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How much is a practical budget for a successful Shopify dropshipping store?


  • By Editor Team
  • 08 Sep, 2022
  • Guide
  • 15 Min Read
Last Update: 11 Sep, 2022

How much is a practical budget for a successful Shopify dropshipping store? If you are reading this, then one thing is clear. 

You are at least thinking about starting a dropshipping store using Shopify.  And you want a realistic idea about the starting money for your online store. 

Google-Trends

Well, you are in the right place. 

Today, I am going to cover the costs you must keep in mind before you start your Shopify entrepreneurial journey.  At the end of the discussion, you will have a crystal idea about your dropshipping store budget. 

I promise. 

So, how much should I have when starting a Shopify store?

That’s a vital question, to be honest.  Honestly speaking, there is no one-word answer for that. 

It depends on several factors.  The budget plan I am going to show you is for 4 months. 

That means you will have a clear idea about how much money you will need to keep your Shopify store running for at least 4 months. 

Let’s begin. 

The cost of using the Shopify platform

Shopify is not a free platform. Anyone who told you otherwise has not-so-honest intentions. Or is trying to upsell you some services you may not need at the moment?  Shopify offers 3 pricing plans.

budget for a successful shopify dropshipping store

Those are:

When you are just starting, the “Basic Shopify” plan is more than sufficient. 

It gives you 2 staff accounts and discounted shipping rates (up to 77%) from DHL, UPS or and USPS among other benefits. However, Shopify will charge you 2.9% and $0.3 for every credit card purchase. 

So, if a person pays $43.15 for a product, Shopify will keep (2.9%x$43.15) + $0.3 = $1.55. 
You will receive $41.60. 

I digress. Let’s get back to the cost of using the Shopify platform. 

For 4 months, Shopify will charge you ($29×4) = $116. 

Unless you are using any premium Shopify apps, there are no other costs of using this amazing eCommerce platform. 

Read it, if you are not open a Shopify Store Yet: Create a successful Shopify store in 30 minutes

Store item marketing

Once your store is up, you will naturally start thinking about marketing your products.  And being a small business owner, you will want (and need) to make quick sales.  For that to happen, you will need to get traffic to your store.  But what are some fast and reliable ways of doing that?

Let’s discuss some of those marketing methods.

Facebook ads

Facebook ad is one of the most widely used marketing methods.  And why shouldn’t it be?  After all, it has over 2.8 billion users all over the world. 

Source: www.statista.com

And over 1.5 billion of them are connected to one or more small business(es).  The question now is, how much does it cost to run ads on Facebook? Now you need to know that there are 3 key metrics of Facebook ads. 

Those are:

Let’s now have a look at each. 

Facebook CPM ad costs

According to a study by RevealBot, the average Facebook CPM at the time of writing this is $14.1.  So if you set your ad to reach 1,000 people, then it will cost you somewhere around $14. 

Average-Facebook-CPM

Source: Revealbot

Just so you know, this number is an average across all niches for US audience.  So, if you spend $10 on ads, then your ad will most likely reach (10/14)x1,000 = 714.29 people i.e. 715 people. 

— Now it’s not set in stone. 

The per one thousand impression value will depend on your target location, age group, industry, ad campaign purpose, and ad duration.  In the video below, I have shown the lowest Facebook CPM ad cost for various ad campaign purposes. 

To make a reliable estimation of your Shopify dropshipping budget, I am going to use $14.1. 

Lemme point something out. 

Provided you are going to adjust your marketing strategy based on the results you get, it’s likely that you are going to get sales on your dropshipping eCommerce store. 

Since yours is a fresh online store no one has ever heard of before, you will need to run some engagement ads first. By engagement, I mean likes, comments, and shares. 

— Let’s say you have set a marketing goal of reaching 10K Facebook and Instagram users. Yes you will run ads for both from the same platform. 

 The data of those who interacted with your ads will be useful in setting up hyper-focused conversion-type ads. Being data-driven, these ads will have a very high chance of getting people on your Shopify store product pages. 

For your very first series of Facebook ad campaigns, I suggest you have enough cash or credit card balance to reach at least 5K Insta and FB users. 

If it takes $14.1 to reach 1,000 people, then you can easily do the math. It’s going to cost you (10x$14.1) = $140.1. Based on that rate, reaching 5K users will cost you (5x$14.1) = $70.05.  And the cost for that is $70.05. 

Just so you know, not every person your ad reaches will find your ad attractive. 

So, if you manage to reach 5,000 users, only a fraction of them will like, comment on and share your ad. 

Facebook CPC ad cost

Let’s say you have run your engagement ads and have gathered a gorgeous set of data.  You will now need to run CPC ads targeting these people who found your brand awesome. The genie at Revealbot has given me the following data. 

Average-Facebook

According to it, the average Facebook CPC cost is slightly above $0.96 across all industries.  If you are running CPC ads targeting a highly specific audience, then your cost per click may be lower than that. 

Suppose you have decided that you want to get 100 people to click on your store website. Then you will need to spend (100*$0.96) = $96. To get 500 people to click through and land on your product page, you will pay Facebook (5x$96) = $480

Let’s use the 100-click assumption to get an idea of the budget for your desired store. 

Influencer marketing 

Influencer marketing is another amazing and popular Shopify store marketing method. 

