How to Calculate and Manage Dropshipping Cost?

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The sky is the limit! In no time, you can achieve your dreams and become a millionaire.

These are the latest statistics on dropshipping.

  • According to research on dropshipping’s market size, the industry is worth close to $150 billion.
  • It’s growing. Dropshipping is expected to grow steadily over the next five years.

These forecasts are for the Asia Pacific region.

It is now a great time for your first dropshipping shop. Dream big, dream big and be bold to seize the moment.

One of the most important questions entrepreneurs must answer in order to be successful is:

What does it cost to dropship?

We’ll tell your story in this article.

We’ll start by looking at why dropshipping can still be profitable if done correctly.

We’ll then share tips on how to set up a dropshipping company for virtually nothing (though this method has its drawbacks).

The bulk of this article is focused on the costs associated with starting a dropshipping company.

We will cover:

  • The basics. These include the costs of setting up your dropshipping shop on an ecommerce platform and obtaining a subscription to an extension/app for importing products.
  • Sample your products. You can’t go wrong with sampling your products to verify its quality. How much is it?
  • Adding functionality. Dropshipping can run more smoothly if you invest a little bit in additional software. We will be looking at some non-essential, but still useful functions that you can add to your online store.
  • Marketing. Dropshipping is difficult because you have to compete for customers online. It can also be extremely costly if it isn’t done right. Here’s how much you will need to spend.

We believe that $280 is a reasonable starting price for a dropshipping company.

Before we go into the details of how much you will need to spend, let’s first take a look at how dropshipping will change in 2021.

Is dropshipping still profitable?

Grand View Research has shown that dropshipping will still be profitable in 2021, according to its research. It predicts that dropshipping will continue to grow at 28.8% per year through 2025. It will become a $557.9 million industry by 2025. This is a pie you’d like to have a piece of.

Dropshipping is poised for another boom. Here are some key reasons.

  • Mobile e-commerce is growing. Statista’s research on mobile retail shows that mobile devices will account for nearly 54% of all ecommerce sales by 2021. This is an increase of 34.5% from 2017. This is an increase of 34.5% from 2017.
  • Warehouse expansion. Both in the US and Europe, there has been an increase in the number of warehouses that are used to store inventory. Dropshipping has become more secure because of this. The ability to source products from more locations has resulted in delivery times that are 6-fold faster in some cases. This allows dropshippers to compete with Amazon and other giants.
  • Greater internet access and greater purchasing power in the developing world. Dropshippers aren’t limited by geography. You can sell in any country you wish. It is encouraging to see that the internet access rate in developing countries has increased by almost 15% over the past five years. You can reach more customers if there are more internet users. You might consider expanding your reach abroad once you have established yourself in your local market. This guide will help you learn the best practices for international e-commerce.

This is the message. This is the best time to get started on your entrepreneurial journey. What about startup costs? Let’s start with the possibility of starting your business on a budget as low as $0.

Dropshipping is possible even if you have no money.

Dropshipping is a way to save money on inventory. What about all the other things? Is it possible to create or purchase an online store for free? How about marketing? What about marketing?

The answer is enthusiastic…sort of!

Although it is possible to start a dropshipping company with zero budget, you will need to invest money. It might be difficult and costly.

Here are some ways to reduce costs if you’re looking for a challenge in starting an online business.

  1. You can extend your Shopify trial. Although this isn’t advertised in advance, Shopify can extend your free trial by contacting them. This is a one-time deal. It is possible to save time and make more sales if you take the extra step.
  2. It is important to prepare for your appointment. You want to get the most out of your free trial, regardless of whether you decide to extend it. If you can set up your shop for free and make some sales, then the Shopify subscription could be paid for. You should plan as much ahead as possible to achieve this. For your store, create a brand name. Create FAQs and standard copy for your pages. Learn about pricing, marketing and payment gateways. You’ll be ready for your free trial.
  3. You can learn on your own. Dropshipping via online courses is an excellent idea. If you don’t have the cash to pay for dropshipping courses, there are other options. Youtube is a great place to start dropshipping. Check out this guide.
  4. Advertise for free. Advertising is one of the most expensive aspects of dropshipping. Try to get organic traffic via SEO. We recommend that you review this Shopify SEO checklist for more details. A blog is another way to increase visibility. This will allow you to share your knowledge about the product with more people. Keep in mind that these strategies take time and are not likely to produce immediate results.
  5. You can ship products free of charge. The Oberlo app, which costs $29.90 per months if you go with the Basic package (more details below), is available to you if your choice. You can still use the app free of charge! However, the downside is that there’s a limit on how much you can scale – the free version has a product limit. This may not be an issue if you are just starting your dropshipping business.

Dropshipping without money is not for everyone.

Dropshipping can be done even if you have a tight budget. However, it is inevitable that you will have to spend money in order to make money.

You might find that dropping shipping is not the best business model. You might be able to save money for the short-term. You’ll end up spending more time and effort than you save in the short term. You might also end up in a worse place for long-term growth.

These are some possible problems:

  • Your e-commerce store is not functional. Many platforms offer extensions and apps for free. These apps won’t be able to meet the standards of customer experience that you expect. You are competing with Amazon. You might have to pay for more functionality if you want to make dropshipping easier and ensure smooth user experiences.
  • Ineffective marketing. SEO is a time-consuming process. Even if your niche is small, it can be very competitive. You will also have an advantage in SEO over existing stores. You will find that you have very little traffic, or even no traffic, especially if your SEO is not working right away.
  • There are few avenues to establish a strong brand. Dropshipping is best when you have a strong brand. Dropshippers can be mistrustful of your brand if they see poor quality images and logos. Choosing not to invest could cause more damage than good.

