Dropshipping Profit Margin Calculator
Calculate your true dropshipping profit after product cost, platform fees, payment processing, advertising, and return rate.
Why Dropshipping Margins Are Often Thinner Than Expected
Many beginners calculate profit as: Selling Price − Product Cost. But the true costs include platform fees, payment processing, advertising, and returns.
Cost Breakdown
- Product + Shipping Cost: Paid to your supplier per order
- Platform Fee: Shopify ~2%, Etsy 6.5%, Amazon 15%
- Payment Processing: Typically 2.9% + $0.30 per transaction
- Ad Spend per Sale: Your Facebook/Google ad cost to acquire the customer
- Returns: Average refund cost as a % of sale price
True Profit Formula Platform Fee = Selling Price × Platform % Payment Fee = Selling Price × 2.9% + $0.30 Return Cost = Selling Price × Return Rate % Total Costs = Product Cost + Platform Fee + Payment Fee + Ad Spend + Return Cost Profit = Selling Price − Total Costs Margin = Profit / Selling Price × 100
ROAS (Return on Ad Spend) ROAS = Selling Price / Ad Spend per Sale A ROAS above 3x is generally considered profitable for most products.
Benchmark Healthy dropshipping margins: 20%–30%+ after all costs. Below 15% makes scaling difficult when ad costs rise.