What is the real cost of starting a Shopify dropshipping business? Can I start a dropshipping business with $100? How many sales can I get if I have a starting budget of $50?
Without a doubt, this is the most asked question in the Shopify dropshipping space.
This post might be disappointing for some of you guys, but someone somewhere has to break it down and reveal the real cost of starting a dropshipping business.
So Let’s face it….
Table of Contents
Can You Start Dropshipping with No Money?
Dropshipping is not a get-rich-quick scheme. And it’s not a system to pluck money from thin air.
Like any other business, you need to invest your time and money.
How much money you need to invest depends on how much time you have and how fast you want to build your business.
Your startup budget totally depends on you. If you have your time and skills, you can do everything yourself manually, build your own platform, promote by engaging in community forums, learn and build the necessary features yourself.
Even if you do that, you might still have to pay for a hosting company and domain name.
So Let’s be realistic. You need money to make money here.
I know how you came here. You wanted to make money online, so you googled “how to make money online” and got to know the term “Dropshipping.” After countless hours of research and youtube gurus claiming they can make you rich. You really wanted to know if you can start a profitable dropshipping business with no money.
But here is the ugly truth which might break people’s heart.
Dropshipping Cannot be started with No Money. If you want to know why and how much you really need to start, Keep reading…
How Much you need to start a profitable Shopify Dropshipping Business? An Honest Realistic Breakdown of the real costs.
Let’s break down the startup costs.
Probably the biggest advantage of this business model is that you need less capital to start. It is possible to launch your eCommerce business without having to invest thousands of dollars in inventory upfront or having to pay for warehousing.
But it doesn’t mean you don’t need any money.
- Domain name = $14
- Shopify plan = $29
- Apps = $20
Let’s give 3 months for you to be profitable with your store.
The costs will be:
- Shopify plan for 3 months ($29 x 3) = $87
- Apps for 3 months = $60.
- Domain for a Year = $14
So the lowest startup budget you should have is – $161
Ok. I know what you’re thinking. I don’t need any paid apps to start.
No. You should be budgeting at least $9 for the apps. At least a basic review app to import reviews.
As you start getting some sales, you should be expecting to spend some more money on apps that let you upsell, bundle sell, and recover abundant carts. You won’t be profitable without these in place. But this is when you grow. To start, you should expect to pay for one or two apps to give you that added advantage.
How Much is the Marketing Cost for a Dropshipping Store?
Some say that you can promote on groups/communities and online forums to get sales without spending any money on ads.
This is not true. You won’t be profitable unless you already have a community/following. Even if you get some sales, it will barely cover the fixed monthly expenses we listed above.
Unless you do something crazy or creative, and it goes viral.
How Much Does Instagram Influencers Cost for Dropshipping?
If you’re going with Instagram influencers to promote your product. A good influencer with real followers and engagement would cost you between $50 – $200.
Every influencer you pay won’t bring you sales. They can’t promise you the sales.
And think about it. You’re going to them without a proven product (which means you’re testing the product). So there is no guarantee here.
Suppose you pay $100 for 5 influencers to promote your product. That is $500. If you don’t have a proven product and targeted audience. Let us all pray that this will break even.
How Much You Need to Test a Product with Facebook & Instagram Paid Ads?
I would say at least $75 to test a product. If your budget is anything less than that, You will abundant it without really knowing if it’s a winner or not.
So say you test 10 products before finding a winner (this is just an assumption, just for the sake of this post).
So it’s $75 X 10 = $750.
If you do the ads right. You should expect to get some sales with that ad spend. If you ask the Facebook ads experts, they will say that they are only trying to break even or prove a point, even if it’s negative in the testing phase.
But say you found a real winner and you made $1000 in sales (which is great).
In this case, $1000 – $750 = You will have $350 after the marketing costs.
And don’t forget about the cost of goods sold. Let’s have $300 for the cogs.
So it’s now $350 – $300 = $50. Oh wait, what about the transaction fees? You have to pay around 2% in transaction fees to your payment provider.
So it will be $20 for $1000 in transactions.
So you have $50 – $20 = $30. Oh, wait, who pays for the maintenance costs? What if a customer asks for a refund?
See what happened here? This is what it means to test a product. If you have a proven product, then the case is different. You will be spending all your money on something that is proven to bring in sales.
But today, we are breaking down the cost of starting a profitable dropshipping business, Not Scaling an eCommerce Business.
This is what happens with 90% of the dropshipping stores out there. Being abundant due to the lack of funds to run the business. Some people give up before finding a winner, and some don’t have enough money to scale it.
Sometimes you may find your gold mine pretty early. Sometimes it takes 20 – 30 products before finding something.
So be prepared.
Final Thoughts! How Much is Really Enough?
At least $1500 to be safe/comfortable starting your dropshipping business. Considering the increasing ad costs and maintenance costs, anything below $1000 is a big risk now.
I am not saying that no one can ever start a successful dropshipping with less. You can if you have a marketing background or very lucky.
But this post is for people who don’t fall into that category. For the people who take the largest space in the pool.
This post is not to discourage you. This is to warn you. Like most businesses, Dropshipping is not a get-rich-quick scheme, and it takes money to make money. Although you can start a profitable dropshipping business with much less money compared to other businesses. You still need some money.
If you’re a complete newbie, You might have to spend some time and money educating yourself. Learn until you feel you’re ready to go in. Yes, the best way to learn is by doing it. But don’t bet your money on a horse you don’t know about.
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And Yes, there are tons of free resources on the internet you can learn from. But most of them are just Business BS upselling you to their software or paid courses.
If you’re going to invest in a course, Invest in one which will teach you A-Z from setting up your store, doing product research, all the way to scaling your store to 5-6 figures with Facebook ads.
PS. This is my personal opinion working as a social media marketer and an eCommerce consultant for the past 6 years. I welcome your comments, and let me know your story starting with less. I would love to be proved wrong on this topic.
Happy Selling, Everyone!