Shopify Stock Goes up When Pricing Plans Go Up

Shopify Stock

Shopify Stock (NYSE:SHOP)

On Wednesday, Shopify (NYSE:SHOP) announced price hikes, and the company’s shares rose by more than 6%.

In a blog post, the Canadian e-commerce giant said that it would be raising pricing for its most basic, intermediate, and premium offerings for the first time in more than a decade. Every plan’s price is expected to rise by around 33%.

The price of the most basic plan has increased to $39 from $29. The price of the Shopify plan has increased to $105 from $79, while the price of the most expensive plan has increased to $399 from $299.

The cost of using our “greatest tools in commerce” has “remained flat over the previous 12 years,” COO Kaz Nejatian said in a blog post. We’ve given this a lot of thought, and now we’re making a change to serve our purpose and our merchants better.

In April, we plan to implement price hikes for our current clients. Also, current merchants can go on an annual plan to lock in the prices they’re paying now. If you’re a new merchant on our platform, you’ll be happy to know that our new pricing structures are going into effect now.

As Baird analyst Colin Sebastian put it, “we don’t believe these costs support a move for the overwhelming majority of merchants, given the time and effort necessary to transition platforms,” especially when Shopify’s platform provides stronger e-commerce capability at a fair price.

These comments were mirrored by Josh Beck, an analyst at Keybanc, who cited examples established by other corporations. He said that in every situation when prices were raised, the gains were worth the potential loss of customers.

He suggested that businesses follow the lead of firms like Intuit, Wix, SquareSpace, and EngageSmart that have successfully adopted SMB price hikes, with the advantages of higher pricing far outweighing modest churn consequences.

Barclays analyst Trevor Young, however, urged caution, saying that the size of the price hikes is substantial. He still has a Hold rating since the change’s effect on consumer acquisition and loyalty is unclear.

Shopify stock opened Wednesday morning up 6.02%.

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