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Dropshipping Profit Margin Calculator

Enter supplier cost, shipping, payment processor, return rate, and optional ad spend. See gross margin, net margin, break-even price, and ROAS needed to be profitable.

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Dropshipping Margin Calculator — Enter your supplier cost, shipping, platform fees, and return rate. See true net margin, break-even price, and ROAS needed if running ads.

Product & Pricing

Your sale price

Supplier product costAliExpress / CJDropshipping / Alibaba

Shipping to customerePacket / standard / warehouse

Fees & Returns

Payment processorReturn rate% of orders returned / refunded

Ad Spend (optional)

Include in calculation

Gross margin

67.6%

$27.03/order before returns

Net margin

66.7%

$26.69/order after all costs

Break-even price

$12.51

$27.48 cushion

100 orders/mo

$2,668.53

$32,022.35/year

Payment fee/order

$1.46

3.7% of sale

Cost waterfall

Sale price$39.99

− Supplier cost-$8.50

− Shipping to customer-$3.00

− Payment processing-$1.46

= Gross profit$27.03

− Return cost (avg per order)-$0.35

= Net profit per order$26.69 (66.7%)

Sale price (gross revenue)

sale_price

$39.99

= $39.99

Supplier product cost

supplier_cost

$8.50

= $8.50 (21.3% of sale price)

Your COGS from AliExpress, Alibaba, CJDropshipping, etc. Negotiate lower MOQ prices as volume grows.

Shipping to customer

shipping_cost

$3.00

= $3.00

ePacket from China typically runs $2–5/order. CJDropshipping and US-based warehouses are faster but cost more. Factor this in when pricing your product.

Payment processing fee

sale_price × fee_% + flat_fee

$39.99 × 2.9% + $0.30

= $1.46

Processing fees on every transaction are unavoidable. On low-ticket items, the flat $0.30 becomes significant — a $10 order pays 3.3% effective rate vs. 2.9% on a $100 order.

Gross profit (before returns and ads)

sale_price − supplier_cost − shipping − payment_fee

$39.99 − $8.50 − $3.00 − $1.46

= $27.03 (67.6% gross margin)

Target 30%+ gross margin to leave room for returns, ads, and chargebacks.

Return cost (per order, averaged across all orders)

(supplier_cost + shipping) × return_rate

($8.50 + $3.00) × 3.0%

= $0.35

At 3.0% return rate, you pay $0.35 extra per order on average. With dropshipping, refunding the customer usually means eating the supplier + shipping cost — the item doesn't come back to you.

Industry average dropshipping return rate: 2–5% for general items, 10–20% for apparel/electronics

Net profit per order

gross_profit − return_cost

$27.03 − $0.35

= $26.69 (66.7% net margin)

Net margin of 66.7%. At 100 orders/month: $2,668.53/mo gross · $32,022.35/yr.

Break-even sale price

(supplier_cost × (1 + ret%) + shipping × (1 + ret%) + flat_fee) / (1 − fee%)

covers: supplier + shipping + payment fees + return losses

= $12.51

You need to charge at least $12.51 to avoid losing money on each order (before ads). Your current price of $39.99 is $27.48 above break-even.

Key insight

The return rate is the most underestimated cost in dropshipping. At 5% return rate, you're eating the supplier + shipping cost on 1 in 20 orders — even if you don't offer a physical return. Factor this into every pricing decision before running paid traffic.

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