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How Much Money Do You Need to Start Dropshipping? ($100? $500? $1000? $3000?!)

Hey guys, today I'm going to answer a really common question that we get asked a lot here on this channel and that is how much money do you need to start a drop shipping store? Do you need $50? Do you need $100? Do you need $500? Do you need $1,000? Now while quite a lot of YouTubers have answered this question already there is one hidden cost that they usually don't talk about I've decided to throw my hat into the ring and give you my honest answer for this question plus I'm also going to give you some tips on how you can keep your costs low as well

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Alright, let's jump straight into the video Okay, so there are three major costs when you're starting your drop shipping business The first are your start up costs to actually build your store The second is your marketing budget I'm going to be honest, this is probably going to make up the majority of your expenses and there is of course the third hidden cost in there which is very important to know which I will get to at the end of this video

For now, let's look at the first How much does it cost to build a store? Now, while [inaudible 00:01:03] is great I suspect that most beginners watching this channel are probably going to chose Shopify to build their store with because of the fact that it is more beginner friendly If you're doing that then your start up costs are just $29 a month for the Shopify plan and then $14 for the domain name if you're purchasing it through Shopify That brings your start up costs to build your store to $43 and that's it The free Shopify themes are absolutely fine, you do not need to pay for a premier theme at all

However there are two optional expenses that are well worth it if you can afford it Extra one, a logo from Fiver You will need to have a logo for your store You can make one for free using a free logo maker and I will include a link to one in the video description below but the truth is is that you will get a nicer one if you get one professionally designed and you can get them professionally designed on Fiver for super cheap, for just $5 plus a 50c transaction fee Extra two, a Shopify up sale plugin

Now there are multiple different types of premium plugins that in the future you will want to invest in for your store but in the beginning the most important one to make sure you have money for is an up sale plugin in A beginner friendly one is the SMAR7 bundle up sale and it costs $47 a month As you may have noticed that costs more than Shopify The thing about up sales is that they make so much money that it's well worth it but in the beginning if you are strapped for cash then you can get away with not getting it just yet In that case what I would recommend is that you set up your store with Shopify, you add your products to your store and then you run ads for those products and you don't purchase the plugin

When you find a product and an ad that connects really well with your audience and you start making lots of sales that is when you buy the plugin Use that plugin to add an up sale to the product that is selling very well and you will very quickly make your money back plus a lot more In the beginning you don't need to purchse the plugin, you can purchase it later once you are successfully selling items in your store There you go, your start up costs are going to be somewhere between $43 and $9550, pretty good, right? Hold your horses because we've still got to get to the marketing

How much money do I need for marketing? Here's the reality, for most of you watching this video 80 to 90% of your start up budget is going to go towards your marketing and for this video I'm going to be talking exclusively about Facebook ads I will say though if you simply don't have the money for this then you can utilize free traffic methods and I do talk about them in my video, Start drop shipping with $50 but as I said in that video, free traffic is slow Is it possible to make money with free traffic? Absolutely but is it the best? No You're going to make money a whole lot faster if you use paid traffic with Facebook ads and Instagram shout outs being the most beginner friendly Now to explain how much it's going to cost you to run a Facebook ad it's very important that I first of all explain what it means when we say to test a product on Facebook

What we mean in this industry when we say that we test products is that we add a product to our store and then we run low cost Facebook ads for it Generally when you're doing this I recommend that you set your ad budget to about $5 a day You then run that ad for a few days, I normally recommend running it for four days Over those four days you see if you make any money from advertising that product and if you do that's fantastic and so you scale the ad budget up and up and up making more and more sales which makes you more and more money When that happens we refer to it as a winning product

A winning product is simply a product that when you advertise it on Facebook you make a profit Most of the time when you're testing products, they don't make you money and we call those products losers Most products are going to end up sadly being losers Unfortunately it can be very difficult to pick what's going to be a winning product you normally have to just add lots of products to your store and test them to find out which ones connect and which ones don't Probably the smartest person that I know when it comes to drop shipping with Facebook ads is my friend Fred Lamb

As he said on my interview with him that it normally takes him about 10 product tests to find one winning item and that is a really high success rate It's been studied a lot and it's generally found that for most people it's going to take about 20 products to find one winning item but there are no guarantees, it might take you even longer to find a winning item Of course, on the other hand you might get super lucky and find a winning item immediately, you just don't know until you try Of course, that one winning item can easily earn you tens of thousands of dollars to even over $100,000 a month but of course, you've got to find that item I reckon with Facebook ads you need to be willing to test at least 20 products so let's use that as a yardstick

Doing the maths we want to be spending $5 a day for four days to test a product which means it's going to cost us $20 to test one product but of course, we want to try and test 20 products so $20 times 20 means that we're going to be spending $400 on our ads to test our products Along the way you are almost certainly going to make money from selling products, even ones that turn out to be losers so it's unlikely that it's going to actually cost you $400 but it's good to budget for this anyway In total then that usually means that I recommend being willing to spend at least $450 to $500 for both your start up costs to build your store and to market it Now for some of you out there you might be thinking, "Oh, $500, that's not much money at all" Of course for some of you out there you might be thinking, "Oh, $500, I don't have $500