Influencer-marketing

Wondering who or what influencers are? Influencers are usually social media celebs with varying numbers of followers. They may be popular bloggers, Instagram models, YouTubers, etc. 

Influencers can be a Facebook page, YouTube channels, Instagram pages as well. The basic principle is, you will ask them to promote your store items in exchange for money or complimentary items. 

budget shopify store

(Source: Influencer Marketing Hub) 

The cost of hiring influencers to market your store will depend on the popularity of your influencer.  If he/she/it has a high following and similar engagement from the followers, then the charge will go up and vice versa. 

In case you are having doubts about social media influencers, then rest assured. A study by Rakuten Marketing has found that about 8 out of every 10 consumers bought something recommended by an influencer. 

For this powerful marketing strategy, a suitable budget is $100 when you are starting. 

Shopify apps

With dropshipping store marketing budget covered, let’s talk about Shopify apps. Most apps on the Shopify app store offer free plans which should be sufficient for fresher Shopify store owners. 

— With that being said, there are certain paid apps that are much better alternatives to their free counterparts.  One such app is Loox. It lets you add reviews to your store items. It comes with a monthly fee of $9.99/month. 

Let’s say you are going to use 3 more paid apps.  On a monthly basis, these apps will charge you:

App 1— $9.99/month

App 2— $15/month

App 3— $9.99/month

App 4— $9.99/month

That’s a total of $44.97/month. 

For a 4-month budget for your dropshipping shop, you will need (4x$$44.97) = $179.88. 

Let’s round it off to $180. 

Product cost

if you have a clear idea about the way dropshipping works, then great.  Rest assured if you don’t. I was going to clarify it either way.

— As a dropshipper, you will collect orders for the products you showcase in your store. 

When you get orders, you send the shipping address and order details to the manufacturer or wholesaler. You will need to pay for the wholesale cost of the product to the company. Then it will ship the item to the person who placed the order in your store. 

Now you might be thinking, “I am just gonna use the payment from my customer to pay for the product.” 

Well, it’s not that simple. 

The payment processor you are going to use to capture credit card payments is not going to transfer the money to your bank account instantly. They have a process and payout schedule of their own. For instance, 2checkout pays out the sales revenue every 7 days deducting their processing fees (usually 2-3%). 

From my experience, it’s best to have enough cash or credit card balance to cover the first 20 orders. 

Let’s say your wholesaler charges you $15 per product. And there is shipping cost as well.  Some suppliers may charge you order processing fees. And if you buy in advance, then there may be warehousing fees. 

So let’s say for each product, there is an additional fee of $7. 

So, it’s going to cost you ($15+$7) = $22 for each product. You will need to pay it to the supplier, warehouse service provider/order fulfillment services and shipping companies respectively. 

I advise people to have enough funds to cover 50 orders. 

For that many orders, you will need to have (50x$22) = $1,100 

If that’s difficult for you at the moment, then at least have enough for a minimum of 20 orders. 

That’s (20x$22) = $440. 

Visual assets

By visual assets, I mean product images and promo videos.  According to a study by MIT, our brain processes visuals over 50,000 times faster than it does text. 

If the visual is the Flash from DC Comics, then the text will be a tortoise.  And don’t get me started on videos. 

Over 9 out of every 10 marketers and brands have amazing returns from their video ad spend.  And they have got new customers as well. So there is no doubt about the importance of images and videos to make your Shopify dropshipping business profitable. 

Now your suppliers may give you some images and videos.  But the thing is, you are not their only retailer. There are probably hundreds if not thousands of others. 

So how do you outshine them?  By using custom images and videos of course. You will need to send your product to a product photographer for that.  And as you already know that’s going to add to your Shopify dropshipping budget. 

A piece of good news that I would love to give you is, Shopify collabs with expert product photographers

Usually, they charge by the number of images you want. And of course, you will need to ship a sample to them. 

To make this photography session run smoothly, I suggest you keep $500 in your Shopify store budget. 

These images will go a long way in terms of marketing and branding. 

For video, you can use the “Product Video Maker” app available in the Shopify store. It’s free at the moment of preparing this Shopify budget plan. 

The sum of all fears (sorry budget)

Just kidding here. 

Well, let’s find the total of all the costs of making your Shopify store a success. 

         CPM– $71 (to reach 5K people)

         CPC– $96 (to get 100 people to click your ads)

The total amounts to $1,413. To be on the safe side, you can extend it to $2,000. 

Quick disclaimer. I will not go so far as to say this is the most ideal amount. But it has been budget that a decent number of Shopify dropshippers have started with. And found success. 

Is there any way to reduce it?

Well, if I have to try very hard, I will slash the following. 

That’s $540 reduced. 

Your Shopify dropshipping business budget or starting capital now stands at $1,413-$540 = $873. 

— Let’s round it off to $900 for convenience. 

But with $900, you will have less wiggle room in terms of marketing and store running comfort. 

Do keep that in mind. 

Wrapping up:

Preparing a realistic budget for a successful dropshipping store wasn’t easy. 

It took a lot of research and interviews. And I have tried to be as realistic as possible. 

— I need juice and a family-size pizza now. 

Do stay tuned. I am going to bring you more information so that you can have a profitable Shopify store. 

Adios. 

Editor Team


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