Like any side hustle you start, there are almost always going to be some kind of financial cost involved.
The great thing about drop shipping is that it can cost as much or as little as you want it to.
As you’ll see in this article you don’t need to have everything I list here. However, as you grow your business some of these tools may become necessary to have to help you grow your business and take it to the next level.
So if you’re looking to feel things out as to how it could end up costing you to start your own dropship business then keep reading.
3 Dropshipping Cost You Don’t Have to Pay For
Before I start I just want to share a couple of costs you won’t have to pay. The reason for this is because your customers will cover these when they buy the products through your store.
#1 You don’t have to buy products in advance. The great thing about drop shipping is that you only have to order the product once a customer orders the product from you. This eliminates the risk of ordering a bunch of products no one wants or needs.
#2 Shipping. This is also another thing you will not have to pay for. When it comes to shipping a product from your supplier you’ll want to follow whatever shipping agreement they have in place.
#3 Suppliers. Finally, you should never have to pay to work with a supplier. Rather it should be a mutual agreement that you work with a supplier.
Now that we have those out of the way lets jump into the cost you will have to pay as a drop ship store owner.
#1 Shopify Platform – $29 a Month
First, and most important you’ll have to pay for a platform to host your store. There are several different options available but I’ve found Shopify to be the best. It gives you the full freedom and flexibility to design the store however you want and also takes care of all the payment stuff.
Plus they carry top grade https encryption to prevent people from hacking you and a ton of other great features at a low monthly price starting at $29.
#2 Credit Card – Minimum $5000 Credit Limit
Second, you’ll need some sort of credit line to order the product from your supplier. To do this I recommend having some sort of credit card with a minimum of $5000 to $10,000 credit limit.
When it comes to drop shipping, selling higher priced items will earn you more income vs selling lower priced items. For example, if you sell a $1000 item and you only have a $1000 limit it will be hard to manage your store since you’ll have to pay off your card every time you place an order.
Related Article: 7 Tips to Find the Best Items to Dropship [Plus 25 Example Ideas]
Because of this, you’ll want to carry at the very minimum a $5000 credit limit to allow you to buy more items. I prefer a $10,000 limit as the best option and gradually raising it over time.
Pro Tip: Use a credit card that offers cash back rewards or airline miles. I use the Capital One QuickSilver which gives me back 1.5% cash back on everything I buy. You can learn more about that card here.
#3 Logo – $299
Next, you’ll want to give your store a professional look and feel and the best way to do that is to get a professionally branded logo designed.
The reason for this is that it will help you attract top-notch suppliers. When suppliers look at your store they want to see a well-designed store with professional branding. This shows them that you’ll bring a higher level of professionalism to your store.
The best way to do this is with 99 Designs. With 99 Designs you can submit the type of logo you are looking for and get a minimum of 30 designs ideas back from professional top quality designers. Yes, you could probably use Fiverr to create your logo but if you want to attract top suppliers its worth the extra money.
#4 Domain Name $10.69/Year
You’ll also need a domain name for your store as well. To do this I prefer NameCheap. This is who I use to host all of my domain names and they are typically the most favorably priced.
When it comes to picking domain names for your store there are definitely some big do’s and don’ts here. As part of this, I want to give credit where credit is due because learned all of this from Anton Kraley over at Dropship Lifestyle and highly recommend checking out his stuff.
#1 Your name should have a branded feel to it. First, the domain name you choose should have a branded feel to it. A good example would be Lumens.com. A bad example would be something like MikesLights.com.
#2 No discount names. Second, if you’re looking top notch suppliers then you don’t want your brand or domain name to have a discounted type name. A bad domain name would be CheapDiscountLights.com
#3 Keep the name short. Third, keep the name short, simple, and memorable. Ideally, one word would be the best option but not more than 3 will work.
#3 Always Use a .Com. Finally, most importantly use a .com domain name only.
#5 Advertising – $300 a Month
When you’re first starting out you’ll also have to consider advertising to bring your first customers. The cost to do this ranges from as little as $10 a day to thousands of dollars a month.
It all depends on the platform you use from Facebook ads to Google Adwords. However, as a good starting point, I would expect to pay at least $10 a day or roughly $300 a month.
This may sound like a lot but if you target your customers correctly you should see a decent profit back on what you spent here.
*Resuts are not guaranteed.
#6 Phone Number – $24 a Month
In order to be a true drop shipping business, you’ll need a phone number that you can prominently display at the top of your store. The reason for this is that in order to advertise in places like Google Shopping you will need this phone number.
To do this you can get a free number from Google Voice but the problem with this is that most professional online dropship stores have an 800 number. This is why you’ll want to have an 800 number which runs $24 a month through Grasshopper.com
#7 Address – $30 a Month
Another dropshipping cost that most people don’t consider is the address of your business. While a lot of people may consider their home address as the best option you may not want to reconsider this.
After all, do you really want somebody knocking on your door asking to buy a product or a refund? Probably not.
To handle this you can create a street address using your local UPS store. The cost varies by area but you’re likely looking at $25 to $30 a month. If you have one of these feel free to share how much it costs in the comments section below.
Side Note: The cost I’m about to discuss below are optional when starting your first drop shipping store.
#8 *Website Design – $599
As I talked about earlier with having a great looking logo you also want a great looking store that looks professional. This isn’t necessary in the beginning because there are tons of great free themes on Shopify.
Plus I prefer to have more control over the look and feel of my store rather than trying to communicate that to some designer who has no idea what I want.
However, if this is something you don’t want to deal with I recommend using 99 Designs as the best option for doing this. You can expect to pay at least $599 for 15 design ideas. This would include the cost of the logo design as well.
#9 *Dropship Lifestyle [Drop Shipping Course] – $1297
If you’re brand new to this whole drop shipping thing you may also want to consider joining Dropship Lifestyle a complete course and coaching program that will show you the exact steps you need to take in order to start your business the right way.
To be honest you don’t need to join this course to start a drop ship business but it will improve your odds of success. Personally, I’ve been researching this course and found it to be the best option out there.
I also want to be upfront and say that this option is not cheap, it can run anywhere from $1297 to as high as $4997 for the complete done-for-you package. I know this sounds like a lot but you also have to think about how this could shortcut a lot of things and save countless wasted hours and money spent making mistakes that you could bypass.
#10 *Automation Tools
Another option to consider is tools to help you automate business. For example, this could be a tool that would place orders automatically with your suppliers.
The cost of these tools varies and there are several of them out there but the one I recommend is the Dropship Lifestyle App which comes with your membership when you sign up for their course and coaching program.
Obviously, you don’t need these tools when your getting started, in fact, I recommend that you not automate your store at first but rather take the time to learn how your business works before you automate things.
#11 * Virtual Assistant – $500 a Month
The final dropshipping cost to consider is hiring a virtual assistant to help you out. A VA can handle a lot of the mundane task in your business from answering phone calls to answering emails.
More importantly, they can free up more of your time so you can focus on growing your store’s profitability.
Again this isn’t a necessity but as you grow your business this is a great way to help you scale things and go to that next level with your business.
What Dropshipping Cost are You Paying For?
Now it’s your turn, what kind of dropshipping cost are you dealing with in your business? As I reflect on the cost to getting my first drop shipping store going I’m roughly looking at paying $700 on the low end and roughly $3300 on the higher end and if I want the done-for-you package you’re looking at nearly $5000+.
You’ll also have continually monthly cost from Shopify to getting your UPS address as well. In this case, you’re looking at roughly $385 on the low end to $900 to a $1000+ on the high end every month.
I would love to hear your thoughts on this in the comments below. Take a moment share how you plan to deal with these cost as a beginner.