" Well, I've got to be honest with you, if you want to start a genuine real business then you need to be willing to invest some money I have some people that come to me and they say to me, "Sarah, I have $100, how can I turn that into $10,000 really fast?" Well, quite honestly, the only way that I can think of to turn your $100 into $10,000 really fast is to go and gamble it on penny stocks or to invest it in a Ponzi scheme but please do not go do that This is my real honest answer when it comes to L express drop shipping, free traffic is slow, paid traffic is fast, if you want to take advantage of it then you need to be willing to invest money but yes, I understand because funnily enough, not everybody has $500 If that is you, here are two tips Tip one you side hustle to save up the extra cash

I actually have a video specifically on the subject on eight different side hustles that you can use to earn extra cash then reinvest into your business and I will have a link for that in the video description below Now, do they pay amazing? No, they don't because a lot of them like Amazon mechanical [inaudible 00:07:45] require you to exchange your time for money and whenever you're doing that that's never a good exchange What you want to do is you want to take that money that you earn from those side hustles and then you want to invest them in a business that scales from you investing money rather than your time and that is how you get rich Tip two, you don't need all of this money at once Now if $500 seems overwhelming to you then don't worry because you don't need to have all of this money at once

Perhaps you split this over two months In month one you test 10 products and in month two you test the other 10 and hey, you might even get super lucky and find your winning item in the first month There is something else that is very important that we need to discuss because if you remember I said that there is a hidden cost to drop shipping that very few people talk about so what is it? Purchasing items that customers buy from you Now, here's the reality, when a customer comes into your store and say, busy this travel mug for $20 you don't get that money instantly If you've got a Shopify payment set up that is run through Stripe and your money is paid out every seven days and if the customer bought it from PayPal then until PayPal trusts you they are very likely to put a three week hold on that money before they will release it to you

Let's say you have a budget of $500 and you've already gone and spent it all on marketing and set up costs and then somebody comes and they buy this mug from you for $20 well it costs about $9 to purchase it from the supplier but you don't have $9 left and you're going to need to wait one to three weeks to receive the money from the customer but you need to order it right now, what do you do? Well unfortunately if this was you there probably isn't much that you could do This is a cashflow problem and you know, it's one of the biggest reasons why new businesses fail so if you don't want to join that statistic have a plan for it in advance There are two solutions to this problem The first one is free, the second one is technically free but doesn't feel free so let's talk about the first one first Use credit cards

Credit cards are absolutely the easiest way to take care of this issue With a credit card you usually have about five weeks to pay off the money on it that you spent so even if you had to wait one week for Stripe to pay you the $20 that the customer paid you for this mug that's okay because you've got five weeks to pay off the $9 you've spent on your credit card The same goes for PayPal, even if it takes PayPal three weeks to send you the $20 that the customer paid for this mug then that's okay because you've got five weeks to pay off the $9 that you spent on your credit card plus if you use credit cards you get awesome bonuses as well such as free air miles so you can fly around the world for free along with cash back rewards with help you offset fees If you don't have access to a credit card though you will need to prepare in advance using the second solution, have $200 to $300 saved in advance Keep in mind though that this money isn't being used to pay for expenses like Facebook ads, this is just money that we are using in the meantime while we are waiting for the customer's money to clear so don't think of this as money being used for expenses in the same way that the other money was, this is money that we are using to just help us manage our cashflow

There you go, that is my honest answer to this question, how much do you really need to start a drop shipping store? Now I do understand that $450 to $500 may seem like a lot of money for some of you guys out there watching this and do not mean to trivialize anybody's position if they are having a hard time financially but I do want you guys to keep something in mind, that 20, 25 years ago if you wanted to start a store here's what you had to do You'd have to go out there and rent a physical storefront and it might cost you hundreds to thousands of dollars every month and plus you'd probably be locked into a lease for six to 12 months Then you'd have to go out there and purchase thousands of dollars of inventory so that you would have something to sell in your store with no guarantees that it would sell at all Then you'd have the choice of either exchanging your time for money by sitting behind a counter for eight plus hours a day serving customers or alternatively you could spend thousands of dollars a month to hire someone else to do that for you Let's flip the start up costs into a positive and keep in mind that we're actually super lucky to be living in a time where thanks to the internet if we want to start a successful store we no longer have to spend thousands and thousands of dollars to do so

Thanks for watching this video If you liked it and appreciated my honest advice then I'd really love it if you gave this video a thumbs up an subscribe to [inaudible 00:12:15] Tip for more great videos about selling online When you subscribe be sure to click that little notification bell next to it so that you don't miss any videos that we post If you would like to build your own Ally express drop shipping store but you don't know how we have a step by step video guide that is perfect for beginners called the drop ship club It is a video training course that takes you through the exact process from start to finish

You will find a link on how you can join it in the video description below Before you run off I do have one last freebie that I would like to give you Here at [inaudible 00:12:46] Tip we have a free E-book, How to make $10,000 a month online with drop shipping You'll find a link on how to download this E-book in the video description below

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