of third-party tools needed to close the gap between what the platform provides and what the business needs. For a subscription business: a subscription management app (Recharge, ~£1,600/month), A/B testing, cancellation flow automation, referral programme management. These stack quickly to £7,000-8,000/month before transaction fees.
Transaction fees — here is where the economics break decisively. Shopify charges 0.5% on every transaction when you use a third-party payment gateway. On £3M monthly revenue, that's £15,000/month. On £5M monthly revenue, that's £25,000/month. These fees are in addition to your payment processor's fees.
The Numbers in Practice
At £3M monthly revenue, the comparison looked like this:
| Cost | Shopify + Plugins | Hybrid Bespoke |
| --- | --- | --- |
| Platform / infrastructure | £1,600 | £2,000 |
| Subscription management | £1,600 | — (custom) |
| CMS | £160 | £350 |
| Fulfilment tooling | £500 | — (custom) |
| A/B testing | £400 | — (included) |
| Referral platform | £1,500 | — (custom) |
| Cancellation flow | £1,500 | — (custom) |
| Transaction fees | £46,000 | £0 |
| Staff (est.) | £30,000 | £48,839 |
| Total | £83,630 | £61,739 |
The £18,839 staff cost difference (more engineers needed for the custom build) is completely offset by the transaction fee saving of £46,000. The hybrid approach saves approximately £22,000/month — £262,000/year — at this revenue level.
The Compounding Effect
The economic advantage of avoiding transaction fees is not linear — it compounds with revenue growth.
At £5M monthly revenue, transaction fees at 0.5% reach £25,000/month. The staff cost for the engineering team doesn't scale with revenue; it stays roughly constant. So the higher the revenue, the wider the gap between the two approaches.
This creates a counterintuitive outcome: the "cheaper" SaaS option becomes progressively more expensive as the business grows. Platforms designed to profit from your success via percentage fees are a liability that scales with your revenue.
Why This Isn't Obvious
The transaction fee impact is easy to underestimate because it's not visible as a line item in the way that software subscriptions are. It shows up in payment processing reports, not in the SaaS invoice. Teams doing platform evaluations often look at the SaaS subscription fees and compare those to engineering costs — and the comparison looks reasonable. They're not counting the transaction fee.
The other reason it's underestimated: at low revenue levels, 0.5% is genuinely small. At £100K/month revenue, transaction fees are £500/month — easily absorbed. The fee is designed to look reasonable at the scale where you start, and reveal its true cost as you grow.
The Decision Threshold
The crossover point — where the higher engineering cost of a custom build is offset by the transaction fee saving — depends on your revenue and your specific plugin stack requirements. For most subscription businesses I've seen, this crossover happens somewhere between £500K and £2M monthly revenue.
Below the crossover: Shopify's economics work. The lower engineering overhead outweighs the transaction fees.
Above the crossover: the transaction fees dominate, and the economics shift decisively toward a custom or hybrid approach.
The calculation is simple. What's your monthly revenue? Multiply by 0.005. That's your monthly transaction fee to Shopify. Is that number less than the incremental engineering cost to build what Shopify would provide? If yes, Shopify wins. If no, build.
The Lesson for Platform Evaluations
Any platform evaluation that doesn't include a transaction fee projection — calibrated to your expected revenue at 12, 24, and 36 months — is incomplete. The fees that seem negligible at current scale may be the largest line item in your platform cost at the scale you're planning for.
Build this projection explicitly, in a spreadsheet, with optimistic and pessimistic revenue scenarios. The number will tell you the right decision more reliably than any capability comparison.