How much does it cost to start dropshipping?
We get asked this question a lot, so we decided to give you all the insights into what it costs to start a dropshipping business. No hidden costs, just the clarity you need to start a profitable business!
Understanding dropshipping
Dropshipping is a dynamic, low-risk model where you sell products without holding inventory. Orders go straight from supplier to customer, making it perfect for entrepreneurs wanting to start with minimal costs while focusing on brand growth.
Effective cost and cash flow management are key in dropshipping, maximizing profits through smart supplier choices and lean marketing. With low overhead and high flexibility, dropshipping offers a fast, budget-friendly path to scalable eCommerce success.
Business registration and niche research
When you start dropshipping, the first thing you need to do is think about a form of registration. There are several options within a business registration. We will explain the 3 most common used registration forms within the dropshipping niche based on different countries.
USA
Sole Proprietorship
A sole proprietorship is simple and low-cost, ideal for new entrepreneurs. Registration is minimal, but a DBA (Doing Business As) may be required, costing $10 to $100, depending on the state.
Limited Liability Company (LLC)
An LLC offers liability protection, separating personal and business assets. Formation costs vary by state, typically $50 to $500, with annual fees of $20 to $800 for renewals or compliance.
Corporation (C Corp or S Corp)
Corporations provide strong liability protection, suited for growth and investors. Registration costs range from $100 to $800, with additional annual franchise or reporting fees from $50 to $500, depending on the state.
Canada
Sole Proprietorship
A sole proprietorship is simple and low-cost, ideal for new entrepreneurs. Registration is minimal, but a DBA (Doing Business As) may be required, costing $10 to $100, depending on the state.
Limited Liability Partnership (LLP)
An LLP offers liability protection between partners, ideal for small teams. Registration fees are $100 to $200, depending on the province, with annual renewal fees.
Corporation
Incorporating provides strong liability protection, suitable for scaling businesses. Registration costs vary by province, generally $200 to $400, with annual filing fees of $20 to $300.
United Kingdom
Sole Trader
A sole trader is the simplest, most affordable structure. No formal registration fee is required, but a self-assessment with HMRC is needed annually.
Limited Liability Partnership (LLP)
An LLP offers liability protection for partners, ideal for professional services. Initial registration with Companies House costs £40 (paper) or £12 (online).
Private Limited Company (Ltd)
An Ltd provides liability protection and credibility, often used by growing businesses. Registration with Companies House costs £12 online or £40 by paper, with an annual fee of £13 to £40 for confirmation statements.
Platform and hosting expenses
When building an online shop, popular platforms such as Shopify and WooCommerce offer unique features and pricing.
Shopify
- User-friendly, ideal for beginners with a full suite of integrated tools. Subscriptions start at $39/month for the Basic plan, which includes hosting and security.
WooCommerce
- Free, open-source plugin for WordPress. However, costs for hosting, themes and plugins can add up, usually starting around $10 to $30/month.
Both platforms offer free and paid themes, with customisation options ranging from $0 to $200+. Don’t forget that Shopify also charges 1-3% of the purchase price.
Domain and hosting
Domains cost around $10 to $20/year; hosting varies, as it’s included in Shopify plans but required separately for WooCommerce.
Supplier platform and costs
When it comes to dropshipping, finding a reliable supplier is an essential part of starting a reliable business. Platforms like AutoDS, Zendrop or CJdropshipping give you tools like finding winning products, creating quotes and fulfilling orders.
Subscription prices for such tools range between $0 p/m and $500 p/m. If you want, you can take advantage of the discount of an annual description that can save you hundreds of dollars.
Supplier costs
Most suppliers you will find add the cost of their services to the quoted price for your products. Additional charges, such as shipping costs, usually range from $1 to $5 for domestic shipping within the same country and about $5 to $20 for international shipping, depending on product weight, size and destination. Shipping costs also vary depending on the supplier’s location and shipping method.
Marketing and advertising expenses
This is where the money comes in. Marketing is a crucial element for your dropshipping shop. You can market your items on different platforms, such as META (Facebook, Instagram) or Google Ads. Pricing depends on the stage of your marketing.
Most dropshippers test products with a budget of $10-20 dollars a day to see if there is an audience for their product. If you find a winning product, you can increase this budget to boost your sales.
Additional software and tools
If you want to maximise the revenue of your dropshipping business, you can add some tools. Consider tools that can indicate a competitor’s total sales (Shophunter) or a tool that can build converting landing pages within seconds. (PageFly) These tools work with monthly subscriptions, ranging from $20 to $79 USD per month.
Estimated total cost of starting a dropshipping business
Allright, we talked a lot about different costs and options within the journey of your dropshipping business. We list all the costs again for you so you have a clear picture of what to expect when you start dropshipping.
Total costs
Business registration – Between $10-$800 one-off
Platform and hosting – Between $20-$59 per month
Supplier platform – Between $0-$79 per month
Marketing and advertising – Between $10-$20 per day
Additional software – Between $20-$79 per month
As you can see, you can start dropshipping today for just $60. Sure, some costs are per day, but when you sell a few products, these costs are already out of it. The unique features of this model make it possible to earn thousands of euros per month within a very short time. So, when are you planning to start your dropshipping business?
