Calculate dropshipping profit margin after supplier cost, platform fees, payment processing, and advertising. Find your true per-order profit.
Dropshipping seems simple: sell a product for more than the supplier charges and pocket the difference. But real-world margins are squeezed by platform fees, payment processing, advertising costs, and refund rates. Many dropshippers discover their actual margin is far thinner than expected.
This calculator accounts for all the cost layers in a dropshipping business: supplier cost plus shipping, marketplace or website platform fees, payment processing fees, advertising cost per sale, and an estimated refund rate. The result is your true per-order profit and margin.
Use this tool before sourcing any product to verify the math works. If the margin is too thin, you'll know to find a cheaper supplier, raise the price, reduce ad costs, or pass on the product entirely. Whether you are a beginner or experienced professional, this free online tool provides instant, reliable results without manual computation. By automating the calculation, you save time and reduce the risk of costly errors in your planning and decision-making process.
Dropshipping margins can be deceptively thin. A product that looks profitable at 3× markup may barely break even after ads, fees, and refunds. This calculator reveals your true bottom-line profit per order, helping you avoid products that waste time and money. Having a precise figure at your fingertips empowers better planning and more confident decisions.
Platform Fee = Selling Price × Platform Fee% Payment Fee = (Selling Price × Payment Fee%) + Per-transaction Fee Refund Loss = Selling Price × Refund Rate% Net Profit = Selling Price − Supplier Cost − Platform Fee − Payment Fee − Ad Cost − Refund Loss Margin = Net Profit / Selling Price × 100
Result: Net Profit: $14.82 | Margin: 37.1%
Selling: $39.99. Supplier: $12. Platform: $39.99 × 2% = $0.80. Payment: ($39.99 × 2.9%) + $0.30 = $1.46 + $0.30 = $1.76. Ads: $8. Refund loss: $39.99 × 5% = $2.00. Total costs: $12 + $0.80 + $1.76 + $8 + $2.00 = $24.56. Profit: $39.99 − $24.56 = $15.43. Margin: 38.6%. The result accounts for refunds effectively reducing your average revenue.
A typical dropshipping order has five cost layers: (1) Supplier + shipping (35‒50% of revenue), (2) Advertising (15‒30%), (3) Platform fees (2‒15%), (4) Payment processing (3–4%), (5) Refunds and chargebacks (2‒10%). Together, these consume 60‒90% of the selling price, leaving 10‒40% profit.
Protect margins by choosing products that are: lightweight (cheap to ship), non-fragile (low returns), not easily compared (avoid commodity products with many identical listings), and have perceived value above their cost (unique designs, problem-solving products). Products priced $30–60 offer the best margin-to-conversion balance.
As you scale dropshipping, ad costs per sale tend to increase (audience saturation), refund rates may rise (broader audience = less targeted), and competition intensifies. Plan for 10–20% margin erosion at scale compared to initial test results.
A healthy dropshipping margin is 30–50% after all costs. Top-performing products can achieve 40–60%. Below 20% is risky because small increases in ad costs or refund rates can eliminate profit. Products with under 15% margin should generally be avoided.
Common overlooked costs: payment processing fees ($0.30 + 2.9% per order), chargebacks ($15–25 each), customer service time, refund shipping costs, Shopify/app subscriptions, VAT/sales tax obligations, and product replacement for quality issues. These can total 5–10% of revenue.
Ad cost per sale depends on the product price and niche. For $30–50 products, $8–15 per sale is common on Facebook/TikTok. Your cost per acquisition (CPA) should be less than 30% of the selling price. If CPA exceeds this, your margins are likely too thin.
Shopify has lower per-order fees (2% + payment processing) but requires you to drive traffic via ads. Amazon has higher fees (15% referral + fulfillment) but provides built-in traffic. Shopify works for branded/unique products; Amazon works for products with existing search demand.
You refund the selling price but can't recover the supplier cost (most suppliers don't accept returns easily). A 10% refund rate means 10% of your revenue is lost while you still paid the supplier. This effectively reduces your margin by the refund rate multiplied by the profit percentage.
Yes, but Amazon requires the product ship with your branding (not the supplier's). Direct AliExpress-to-customer dropshipping violates Amazon's policy. Use a US-based 3PL or Amazon-compliant supplier. FBM (Fulfillment by Merchant) is the standard for dropshipped products on Amazon.