What a shower niche really is, and why it is all about water
A niche is just a recessed shelf built into the shower wall, so your shampoo is not balanced on the edge of the tub. Handy. The catch is where it lives: right in the wet zone, in the wall whose whole job is keeping water out of your house, which is a proper waterproofing job on its own.
So a niche is not a tiling job with a bit of waterproofing. It is a waterproofing job with a bit of tiling on the front. Get that order backwards and you have not built a shelf, you have built a nice little bucket inside your wall.
Waterproofing a shower niche is the part you never see and cannot skip
This is the one that matters. Waterproofing a shower niche means the membrane, the sheet or coating that actually keeps water back, runs unbroken into the box, up the sides, across the back and over the little shelf, with every corner sealed. Tile and grout are not waterproof. The membrane behind them is, and a niche adds five fresh inside corners for it to fail at.
We waterproof to ANSI A118.10, the standard for bonded shower membranes, and we do not mix one brand's sheet with another brand's liquid, because that is not a system anybody warranties. Then, before a single tile goes on, the whole shower gets a flood test. A niche is exactly the kind of clever little detail a leak loves, so I would rather find a mistake with a hose than with your ceiling.
The shelf has to slope, or your niche becomes a puddle
Tiling a shower niche has one detail that separates the good ones from the mouldy ones: the bottom shelf tips forward, about an eighth of an inch, so water runs out instead of sitting in a puddle at the back. A dead flat shelf grows a small science project in the back corner. A slight forward slope, and it drains itself every time you shower.
Small thing, big difference. It is the same reason a shower floor slopes to the drain, just in miniature.
Tiling a niche so it looks built in, not bolted on
Now the fun part. Tiling a niche is where it either looks like it was always meant to be there, or like somebody remembered it at the last minute. We line the niche up with the tile joints around it, so the grout lines run straight through instead of stopping and starting at the box.
Plenty of niches get a feature: a strip of mosaic, a slab of the same marble, a contrasting accent band. That is your call, and we hold samples in the shower before anyone commits. The one hard rule is the inside edges get a clean finish, a mitred tile edge or a metal trim, never a lump of caulk hoping nobody looks too closely.
Where to put a niche, and where to think twice
Height first: about eye level, on the wall away from the shower head, so the spray is not firing straight into it. Between two studs is the easy build, because you are not cutting into anything structural. Go wider than one stud bay and it means framing work, which is completely fine, it just belongs in the plan and the estimate rather than as a surprise on day three.
One wall to think twice about is an outside wall, where the recess eats into your insulation. Not a dealbreaker, just a conversation to have before the saw comes out.
When you do not need a niche at all
If your shower is already tiled and watertight and you just want somewhere to put the soap, do not let anyone cut a niche into that finished wall. Opening a waterproofed shower to add a recess means redoing the waterproofing you already paid for. A surface-mounted corner shelf in glass or stone gets you almost all of the function with none of the risk.
And if the budget is tight and this is a quick refresh, the niche is the first thing I would cut. It is a lovely detail, not a necessity, and a leaking one is worse than none at all. I would rather talk you out of it than build you a slow drip with nice tile around it.