What is a good margin for dropshipping?

Gross margins of 40–60% are typical for viable dropshipping products, but the decisive number is net profit after fees and advertising — aim for 15–25% of revenue. Products below roughly 30% gross margin rarely survive ad costs, returns, and chargebacks.

What is break-even ROAS and how do I use it?

Break-even ROAS is revenue divided by the contribution left after product, shipping, and fee costs — the point where ad spend exactly consumes your margin. Use it as a campaign floor: an ad set delivering ROAS below break-even loses money on every conversion, regardless of how good the ROAS looks in isolation.

Should I include returns in this calculation?

This calculator shows per-order economics for a completed sale; returns are best layered on top as an expected cost. If 6% of orders return and each return costs you the shipping plus a non-resellable product, multiply those out and subtract from net profit — or use the Returns Cost Calculator to size it across your volume.

Ecommerce & Fulfillment

Drop Shipping Margin Calculator

The Drop Shipping Margin Calculator computes the real profit on a dropshipped product: gross margin after supplier and shipping costs, net profit per order after platform fees and advertising, and the break-even ROAS — the minimum return on ad spend at which an order stops losing money.

Input Parameters

Retail Price ($)

Supplier / Dropship Cost ($)

Shipping Charged ($)

Shipping Cost ($)

Platform / Transaction Fee (%)

Marketplace + payment processing, as % of revenue

Ad Cost per Order ($)

Results

Enter values to see results

Formula

Gross Margin = (Price + Shipping Charged) − (Supplier Cost + Shipping Cost) · Net Profit = Gross Margin − Platform Fees − Ad Cost · Break-Even ROAS = Revenue ÷ Contribution Before Ads

Revenue is what the customer pays (retail price plus any shipping you charge). Platform and payment fees apply to that full revenue. Contribution before ads is what remains after supplier cost, shipping cost, and fees — the money available to pay for advertising. Break-even ROAS divides revenue by that contribution: if your ad campaigns return less revenue per ad dollar than this number, every sale loses money.

Variable Definitions

Price

Retail Price

What the customer pays for the product.

Supplier Cost

Supplier (Dropship) Cost

What the supplier charges you for the product, per order.

Ship Charged / Cost

Shipping Charged vs Cost

Shipping revenue you collect from the customer versus what the supplier or carrier charges you.

Fee %

Platform / Transaction Fee

Marketplace and payment processing fees as a percentage of total revenue.

Ad Cost

Ad Cost per Order

Average advertising spend to win one order (total ad spend ÷ orders).

Example Calculation

Scenario: A dropshipper sells a $49.99 product: - Supplier cost: $18.00 · Shipping charged: $4.99 · Shipping cost: $7.50 - Platform + payment fees: 5.9% · Ad cost per order: $12.00 Calculation: Revenue = $49.99 + $4.99 = $54.98 Gross margin = $54.98 − ($18.00 + $7.50) = $29.48 (53.6%) Fees = $54.98 × 5.9% = $3.24 Contribution before ads = $29.48 − $3.24 = $26.24 Net profit per order = $26.24 − $12.00 = $14.24 (25.9% of revenue) Break-even ROAS = $54.98 ÷ $26.24 = 2.10 Ad campaigns must return at least $2.10 of revenue per $1 of ad spend on this product before it makes any money.

How to Interpret Your Result

• Net profit per order is the number that matters — healthy dropshipping products typically net 15–25% of revenue after ads; below 10% leaves no room for returns and chargebacks. • Break-even ROAS is your campaign kill line: pause ad sets running below it. Add a margin of safety (e.g., target 1.3× break-even) to fund returns and overhead. • Shipping is a common silent leak: charging $4.99 while paying $7.50 costs you $2.51 per order before anything else. • Model price increases here first — a $5 price rise often adds more net profit than a 20% ad-cost improvement.

Related Calculators

Related Glossary Terms

Order Fulfillment Third-Party Logistics (3PL)Break-Even Analysis Landed Cost