How to use the dropshipping profit calculator
Enter the supplier cost and the shipping cost you pay per order.
Enter your selling price and anything you charge the customer for shipping.
Add your ad cost per order (your CPA), payment fee percentage and expected refund rate.
Enter monthly orders and fixed monthly costs, such as your store plan and apps, to project the month.
The dropshipping profit formula
- Revenue per order=price + shipping charged
- Profit per order=revenue × (1 − refund rate) − product − shipping − ad cost per order − revenue × fee %
- Break-even ad cost per order=profit per order + ad cost per order
- Monthly profit=profit per order × orders − fixed monthly costs
- Ad cost per order
- Your blended CPA: total ad spend divided by orders.
- Refund rate
- Share of revenue refunded. The model assumes product, shipping, fees and ad costs are not recovered on refunded orders, which is the usual case in dropshipping.
- Fixed monthly costs
- Store subscription, apps, domain and other costs that do not depend on how many orders you take.
Worked example
A 34.99 product at 600 orders a month
- Product 9.50, shipping 4.50, price 34.99, no shipping charged.
- Ad cost per order 12, payment fees 2.9%, refunds 4%.
- Refund loss = 34.99 × 0.04 = 1.40, and fees = 34.99 × 0.029 = 1.01.
- Profit per order = 34.99 − 1.40 − 9.50 − 4.50 − 12.00 − 1.01 = 6.58, which is 18.8% of revenue.
- Monthly profit = 6.58 × 600 − 150 fixed costs ≈ 3,795 (using unrounded figures).
Where dropshipping margins disappear
Supplier price and shipping are visible. The leaks are elsewhere: ad cost per order, which is often the largest single cost, payment and currency fees, refunds and chargebacks from long delivery times, and discounts that quietly lower the average price.
- Long shipping times tend to raise refund requests and chargebacks.
- Payment fees apply to the full order value, including shipping you charge.
- Free shipping still costs you; it moves the cost into your margin.
- Small fixed costs, such as apps and subscriptions, matter a lot at low volume.
Pricing and kill rules
Many dropshippers aim for a selling price of around 2.5 to 3 times landed cost (product plus shipping) so that there is room for advertising. Treat that as a starting point rather than a law: what matters is that profit per order stays positive at a CPA you can actually achieve.
Testing new products is where most money is lost. Set a kill rule before you start, for example stopping a product once spend reaches one and a half to two times your break-even ad cost per order without a sale.
Use competitor ads to de-risk product choice
Before spending on a test, look at how the product is already being advertised. Ads that have run continuously for weeks or months, with several variations, suggest that someone is profitable at the current price and CPA. A product with only a few days of ads and many abandoned variations can be a warning.
PixelSpyer's ad library shows how long ads have been active, who runs them and where they send traffic, so you can check the landscape before you commit a test budget.
Questions and answers
How do I calculate dropshipping profit?+
Start from what the customer pays, then subtract refunds, product cost, shipping, payment fees and your ad cost per order. What remains is profit per order; multiply by orders and subtract fixed monthly costs to get the month.
What is a good profit margin for dropshipping?+
Many operators aim to keep somewhere between 10% and 30% of revenue as profit per order after ads, but the range is wide and depends on product, price point and traffic costs. Stable, positive profit at a CPA you can repeat matters more than any target percentage.
How much should I spend on ads per order?+
No more than your break-even ad cost per order, which this calculator shows. To keep a profit, aim for an ad cost per order well below that ceiling.
Should I charge for shipping or offer free shipping?+
Test both. Free shipping often lifts conversion rate, while a shipping fee raises revenue per order. Enter each setup here to compare profit per order, then let real conversion data decide.
How do refunds affect profit?+
In dropshipping a refund usually returns the customer's money while the product, shipping and ad costs are already spent. Even a few percent of refunds can take a large share of a thin margin.
Does this include taxes?+
No. Enter prices excluding VAT or sales tax and handle income tax separately. The rules depend on your country and where your customers are.