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This should not involve any cost beyond a droplet to host it. Our 2GB droplet includes 50GB of storage space at a cost of $10/month.
All droplets have an SFTP service by default and adding new users to your server itself from the command line will give them SFTP access and restrict their ability to upload or change files to their home directory or any files that are world-writable.
This process alone will not lock the user into a directory however so they will be able to browse but not change other files on the server. If you wish to lock the user to their home directory you will need a chroot configuration. While this guide is for Arch Linux it uses standard Linux utilities and configuration file locations that should work for most systems.