So you want to start a sex toy business? As a start-up sex toy business, forecasting your initial overheads is vital before you get into the act. Your business needs primary capital and an operating budget for purchasing a website and inventory, paying salaries, buying utilities, insurance, licensing, and marketing.
With the global sex toy market valued at $32.7 billion in 2022, it isn’t surprising people make a fortune after learning how to sell sex toys.
If you’re interested in making a chunk of money by starting a sex toy business, then keep reading!
Rental Charges
Rental charges are going to take a big part of your capital. You should be prepared with enough funds to pay your rent for at least 1-2 years. As a start-up sex toy business, you can deduct your rental expenses in two ways.
Purchase or Lease
Property tax rates vary depending on whether you purchase or lease a rental space. The leasing cost for a rental space in the U.S. (if you’re not stubborn about having amenities) varies at scale from $45 to $80 per square foot. Rental expenses may touch $400-$500 per square foot if you want your sex toy business to be at the center of the city.
To reduce rental charges, you can look for properties near the highway. For example, the rental cost near highways may run $23 per square foot. So 1,500 square feet would cost you $2,875 per month.
As a sex toy store, you must integrate many kinky props around the store that reflects your brand and the erotic theme. So don’t forget to factor in the price of the renovation.
Sex Toy Business from Home
You can start your sex toy business from home if your home office qualifies as the principal place of business. By renting a portion of your home as an office for your sex toy business, you’re qualified to make it a rental dedication.
For example, if you have a 1,200 square feet apartment and pay a monthly rent of $3,000. You allocated ⅓ of your apartment for selling sex toys. Then you can assign a monthly rent of $1,000 and deduct it from your business.
Inventory costs
One of the valuable assets of the sex toy business is inventory. The inventory cost will have a massive impact on your sex toy business because it is directly affiliated with your stocks’ purchase, storage, and management.
To determine the total costs of an inventory for your sex toy business, you need to consider the following:
- Storage unit cost
- Sex toy lifespan. (silicon and glass-made sex toys may last for decades, but jelly rubber only holds up to 1-2 years)
- Terms and conditions of your sex toy supplier
- Storage method
The inventory costs, in the beginning, may take up to 25-30% of your total expenses. So prepare enough capital for 5-8 months.
Legal Expenses
It goes without saying you need to spend some money to obtain the legal license and permits to start your sex toy business.
The first step is to register your sex toy business. When you register, you can choose one of four business structures: sole proprietorship, partnership, corporation, S-corporation, or Limited Liability Company (LLC).
For the sex toy business, it’s advisable to register as LLC. By treating LLC as a sole proprietor, you’d get a 20% off of your taxes and still have the advantage of being a corporate entity.
Here is a list of Permits and Licence you should get to start a sex toy business:
- Business License
- LLC certificate
- Employer identification number (EIN)
- Seller’s Permit
- Health Permit
- Food handler’s Permit
- Sales tax License
- Sales tax License
- Resale License
Getting all the paperwork and obtaining the legal permit may cost you $100 to $2000. And, if you look for a lawyer to finish all your legal work, you will have to pay from $200 to $1000 per hour.
Additionally, insurance takes substantial costs as you have to insure your property, personal coverage, and employee compensation. For example, your sex toy business should pay $65 monthly as commercial insurance, $45 for general liability, and $58-$100 for employee compensation.
Business Expenses
After setting up your sex toy store, it’s time to kick-start your business. While you plan your budget for your sex toy business, make sure to keep in mind these operating expenses.
Appliances:
You’re required to allocate a chunk of your investment to buy proper equipment like computers, credit/debit card readers, cash counters, printers, video displays, cash counters, etc.
Website:
Sex toy businesses are often successful through e-commerce. So you need an effective website that gives a seamless user experience. You can build from scratch, which costs you more than $30,000-$50,000, or you can choose to purchase readymade adult e-commerce scripts like xMarketplace by Adent.io, which costs you no more than a couple of hundred bucks.
Payment Gateways:
As a sex toy business, you can opt for adult payment processors like CCBill, Verotel, Paxum, and many more, as they facilitate both domestic and international transactions. You’ll be charged for their service, so choose what benefits you for a long time.
Marketing:
You need a better marketing strategy to become successful in the sex toy business. Marketing comes with a price, but it’s essential as it boosts your ROI. You can either market organically using your in-house team or promote through adult ad networks that run ads throughout porn tube sites and cam sites.
Salaries:
To run a successful sex toy business, you need employees. So factor in their salaries while budgeting.
- Store manager: $30-$46 per hour
- Store Assistant: $14-$19 per hour
- Sales associate: $11-$12 per hour
Utilities:
It’s unavoidable; your store needs utilities to function. It includes electricity, water, phone, and internet bills. Also, if you opt for a cleaning service, prepare yourself for $50 to $200 per week.
To Sum it All
The sex toy market is on the rise post covid, especially the sales of sex dolls. It is becoming more likely that people will turn to sex dolls to satisfy their sex curiosities as virtual reality and artificial reality become an integral part of everyday life.
To the final question, how much does it cost to start a sex toy business?
The average cost to start a sex toy business is $40,000.
If you still think it’s not within your budget, we recommend you cut the cost of developing a website from scratch and instead purchase it as a readymade script. xMarketplace by Adent.io is one the best adult e-commerce scripts that suits your sex toy business end-to-end.
Cheers.
