
Making money building Shopify micro-SaaS apps - gk1
https://www.preetamnath.com/blog/building-your-first-micro-saas-app-on-shopify
======
rwhitman
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.

~~~
DevX101
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
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.

------
valuearb
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.

~~~
lxxvii
> 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?

~~~
adventured
Which might imply closer to $180-$200 million today, given their sales have
doubled since 2018.

------
andygcook
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
> 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
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-...](https://thinkgrowth.org/building-on-slack-saved-our-
startup-94953fdaf27a)

~~~
atarian
Were there any other wiki-like apps for Slack when you guys first launched? I
know there are several now, but I'm curious what it was like in the beginning.

~~~
andygcook
The only other one at the time that also built a Slack integration was Guru.
Confluence didn’t have a Slack integration and HipChat was still alive too, so
our bet was that we could be the Confluence equivalent for the
Slack/Github/Asana ecosystem. Things have wildly changed since then (e.g.
Slack bought HipChat, dozens of new competitors, etc), but we’ve adapted.

------
donutdan4114
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
You're very successful. There're too many copycats on shopify. Do copycats
have significant impact on your business?

~~~
donutdan4114
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.

------
areoform
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
The recommendation engine may not require ML. The recommendation can be based
on statistics of customers browsing history.

~~~
areoform
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
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.

------
vemv
> 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.

------
zaroth
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).

~~~
nickjj
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
> 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.

~~~
nickjj
> 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.

That sounds very much like the definition of collusion. An unspoken agreement
that says "you don't move, we won't move".

------
drchiu
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.

------
semireg
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
The direct ZPL deprecation was dumb. Thankfully Shippo fixes that already.

Shipping is real, and the more carriers you can support seamlessly the better.

------
edge17
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?

~~~
tarsinge
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
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, ...

------
pw6hv
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.

~~~
heipei
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.

~~~
pixelbash
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.

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

