 Hey what's going on guys, so today then we're going to be breaking down the true cost of starting a Shopify dropshipping business in 2020. So I've literally broken down everything from the Shopify plan to Facebook ads to conversion rates, absolutely everything. If you watch any of my previous videos, especially the Facebook ads ones, you'll know that I am indeed one of those weirdos that actually enjoys numbers. The reason being is because numbers are very black and white, they don't lie. So for example, a 10 pound CPM is obviously better than a 20 pound CPM, a 10 pence cost per link click is obviously better than 20 pence. And at the end of the day, Facebook ads is a numbers game. It's all about testing different creatives, different audiences, different products, seeing where the best data comes from and doubling down and spending your money and essentially what's working. Before we jump into the video then, just to quickly say, I do read every single comment so if there is a question you guys want to ask me, just make sure you post it down below. I will see it and I will respond to you. If you enjoyed the video, please do make sure you let me know by hitting that like button and I do upload four videos every single week too. So make sure you subscribe for regular content. So the goal of this video then or the goal of this breakdown that I've created is 300 pound per day in sales, which equals about 110 grand per year in sales. It's a pretty good target to be honest for 2020. It was similar to actually what I turned over in my very first year of dropshipping, which I've documented in previous videos by the way. So the fixed costs then, the obvious ones are the Shopify plan. You have to commit to a plan, pay for a plan before you can start selling. So these are unavoidable and that is 29 pounds plus the different apps. Again, I've documented the different apps that I recommend. But to kind of summarize, then you're looking at a total of about 89 pounds before you even start running Facebook ads. Moving into the variable costs then, these are obviously the costs that are going to vary depending on how many sales you bring in, depending on how much you spend on Facebook ads. And that's the reason then why I've set a goal for the beginning because when you have a goal, you can kind of reverse engineer the numbers. So start with the order fulfillment. If you work on the 30, 30, 30 rule. So essentially what that rule means is if you do 300 pound per day in sales, then you're going to be spending 30% on order fulfillment, 30% on marketing and then 30% on profit. Now this is a rough rule of thumb. So if you don't stick to these percentages, then don't worry about it. At the end of the day, the most important thing is obviously that you're making a profit. So 300 pound per day in sales, working to the 30% rule, you're looking at obviously about 100 pounds per day or per every 300 pound in sales. The way it works this out then is obviously 10 orders at 30 pounds per order equals 300 in sales, 10 pound to fulfill each order following the 30, 30, 30 rule equals 100 pounds in order fulfillment. So fairly straightforward up to this point. Place where things get a bit tricky to put a number on then is Facebook ads. The reason being is because obviously results will vary so much from person to person, depending on the products, the creative, the site, et cetera. So what I've done then is I've taken the results from one of my ad accounts that's kind of middle of the road. It's not the best performing one. It's not the worst performing one. And these are the numbers I've come up with then. So the CPM I've gone with is 10 pounds because in this ad account here, which you can see from the screenshot, in fact, I can show the account as well. I can refresh the table data. I can refresh the page so you guys can see it's legit. And the average CPM then for this select few campaigns I've chosen is six pounds and 18 pence. Now the reason I've put it at 10 pounds then for this breakdown is because certainly people getting into job shipping might not be able to achieve the same results. Plus if you do a bit of research across Google, which I did, you can see this website thinks it's about $11. There's other websites that think it's about $15. So to kind of meet in the middle, I've gone for 10 pounds. The next number I had to work out was the average conversion rate. Now, as it says there in brackets, this is my conversion rate. Yours might be different to the next person, the next person, and so on. So my average conversion rate for this ad account was 0.08%. And the way I worked this out then was essentially the amount of purchases. So 4,077 purchases divided by the impressions, which was just over 5 million, times that by 100, and you get a 0.08% conversion rate. Now, when you have this number, you can essentially pretty much work out exactly how much it's going to cost you. And to do that then, we have to take our conversion rate, put it into one CPM, which is obviously a thousand impressions. So per 1,000 impressions, we're going to get 0.8 orders. Now to get to that 10 orders we need to achieve 300 pounds per day in sales, we need basically 10 orders is equal to 12.5 CPMs. The way I worked that out then is basically 0.8 times by 12.5 is going to get us to the 10 orders we need. So 12.5 CPMs at 10 pound each on average is going to cost you 125 pounds on Facebook ads. So if we work out all the totals, it comes to 314 pounds, which is 89 pounds on Shopify and apps, 125 pounds on Facebook ads, and then 100 pounds on order fulfillment. Now that isn't the full story to kind of carry on to give you more detail and a more kind of realistic startup cost, because this obviously doesn't include any of the following which are potential extra costs. I'm not saying you have to spend money on these, what I'm saying is they're potential extra costs. Number one is extra apps. So if you decide to go for certain apps that aren't included in this price that will cost you extra, that's going to increase your startup costs. There's developer costs, if there's certain things you need to do, but you don't know how to do them yourself, you may have to hire a developer, which is going to cost you money. There might be certain business services that you have to pay for. So for example, accounting, if you choose to go as a corporation, as a limited company, if you want to hire a virtual office, so you don't have to put your personal address on your site, that's going to cost you money. And then the next one as well is Facebook ads testing, because obviously all of these results up here are based on my account as an average. In the beginning, your results might not be so good, they might even be better. So you have to kind of factor this in that you might end up wasting a couple of hundred pounds on Facebook ads just to find out what works. The next thing is different training programs. Many people, when they get into job shipping, they might invest in a training program just to kind of try and fast track their success or learn from other people's mistakes. And then finally, there's your time as well. Not many people, when they work for themselves, will factor in their own time. But the way you've got to look at it is if you make 20 grand a year, if your business makes 20 grand a year, but you're working 60 hours a week, then you probably realistically only paying yourself about four or five pounds per hour, which is less than minimum wage currently in the UK. So all of that taken into account. Then if I had to put a figure on it, I would say the realistic startup cost in 2020 is 750 pounds, and that's going to cover absolutely everything you need and get to that point where you can start to bring in some money through the door. Just to kind of reiterate it, this is my rough estimation based on the averages that I've just shown you. I mean, realistically, the biggest variable is going to be how well your Facebook ads go in the beginning. Some people have success from day one, in which case their startup cost realistically is going to be a lot less than this, whereas some people take a bit more testing, a bit more money involved before they find that one product that does really well. So roughly 750 pounds is going to be more than enough to account for anything. Moving on then, just kind of a bit of extra fun. If you were to be able to achieve this level of sales every single day. So here's just kind of like a quick daily profit and loss so you can see how much money you need to make to see how much money you make basically. So out is 100 pounds for order fulfilment. So obviously this is based on the 300 pound per sales every day. 125 and Facebook ads in this 300 sales. So essentially profit is 75 pounds, which equals a 25% profit margin, which is pretty decent to be honest for dropshipping. Minus the 19% corporation tax assuming you're a limited company is 60 pounds profit per day times that by 365 and you're looking at about 22 grand profit per year. And that's after taxes. And there you have it then. That's exactly how much money you need to start a dropshipping business in 2020. Let me know in the comments section down below would 22 grand a year profit be enough for you to quit your job? Or are you just doing dropshipping for a bit of extra cash on the side? In which case, you might only need to earn half of this. Anyway, with all that being said, I just want to say a quick thank you for watching the video. I hope you enjoyed it. If you did, make sure you let me know by hitting that like button. Make sure you comment any questions or anything you're not quite sure on in the comments section below. And finally, please do make sure you subscribe to my channel as well. I do upload four times every single week. And that being said, that's pretty much it. So thanks again for tuning in and I'll see you in the next one.