What are the most important costs about when starting a dropshipping business?

Here are where most of your startup money will go when starting a dropshipping business: 1. Building up an online store 2. Supplier fees 3. Marketing costs 4. Other business expenses, such as obtaining a tax ID or local business licenses

How much it will cost to set up your online store?

Let’s have a look at what it will cost you to setup a Shopify store. A basic plan for a Shopify ecommerce store is $29 per month and can get up to $299 per month. Keep in mind that on top of that, you need to also purchase a domain for your site, if you don’t have one already, and can do that within Shopify at a starting cost of $14 per year. So, to sum up, the initial cost to set up a basic Shopify ecommerce store can get to $43.

How much will you pay for dropshipping platforms or suppliers?

Most dropshipping suppliers and platforms charge a transaction fee and a subscription fee for services and products, and that’s only normal. Let’s take AppScenic, our dropshipping platform. If you want to sign in for an account with us and check our catalogue with over 500,000 products, you can start with a Free Account. But the Free Account won’t give you access to any of our automation features, like syncing products or orders, or the ability to push products to your store. So, when you’re ready or sure you want to sell our products, you will need to upgrade to one of our paid plans, let’s say you choose our Standard Plan that’s $37 per month.

Other costs when starting a dropshipping business?

One other important aspect you need to think about has to do with the legal aspects of starting a dropshipping business. Most of the time dropshippers choose a sole proprietorship (also known as a sole trader in the UK) or LLC ( known as LTD in the UK). Now, let’s say you’re in the USA and decide to open a company there. The total cost to incorporate an LLC company can be around $600-700. You may also need to add some extra apps to your Shopify store, let’s say one to help you with SEO and one conversion optimization tool. For SEO you can find a free tool, like Plug in SEO, but you would need to choose a paid plan for an optimization tool, like Personizely, which can be $29 per month.

What’s the total cost when starting a dropshipping business?

Here’s a breakdown of how much it can cost you to start a dropshipping business in the USA: - Domain: $14 per year - Ecommerce platform (such as Shopify): $29 per month - Dropshipping platform (such as AppScenic): $37 per month - Sampling products: $200 - Marketing (such as advertising on Google and Facebook): $1,000 per month - LLC company to incorporate: $600 one time fee - Other apps: $29 per month If we add all this up, the total cost you need to pay one time is approx. $1800. The cost per month will be a bit lower, around $1000 if you keep the same budget for advertising.

How much does it cost to start a dropshipping business?

Many experts out there who will say you can start a dropshipping business for less than $100 or even for free. Well, what hat they don’t tell you is what you actually get for those money. Would you be able to have a fully functional online store? And would this budget bring you any orders and actual sales? No, you won’t be able to have either a competitive store or to get too many sales. If you actually want to stand a chance in this highly competitive ecommerce world, then you need to invest around $1800 in the beginning. The cost per month will be a bit lower, around $1000 if you keep the same budget for advertising.

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The True Cost Of Dropshipping – What Nobody Tells You

The True Cost Of Dropshipping – What Nobody Tells You

December 18, 2024
7:46 am

Dropshipping, Ecommerce, FAQ

Many “experts” out there claim that it’s possible to start a dropshipping business for less than $100 or even for free. And while it’s technically possible, is this minimal budget enough to create a fully functional and competitive online store? Can you expect real sales and profitability on such a tight budget?

The truth is, no, you won’t build a sustainable, competitive store or generate consistent sales with just $100. Dropshipping is not a shortcut to riches, it requires financial investment, hard work, and strategic planning to stand out in a highly competitive ecommerce market.

So, below we’ll break down the true costs of starting a dropshipping business. We’ll cover all the essential expenses you need to consider, from building your store and marketing products to legal compliance and managing returns, so you can start with realistic expectations and succeed in the long run.

Now, if you want to get to the total cost, just click on “What’s the total” in the table below.

Table of Contents

What are the most important costs of dropshipping?

While dropshipping eliminates upfront inventory costs (one of its greatest advantages), there are still several expenses you need to account for, such as creating your online store, finding suppliers and marketing your products.

These are some of the most important costs when starting a dropshipping business:

Building your online store
Supplier fees and platforms
Product sampling and returns
Marketing and advertising
Legal and administrative costs
Essential apps and tools

Let’s break each of these down.

How much does it cost to set up your online store?

Your online store is your storefront, it must be user-friendly, professional, and secure to attract and retain customers. Choosing the right ecommerce platform is key.

We recommend platforms like Shopify or WooCommerce as both these platforms can provide all the necessary tools for an awesome ecommerce store, such as great themes, customizable design, managing inventory, taking and shipping orders, receiving payment, etc. Of course, Wix or Ecwid can also be great alternatives.

Now, let’s have a look at what it would cost you to set up a Shopify store:

A Shopify basic plan: $36/month
A domain: ~$15/year (Shopify or registrars like GoDaddy or Namecheap)
Transaction fees: Shopify charges a 2% fee on sales (e.g., $240/year for $12,000 in sales).

Optional but beneficial additions:

Premium themes: $100–$500 (optional, free templates are available).
Essential apps: Plugins for SEO, conversion optimization, or email marketing ($20–$60/month).
Other transactional fees: Other payment processors than Shopify payments, such as Stripe or Paypal.

Total initial setup cost: ~$54 one-time + $39/month ongoing fees (+ transaction fees and apps).

Expert tip: If you’re just starting out, free Shopify themes can help keep costs low while you build momentum. Once profitable, invest in premium templates for a unique and professional look.

