Dropshipping Profit Calculator
Calculate dropshipping profit per order after supplier cost, platform fees, and advertising spend.
Results
Visualization
How It Works
The Dropshipping Profit Calculator shows your true profit per order after all costs are accounted for. Dropshipping businesses must cover supplier cost, paid advertising to acquire customers, platform/payment processing fees, and a reserve for returns and chargebacks. Many dropshippers focus only on supplier vs. sell price and are surprised when ad costs make the business unprofitable.
The Formula
Variables
- SP — Sell Price — what the customer pays on your store
- SC — Supplier Cost — what you pay your dropship supplier including shipping from supplier to customer
- AS — Ad Spend Per Order — total advertising cost divided by number of orders (= CPA, cost per acquisition)
- PF — Platform Fee — Shopify Payments, PayPal, or marketplace processing fees (typically 2.9% + $0.30)
- ROAS — Return on Ad Spend — total revenue divided by total ad spend; higher is better
Worked Example
A dropshipper sells a $59.99 product with a $14 supplier cost, $12 ad spend per conversion, and 2.9% + $0.30 platform fees ($2.04). With a 2% returns reserve ($1.20), total costs are $29.24. Profit per order is $30.75 — a 51.3% margin. ROAS is 5.0 ($59.99 ÷ $12). At 30 orders/month, that's $922 monthly profit.
Practical Tips
- Your ad spend per order (Cost Per Acquisition / CPA) is the single biggest variable — optimize your ads continuously to lower CPA and increase margins.
- Target a minimum 30% margin after all costs for a sustainable dropshipping business — anything below 20% is very fragile to ad cost increases.
- ROAS (Return on Ad Spend) is a key metric — a ROAS of 3× or higher is typically needed for profitability; your break-even ROAS depends on your specific cost structure.
- Always include a return/chargeback reserve in your calculations — consumer goods typically see 2–5% return rates, higher for apparel (15–30%).
- Negotiate lower supplier costs as you scale — even $2–3 per unit reduction significantly improves margins at high order volumes.
Frequently Asked Questions
What is a good profit margin for dropshipping?
A healthy dropshipping margin is 25–40% after all costs (supplier, ads, fees, returns). Many beginners target gross margins of 50–70% (sell price vs. supplier cost only) but the business is actually unprofitable once advertising and fees are included. Focus on true net margin, not just the markup over supplier cost.
What is ROAS and why does it matter?
ROAS (Return on Ad Spend) is calculated as revenue divided by advertising spend. A ROAS of 3× means you generate $3 in revenue for every $1 spent on ads. Your break-even ROAS is higher than 1× because you also have supplier costs and fees — use this calculator to find your specific break-even ROAS and ensure campaigns exceed it.
How do I reduce my cost per acquisition (CPA)?
The main levers are: improve your ad creative (images, copy, video), refine your targeting to reach buyers more likely to convert, optimize your landing page and product page for conversion rate, use retargeting campaigns which typically have much lower CPA than cold audiences, and test different ad platforms (Meta, TikTok, Google) to find the most efficient.
What are the biggest hidden costs in dropshipping?
Common surprises include: credit card chargebacks (2–3% of revenue if you get flagged), PayPal holds (can freeze 20–30% of revenue for 6 months for new accounts), Shopify app costs ($100–300/month for essential apps), ad account bans requiring restart costs, and long supplier shipping times causing returns and chargebacks. Budget for these.
Is dropshipping still profitable in 2025?
Dropshipping remains profitable for sellers who treat it as a real business — rigorous testing, quality product selection, strong branding, and continuous ad optimization. The low-effort, high-profit model often described online is no longer realistic. Successful dropshippers typically have 20–35% net margins and $5,000–20,000+ monthly revenue. Building brand and repeat customers is increasingly important.