How Does Payhip Make Money? - Investopedia

Payhip is an ecommerce platform specifically targeted at digital content creators. It enables users to sell digital downloads, online courses, coaching, memberships, and physical products. It makes money from subscription fees and transaction fees, which vary by plan.

Key Takeaways

• Payhip is an ecommerce website that enables users to create online storefronts.
• Payhip's platform is designed with digital content creators in mind, and its users sell products like digital downloads, coaching services, online courses, memberships, and physical merchandise.
• Payhip has three pricing plans: Its free plan has no monthly cost but charges 5% transaction fees on each sale; its mid-tier plan is $29 per month with a 2% transaction fee; and its premium plan is $99 per month with no transaction fees.

What Is Payhip?

Launched in 2011 and based in London, Payhip is an ecommerce platform that specializes in digital services like downloads, online courses, memberships, and coaching. It also enables online ordering for physical products, with the ability to sell and manage inventory, fulfill orders, run promotions, collect reviews, and more. Payhip features a customizable store website builder, and users can connect their own custom domains or embed a checkout on their existing websites.

Compared to other ecommerce platforms like Shopify, eBay, and even Etsy, Payhip's target audience is digital creators. Their "About Us" page states, "We help creators earn a living online doing what they love," and their "Mission" section opens with, "Whether you're an author, designer, YouTuber, blogger, poet, knitter, painter, musician, podcaster, consultant, teacher…." As of mid-2023, their website advertises a user base of "over 130,000 creators."

How Payhip Works

From a business perspective, Payhip makes a profit by charging for monthly plan subscriptions as well as transaction fees, which differ across their three plan types.

From a user perspective, Payhip facilitates the direct online sale of both digital and physical products. Sellers can create customized storefronts without needing any technical or coding knowledge, and can take advantage of email marketing tools, tax reporting, and features like coupons, reviews, referrals, and more. Sellers receive a payment from Payhip after each sale.

Payhip has a slightly different user flow for each type of product sold through the platform. Each sale starts with a customer visiting a digital product page and completing a purchase. After that, the customer journey changes depending on the product, as outlined below.

Selling Digital Downloads on Payhip

After purchasing a digital download, customers are sent to a download page where they can access their files and receive an email receipt with a link to access their download in the future.

Selling Physical Products on Payhip

When a customer purchases a physical product through Payhip, they see an order confirmation and are emailed a receipt. The Payhip seller then receives the payment and is prompted to ship the order. The seller then sends out the order and can mark it as "shipped" in Payhip and send an email with a tracking number to the customer.

Selling Courses, Coaching, Memberships, and Subscriptions on Payhip

For these types of services, customers set up a password and create an account at the time of their purchase. From there, they're directed to a subscription page or dashboard where they can manage their personal information or online materials as applicable. Customers are also emailed a link to these pages in their receipts.

Payhip Features

Payhip describes itself as an "all-in-one ecommerce solution for creators" and has a range of features targeted at digital creators. All their plans include access to all of their features, which include a wide range of capabilities for different use cases.

Payhip enables the sale of:

• Digital downloads, such as e-books, software, design assets, video files, music, recipes, workbooks, fonts, templates, presets, and printables
• Online courses, with capabilities like videos, files, quizzes, downloads, surveys, user accounts, comments, assignments, certificates, and more
• Coaching and consulting services, with meeting and calendar integrations to Zoom, Skype, Calendly, and more, and client communication and event-sharing tools
• Memberships and subscriptions, including the ability to provide free trials, set different pricing structures and intervals, communicate with customers, share exclusive content with different privacy settings, and manage customer accounts or allow customers to manage their own accounts
• Physical products, with features like inventory management, order fulfillment, promotions, customizable design and domain, reviews, and analytics

Payhip's features include:

• An online store builder and blogging platform
• Built-in marketing tools, like the ability to create coupons, run affiliate and referral programs, cross-sell and upsell products, and host reviews
• Integration with PayPal and Stripe, enabling payments from various international currencies
• Sales tax collection, reporting, and payment
• General Data Protection Regulation (GDPR)-compliant email marketing integration with a variety of platforms, or an internal email update system
  

How Much Does Payhip Cost?

Payhip offers a free plan; however, under this plan type, each sale is subject to a 5% transaction fee. In addition, sellers must link a PayPal or Stripe account (or both) to Payhip to receive payments, and PayPal and Stripe both charge transaction fees. These fees are each estimated at around 2.99% plus a fixed fee per transaction, with an additional 1.50% fee for international transactions.

In addition to the free plan (called the Free Forever plan), Payhip offers a Plus plan ($29 per month with a 2% transaction fee per sale) and a Pro plan ($99 per month with no transaction fee for sales). All of the plans include all of Payhip's features, with the only difference being the pricing structure.

Notably, if sellers choose to refund a payment to their customers, none of the fees that Payhip, PayPal, or Stripe charge are refunded to the seller. Also, sellers cannot currently choose to receive their money in different installments to save on PayPal and Stripe fees.

Users who choose to sell courses and host videos with Payhip must also pay a fixed price of $5 per month for this additional hosting service.

What Percentage Does Payhip Take?

The percentage that Payhip charges as commission varies by plan. Payhip charges a 5% transaction fee for every sale under their free plan, a 2% transaction fee under their $29-per-month plan, and no transaction fees under their $99-per-month plan.

Do You Have to Pay to Use Payhip?

You do not have to pay a monthly fee to use Payhip, as they offer a free plan that includes all of their features. However, the free plan does include a 5% fee that is charged as a commission for every transaction. Their $29-per-month Plus plan includes a 2% transaction fee, while their $99-per-month Pro plan does not charge any transaction fees.

Is It Free to Sell on Payhip?

Although Payhip offers a free plan, it charges a 5% transaction fee for every sale under this plan type.

Do You Need PayPal to Use Payhip?

To receive payments via Payhip, sellers must either link a PayPal account or a Stripe account—and sellers have the option to use both if desired.

How Do I Get Paid on Payhip?

When you sell something on your Payhip store, Payhip will instantly transfer money to your PayPal or Stripe account, less the applicable fees from Payhip (which vary depending on your plan type), PayPal, and Stripe. You will receive a transfer after every transaction as it happens.

The Bottom Line

Payhip is an ecommerce platform targeted at creators who want to sell online content, with the option to sell physical merchandise as well. Its many features address various digital applications involved in selling content, such as digital downloads, courses, coaching, and memberships. 

The platform is designed to be easy enough to use that sellers do not require any technical knowledge to set up a shop, but customizable enough that it can integrate into existing brands, businesses, platforms, and marketing strategies. Please note that users can only sell original material, not private-label rights.

Sellers looking to use Payhip will need a PayPal or Stripe account to receive payments. In comparing Payhip with other platforms, it is worth noting their specialty in digital content delivery as opposed to physical shipping logistics, as well as comparing the transaction fees against those charged by other ecommerce companies. It is also important to consider sales volume against Payhip's plan subscription types and the associated payment processing fees charged by Payhip, PayPal, and Stripe.