How much do suppliers or right dropshipping platforms cost?

The second most important platform you need to choose after having a Shopify online store is a sourcing or a dropshipping app that can give you access to products you can import and sell in your store.

Yes, finding reliable suppliers or dropshipping platforms is critical for success. While some platforms offer free plans, most charge subscription fees or transaction fees.

Typical supplier and platform costs:

Subscription fees: $20–$100/month, depending on the features and order volume.
Transaction fees: 5–10% per order on some platforms.

For example, AppScenic offers a Standard Plan at $29/month, giving you access to over 1 million products from trusted suppliers. Choosing a platform like ours ensures quality products, fast shipping, and tracking capabilities.

Product sampling

To ensure quality and customer satisfaction, you should test products before listing them. We recommend testing 1–2 products per supplier.

Average sampling cost: ~$200 (varies by niche and product type).

Expert tip: Avoid relying on a single supplier. Find more suppliers and diversify your options to protect your business from stock issues or poor service.

What are return and refund costs?

Returns and refunds are inevitable in ecommerce. While dropshipping reduces inventory risks, you will still handle dissatisfied customers, lost packages, and chargebacks.

Now, of course, all these come with a cost that it’s impossible to know but we want you to be aware of it.

Here are some key considerations:

Return costs: If your supplier doesn’t accept returns, you may need to refund customers while absorbing product costs.
International returns: If using Chinese suppliers, return logistics can be expensive and impractical. Alternatives include offering refunds or using third-party warehouses for returns.

To minimize costs:

Work with local suppliers who offer hassle-free returns.
Be transparent about return policies and delivery times.

Expert tip: Set aside a small budget (5–10% of monthly sales) as a safety net for handling refunds, replacements, and chargebacks.

How much does marketing cost?

This is another tough question, as it’s very difficult to know for sure how much marketing and advertising can cost. What we know for sure is that without marketing, even the best products won’t sell. Marketing is crucial for driving traffic and sales to your store.

Key marketing channels:

Social media ads: Facebook, Instagram, TikTok.
Google shopping ads: Great for high-priced products.
SEO: Optimizing your store for organic traffic.
Content marketing: Blogging, videos, and influencer collaborations.

Estimated marketing costs:

Initial advertising budget: $500–$1,000/month (for Facebook Ads and Google Ads).
SEO tools: ~$30/month for tools like Plug in SEO for Shopify.
Content creation: Optional, but hiring freelancers for blog posts or videos may cost $100–$300.

Expert tip: Start small by focusing on one or two platforms where your audience is most active. For example, Facebook is known to work best for products in the $10-100 range and Google Ads works best for medium to high-priced items above $100. Measure performance and gradually scale your ad spend.

What about legal and administrative costs?

Starting a legitimate dropshipping business requires addressing legal requirements like company registration and taxes. Of course, the legal requirements depend on your region, so make sure to check what the law says in your case.

As a general rule, dropshippers in the USA choose to open a sole proprietorship (or sole trader in the UK) or LLC ( or LTD in the UK). If you are in the USA, check this article on how can you set up a dropshipping business there, and if you’re in the UK, here’s a guide on how to start a dropshipping business.

Common legal costs:

LLC registration (USA): ~$600–$700 one-time fee.
Business licenses: Costs vary by state or region.
Accounting software: ~$15–$30/month for tools like QuickBooks or FreshBooks.

Expert tip: Consult a legal advisor or accountant to ensure compliance with local laws and tax requirements.

Essential apps and tools

You will need to think about a few ecommerce apps as these can streamline operations and improve conversions.

Key tools include:

SEO optimization: Plug in SEO ($30/month).
Conversion optimization: Personizely or OptinMonster ($39–$49/month).
Email marketing: Klaviyo or Mailchimp ($20–$50/month).

Optional tools:

AI tools for product descriptions, image optimization, and customer analytics.

Expert tip: Focus on tools that directly improve user experience and increase sales. Avoid unnecessary subscriptions in the beginning. For example, if you choose AppScenic, you will have access to AI tools for SEO optimization, product descriptions, image optimization and ad creation.

What’s the total cost of starting a dropshipping business?

Here’s a realistic breakdown of startup costs for a dropshipping business in the USA:

Domain: $15/year
Shopify store (Basic Plan): $36/month (plus the 2% transaction fee)
Dropshipping platform (e.g. AppScenic): $29/month
Product sampling: $200 (one time)
Marketing (Google/Facebook ads): $500-$1,000/month
LLC registration: $600 (one-time)
Essential apps (SEO & Conversions): $60/month

Total initial cost: ~$2,000 (one-time setup)

Monthly cost: ~$1,000 (including marketing and tools).

Of course, this total cost can be lower or higher, depending on many factors, like your niche, how many products you want to test, the LLC company you choose, the dropshipping platform you want to go with, or if you want to invest in a dropshipping course.

There’s no way to know exactly what it will cost you in the end, but what we can tell you is that even if you start with minimal costs, a dropshipping business will cost you more than $100.

So, is dropshipping worth the cost?

Starting a dropshipping business requires more than just a few dollars, it’s a real business that demands time, money, and effort. While it’s not as expensive as traditional retail, you still need to budget realistically for setup, marketing, legal compliance, and ongoing operations.

Bottom line: Don’t let myths about “free dropshipping” mislead you. With a realistic budget, thorough planning, and smart investments in tools and marketing, dropshipping can be a profitable and scalable business model.

If you’re ready to invest in your future, take the first step today. Research your niche, choose reliable suppliers, and start building a business that lasts.

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