The REAL Costs of Starting a Drop Shipping Business

Let's take a look at the truth of what it actually costs to get a drop shipping store up and running. There are a number of costs that you may not be aware of, so I want to go over them so that you'll have a realistic picture about what you'll need to get started.

Dropshipping is probably one of the most affordable business models. You don't need tens of thousands of dollars up front to get started. But the truth is that it's not zero, it's not a hundred bucks, it's not even $200.

You're going to need a decent investment in the business to make it work successfully from the get-go. This will help you work towards the win instead of depending on that impossible instant win.

So let's take a look at those costs.

First, you need a domain name. You can get a domain for about $10, depending on the registrar you use. Then you can get started with Shopify for free for nine days, and hopefully you'll make a few sales in that time, but to build a store you'll need at least the minimum package, which is only $29 per month. So that's one thing that you have to factor in.

Make sure that you budget this $29 into your monthly budget as you're getting started. You'll also need to buy a decent theme. I don't use any of the free Shopify themes. They're okay, but I always use what's called the booster theme which has all these amazing optimizations. If you use the default theme, or a cheaper theme, you have to install these apps and they'll cost you a bit more. I'll get into that in a second, but I always use the booster theme. It costs about $50.

So right there you're in for about $100 already. Now, even if you don't know anything about building a website, Shopify is pretty easy to use but it's not 100% done for you. So if you don't know anything about it, you're going to have to get someone to build your website. I recommend doing this anyway because whenever you try and build your own, it can end up looking a bit dodgy, a bit cheap, a little bit tacky.

You can get a website built for about $500, but if you really want greeat quality and optimization, you're looking at between a thousand and two thousand dollars. This investment is worth it: perfect, high-quality images, everything sized correctly, color schemes all taken care of. It will look like a high-end online store comparable with anyone else’s out there.

Even if you don't invest in professional website design, the optimizing apps you'll

need are an expense. They may only be a few bucks a month, but if you're using four or five, it starts to add up quickly. You should account for an extra forty dollars a month in your budget for these apps.

Then there's phone costs. I use a card called Velox in Australia. It's a prepaid I use and it costs about $50 a month because there's a lot of volume coming through there. That's just on incoming calls. I'll put about another $20 on Skype per store for outgoing calls when I'm calling my customers and lots of other stuff. So that's about $70 a month for the telephone bill.

Uploading products: If you want to, you can hire people to take care of this tedious task for you. It's possible to find people to do it for about 30 cents per listing, but at this low rate, they are probably going to stuff up regularly.

You'll realistically have to pay between 50 cents and a dollar to get any reasonable work done. Otherwise, you'll have more problems than it's worth for 30 cents each. So if you're paying to upload products, expect to spend $100-200 for uploads.

Now this is a big one: ads-spend. Let's get realistic here, because if you don't have between 500 and a thousand dollars set aside for ads before you even get started, you need to start saving some money to get to that point. You have to spend more at first because there is testing involved; it's not just turning on the ads and making sales. You'll make some mistakes, try some different strategies, and waste some money—that's just how it is.

This is just how business goes. There's always a learning curve unless you're paying someone a lot of money to run your ads, which I don't necessarily suggest, since unlike web design it is something it's pretty easy to learn yourself. If you've learned how to run your own ads, and then you do decide to outsource it, you'll be able to be sure that you're not getting ripped off.

So you're going to need at least 500 dollars, and likely closer to a thousand, in your pocket before you get started. People might say differently, but I'm telling you how it is. Once you've figured out what works and gotten all your ads nice and squared away, you're going to need at least 400 a month. I spend way more than that on my stores because I do all sorts of different advertising. I'm just talking about product listing ads here, and 100 bucks a week will get through that.

Remember, nothing's free! You know you've got to spend money to make money, so if you're serious about your business and want to be successful, you'll need to make this initial investment in advertising.

Hopefully that thousand-dollar budget will get you there. In theory, that could last a 

month or two, and then you're making a few sales and everything starts going smoothly. But you might have to wait a bit; it might take you three or four months to get to the point where you're winning.

So you'll need to make sure that your budget will allow you to spend sensibly without putting yourself out. You need to invest in your business to make it work, so be sure that you'll be able to cover all these operating costs for at least a couple of months, and up to four to really be safe.

Finally, I want to mention a less direct but just as important cost: courses. You can invest in a course and learn how to do all this yourself. These courses can range from a hundred to four thousand dollars, so it’s up to you. There are dropshipping courses and they'll teach you step by step on how to do things. There are also courses about online advertising that can be very helpful, and many others. Investing in yourself will help you invest wisely in your business.

This is what you'll be looking at as you start your dropshipping business. This is the real deal, so expect to spend some money. If you don't have those initial funds for setup and advertising, I suggest you save up before you even get started.

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