Dropshipping Margin Calculator

Dropshipping profit margins are typically lower than traditional retail because you do not benefit from bulk purchasing discounts and you rely on suppliers for fulfillment. Most successful dropshippers target net margins between 15% and 30% per sale after all costs are accounted for.

The biggest hidden cost in dropshipping is customer acquisition. Ad spend per sale (your customer acquisition cost, or CAC) can quickly eat into margins if your targeting is not efficient. A common rule of thumb is to keep your ad spend below 30% of your selling price, though this varies heavily by niche and platform.

Platform fees vary significantly. Shopify stores have no per-sale marketplace fee but incur payment processing fees (around 2.9% + $0.30). Marketplaces like Amazon (15%), eBay (12-13%), and Etsy (6.5%) charge referral or transaction fees on top of payment processing. Always factor in every fee layer when calculating true margins.

Returns are an often-overlooked margin killer. In apparel dropshipping, return rates can reach 20-30%. Each return typically costs you the supplier price, outbound shipping, and sometimes a restocking fee, while the customer receives a full refund. Building a returns buffer into your pricing is essential for sustainable profitability.