It's helpful to wonder if Shopify and others based on % of sales have a limited TAM at the high-end of the market based sheerly on business model.

In SaaS, I have seen both good and bad come out of % of sales business models. Going back to 20+ years ago when I was at ChannelAdvisor. If you charge a % of sales, you could often set your watch by the "renegotiation" call once your monthly bill got too high.

So much that you wondered why these rates weren't tiered to start with. This always limited the success of Demandware vis-a-vis Oracle, and Magento back in this era. Large beauty, fashion, and luxury brands had the gross margins to afford % of sales business models - who cares about 1-2% when average beauty gross margins are 70+%?

Still, retailers and lower margin categories (which, isn't everyone getting slightly lower margin these days) Demandware struggled to penetrate. Larger players went to Oracle or built in-house. Smaller to mid-market players went to Magento.

The reasons?

First of all, no transaction tax outside of the payments industry, which the larger you are, the more you can negotiate this down.

That low to mid-margin set of businesses, which avoided Demandare initially, and I think you could include a lot of "pure B2B" (industrial/scientific, etc) in this bucket to a large extent, there is an argument that this is much harder for Shopify to access purely due to business model -- even if you grant all their arguments about innovation, etc. The TCO falls down at high scale because the service costs do not level out and the costs are not capitalizable except for the initial theme build.

In the Enterprise, it's clear that Shopify largely has two primary offerings.

1 - Shopify Plus. There is a segment of "Enterprise" for Shopify which essentially looks like taking former Salesforce accounts (see % sales logic above)

2 - Shop Pay. In this case, Shopify can sell to anyone, even lower margin clients. But it's not selling platform. It's "simply" a Paypal competitor. The overall pitch and statistics seems aimed primarily to those with legacy guest checkouts.

One wonders if at the high-end of the market, Shopify just won't find it easier to permanently sell payments, and not come back to selling platform. And if that happens, what happens to their business model?

If the answer is "not much," then what you have is primarily an Enterprise payments provider, and a SMB through mid-market platform provider (of course excepting the -- rather large -- SF part)

In fact, I think despite the rhetoric the idea of the Shopify onramp from payments --> Shopify Plus platform seems largely untested, given its newness. How could it not be, it was launched the last year?

After all, there is quite a jump between being one of many payment providers on a checkout, to providing catalog, pricing, promotions, cart, order management, and other services independently.