The process will be painfully slow and frustrating if you don’t have the tools that most dropshippers use. It might even do permanent damage to your dropshipping business.

Although it’s possible to spend nothing on your startup, it is not a smart decision. Let’s take a look at the costs of dropshipping.

What is the cost of dropshipping?

Dropshipping startup costs can be very affordable if you have the money. Here is a breakdown of the initial cost. These costs may be per month or per year depending on how much you use them. The descriptions below will provide more information.

Keep in mind, however, that not all items are required and that the numbers provided here are only for informational purposes. You may want to:

  • Add more features to your store
  • Shopify themes that are perfect for your brand are available.
  • Increase your ad spend.

These will all increase your startup budget.

Let’s take a closer glance at each budget area.

The basics of starting a dropshipping business

Your online store: To run your online business, you’ll need a store. Shopify is the most preferred choice, so we will use it. However, you could also consider BigCommerce, WooCommerce or PrestaShop, as well as other platforms. They all have similar pricing plans. Shopify offers a 14-day free trial and $29 per month thereafter.

Your domain name: A domain name is also necessary for your online shop. Your domain name can be registered through Shopify for $10-20 per year.

Dropshipping apps: An extension/app is required to import products from multiple suppliers and automate orders. Oberlo is the most popular choice, with a 500-product limit and a forever-free option. You will need to upgrade to Basic to scale if you wish to. This package costs $29.90. Dropified and Importify are also great options.

Starting your dropshipping store: sampling your products

Dropshipping is a business that relies on quality products and timely delivery. If you fail to do this, your dropshipping business will have negative reviews and no return customers. This could quickly put an end your e-commerce business.

Ordering your product yourself is the only way to be certain about its quality and speed of delivery.

Although you don’t have to try every product in every version, it is a good idea to order at least one product each from your suppliers.

This will give you an idea of delivery times, packaging, quality, and other details. This will reflect your customer experience. This will help you with customer service queries. You can also take photos and create custom videos by having products delivered to you home, increasing your chances of getting traffic.

Depending on your dropshipping niche, the cost of ordering samples may vary greatly. We do require a number. Assuming you don’t intend to sell expensive jewelry or high-end equipment, let’s assume this will cost you $100.

Starting your dropshipping store: additional functionality

Some of the items that we have listed here may not be essential to dropshipping success. These are just some of the useful apps you might consider purchasing. Shopify offers thousands of apps to choose from. The choice of which app you buy will depend on your business model and audience.

Apps for bulk pricing and exit intent pop ups are two options. These apps can help you increase sales in the beginning.

  • Exit intent popups are JavaScript snippets that track the speed and direction a visitor’s mouse movement. A pop-up window appears when the cursor moves beyond the upper page border. It contains a discount code and other calls to action.

You might consider Wheelio and Spin-a-Sale for exit intent pop-ups. For bulk pricing, we recommend Discounted Prices or Bold Quantity breaks. These are only available through Shopify. However, similar functionality can be found on other platforms.

These apps come in a range of pricing, ranging from $10 to $20 for the basic version to $15 for the premium versions. Let’s assume that you add additional functionality to your store and it will cost you an additional $15.

Starting your dropshipping store: marketing

It is more difficult than with the other items, however, to put a specific number on your marketing is not easy. This is because in most cases, the higher your product visibility, the more customers you get. It’s your decision to decide how much money you spend on Facebook ads and Google ads. You can also try another Google Ads option if these platforms seem too costly.

Don’t be discouraged, even a small marketing budget can still get you into the industry if you use it well.

We recommend you start with around $100. This is not excessive but enough to get some initial traction.

These are some ways to make the most of your budget.

  • Specific goals. Instead of vague, unquantifiable goals like “I want more sales”, set specific marketing goals you can track such as “I want 300 unique customers this month.”
  • Automate your ad setup. You have a lot of knowledge about running ads. How can you reach your audience with ads? How do you decide which ads to boost? An app that automates your Facebook ads is a smart choice. These apps will help you to spend your first $100 of marketing budget.
  • Quality is important. Your ads’ quality matters. Poor quality ads can cost you a lot of money and result in little to no traffic. You should take the time to create high-quality ads, including visuals, copy, and calls to action. This article is a great guide to creating eye-catching ads. It was written by an entrepreneur who spent almost $200,000 on Facebook advertising.

Takeaway – The sky is the limit

This is your complete breakdown of how much money you will need to start a dropshipping company. You should budget around $290 to ensure your success.

Don’t forget to budget for your business as it grows. You will need to continue to spend money in order to make a profit and keep your business afloat. After you have made your first sale, you can reinvest the profits into your dropshipping company. These are some areas you might consider investing in later on the line.

  • It’s time to switch to Shopify Premium theme
  • High-quality images and branding;
  • Retargeting campaigns can be launched via SMS, push notification or email.

The bottom line is that you can start your own ecommerce business. Dropshipping is possible with a few hundred dollars well spent and a lot of passion. You can then enjoy the freedom of being your boss, making a good living and working from your home or on a sunny beach. It takes only a little time and effort as well as a small investment.