How Much Does it Cost to Start a Dropshipping Business?

Want to start your own business without a large upfront investment? Dropshipping is a great way to break into the world of ecommerce with little to no investment or holding inventory. But, how much does it cost to start a dropshipping business? We’ll be answering that and more in today’s guide to dropshipping with a cost breakdown from essentials to optional, but beneficial expenses. If you’re looking to start your own business, dropshipping might be the place for you to start. Just keep reading.

What is dropshipping?

Dropshipping is a retail model where a business sells products through an online store, but doesn’t hold any inventory. When customers make a purchase, products are shipped directly from the supplier to the customer so you only pay for inventory once a sale is made. This business model reduces initial investment and offers flexibility. However, it’s still important to understand the costs involved.

How much does it cost to start a dropshipping business?

Let’s break down the core expenses you’ll face when starting a dropshipping business. While costs can vary based on your approach, there are some key costs required to start and run your new venture.

Website and hosting costs
Your website is the face of your business, so it’s important to make sure it’s user-friendly and reliable. Here’s the costs you can expect to pay for getting your website up and running.

• Domain name: A domain name is an average of $10 to $20 per year. It may not seem like much, but selecting a unique domain name is crucial for branding so make sure it’s a good one.
• E-commerce platform: There are plenty of ecommerce platforms to power your dropshipping business like Shopify, WooCommerce, and BigCommerce. These platforms make it easier to grow your online store without advanced technical skills and coding knowledge. The most popular choice, Shopify, costs around $29 a month for its basic plan.
• Design: It’s key to make your website have a professional look and feel. Themes can cost anywhere between $0 to $100 depending on their complexity.

Estimated total: $50-$60 monthly for basic website costs.

Product sourcing and supplier fees

Most suppliers don’t charge until you make a sale, but some suppliers may require payment for each order fulfilled or a small monthly membership fee.

• Dropshipping platform fees: Apps like Oberlo or Sprocket often charge subscription fees for accessing their product catalogs. These can range anywhere from $0 to $30 a month for beginners.
• Order fulfillment fees: Depending on the supplier, you might pay a small fee per order, around $1 to $5.

Estimated total: Roughly $10 to $35 monthly depending on the platform and supplier you choose.

Marketing costs

This is where things can get a bit pricey, but a quality marketing strategy is how you’ll gain attention and buyers for your dropshipping business—which is the hardest part. This can be as inexpensive or costly as you like, depending on trial and error to see what works. The costs will vary greatly depending on which methods you use:

• Social media ads: Facebook and Instagram are popular choices for running paid social media advertisements. You set your own budget, but a recommended starting budget is anywhere between $100 and $300 per month. But, it’s recommended to invest much more as you continue to grow your business.
• Google ads: Google is another powerful advertising tool to drive traffic. As a beginner, you can expect to spend around $100 to $200 each month.
• Influencer marketing: Collaborating with micro-influencers is a great way to gain a new following as a beginner in dropshipping. Depending on the creator’s engagement and reach, you may pay anywhere from $50 to $500 per collab.
• Organic social media: If you’re budget conscious but still want to work on marketing your brand, carefully curate your social media presence. Create engaging content about the products you’ll be selling and potentially gain new followers who could turn into customers—without paying a dime.

Estimated total: You can pay anywhere from $0 to $500+ a month depending on how invested you are in your marketing efforts.

Additional optional costs

If you’re willing to pay extra to see your dropshipping business grow, there are other costs aside from the essentials that can greatly improve your brand’s efficiency and reputation.

Branding

Suppliers may offer some generic photos of products, but to go the extra mile, you can invest in professional photography. This way, you’re providing unique and creative images to set yourself apart. A small photoshoot could cost between $50 to $200.

Apps and plugins

Depending on the platform you pick, you may want to install additional apps or plugins to improve functionality and ultimately create a better purchasing experience. Cart recovery or customer support chat features make a big difference to customers and conversions. Apps can be anywhere from $5 to $50 monthly.

Legal business structure

If you’re serious about building a legit business, consider registering it. Depending on your state and country, this can typically cost from $50 to $200. It’s also a good idea to consult with a legal service who can help structure your business correctly. These services may also cost around $150 to $300.

Total monthly and startup costs

Back to the original question, how much does it cost to start a dropshipping business? Taking into account all the expenses discussed, expect estimated costs of:

• Initial setup fees: Around $200 to $500
• Monthly costs: $150 to $600+

While it’s possible to spend less or more, planning around these figures can give you a solid foundation to start your dropshipping business.

The bottom line

Compared to starting a business entirely from scratch, dropshipping is a relatively cheaper alternative with the opportunity for a great return on investment. Remember, while the upfront costs are significantly lower than other business models, success comes from a continued
investment.

Once you’ve got your foot in the door of the dropshipping market and you're seeing business success, you can significantly benefit from partnering with a third-party-logistics (3PL) provider like Phase V. We specialize in streamlining the logistics process from the moment an order is placed to when it arrives at a customer’s doorstep. We’ve helped hundreds of ecommerce clients optimize their fulfillment and grow their businesses.