When dropshipping, you have 3 major costs/expenses/things to budget for:
1) Setting up your store.
2) Marketing your store and testing products.
3) Purchasing the products that customers buy.
How Much Does it Cost to Create a Store?
Most viewers watching this video will be looking to build their store with Shopify.
That means it will cost $29/month for the subscription, and then $14 for the domain name. That means you need just $43 up front.
However, there are two optional costs that are good to consider:
1) Purchasing a logo from Fiverr for $5.50 To build your store, you will need a logo. You can make a logo for free using a free logo maker. But a professionally designed logo will look a lot nicer in your store. For such a low cost, it is well worth it if you can afford it.
2) Purchasing an Upsell Shopify Plugin for $47/month The SMAR7 Bundle Upsell is very beginner friendly. But it’s also more expensive than a Shopify subscription! UGH!
However, once you stumble upon a winning product, putting upsells on top of it will more than pay back the cost of this plugin.
So what you can do is you can leave this off your buy-list and purchase it once you’ve found your winning product. You can then install this app and then put an upsell on top of your winning product. You don’t need to buy it up-front.
How Much Does it Cost to Market & Test Products?
While you can use free traffic sources, they are slow.
To take advantage of paid traffic, it is going to cost you money. In this video, we discuss Facebook ads.
We recommend being prepared to test at least 20 products. When we say “test products” with Facebook ads, we mean adding a product to your store, and then running a small ad for it on Facebook promoting it.
If the ad is profitable, you scale that item up and it becomes a “winner.” If it loses you money, then you kill the ad and test something new.
To run ads, I normally recommend starting with a $5/day budget and running it for 4 days. That means that each test will cost $20/product. So to test 20 products, it is going to cost $400.
Along the way it is very likely you’ll make some sales of products even if they turn out to be “losers” – but it’s good to budget for this just in-case.
If this is quite a lot of money (we understand!)
Here are some tips for you:
1) Plan to split it up over 2-3 months. You don’t need to run all of the 20 product test at once: you can do it gradually at your own pace.
2) Use side hustles to save up the extra cash. It will definitely be work – but it is well worth it.
There are ways to pick up jobs from home and to save up this money to reinvest into a business.
How Much Does it Cost to Buy Products That Customers Purchase?
Something that a lot of people don’t talk about when discussing this question is the cost to purchase items that customers buy. If you spend all of your startup money on marketing & setup costs, then you’ll have nothing left to purchase the products customers buy.
And if this happens – your business is sunk!
Unfortunately, money that customers pay you will not be send to you instantly. Stripe pays out every 7 days, and PayPal is likely to hold your money for 3 weeks (potentially more) until they trust you.
This means you’ll need to have money prepared in the meantime to pay for items until the money the customers paid you has cleared.
One of the most common reasons new businesses fail is due to cash-flow issues.
If you don’t want to be part of that statistic, then make sure you prepare in-advance by doing one of the following:
1) Have a credit card. You will get the money the customers paid you well in-advance of when your payment will be due on it. Plus you’ll get bonuses too (such as free air miles and cash back rewards to offset fees).
2) Have a debit card with $200-300 on it prepared in-advance to purchase the items from Aliexpress.