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Dropshipping profit calculator
Short answer
This calculator models profit per order after product cost, shipping, payment processing, advertising, a returns reserve and app overhead. It reports margin, ROI, monthly profit and break-even ROAS - the return on ad spend below which every additional order loses money, no matter how good the campaign looks.
Calculate dropshipping profit and loss
The defaults are an illustrative example with realistic planning allowances. Replace them with your own numbers before scaling ad spend on a campaign.
Price and product
What the supplier charges
Fees and spend
Often around 2.9%
Flat per transaction, often $0.30
Ad spend as a percentage of sales
Monthly software cost divided by monthly orders
Profit per order
$9.63
Profit margin
27.5%
ROI on unit cost
75.5%
Product cost plus shipping
Break-even ROAS
1.9x
Campaigns must beat this
Monthly profit
$3,852.00
Profit before ads
$18.38
Where the order goes
What your ads have to return
After product cost, shipping, payment fees, returns and overhead, this order leaves $18.38 to spend on advertising. Break-even ROAS is the selling price divided by that figure.
A campaign reporting 3x or 4x ROAS can still lose money on a thin-margin product. ROAS compares ad spend to revenue, not to profit. Scale against the break-even figure above, not against the dashboard number.
What a $34.99 order actually leaves
Selling price minus product and shipping cost leaves a $22.24 preliminary spread, which looks like a comfortable business. After payment processing, advertising, a returns reserve and app overhead, the same order leaves $9.63 - a 27.5% margin. The gap between those two numbers is where most dropshipping models go wrong.
| Line | Amount |
|---|---|
| Selling price | $34.99 |
| Product cost | -$8.50 |
| Shipping cost | -$4.25 |
| Payment processing (2.9% + $0.30) | -$1.31 |
| Advertising (25% of revenue) | -$8.75 |
| Returns reserve (3% of revenue) | -$1.05 |
| Apps and overhead | -$1.50 |
| Profit per order | $9.63 |
Why a 3x ROAS campaign can still lose money
ROAS compares ad spend to revenue, not to profit. On the example above, every $34.99 of revenue has already committed $16.61 to product cost, shipping, payment fees, returns and overhead before a cent of ad spend. Only $18.38 is available to advertise with, which puts break-even at 1.90x.
A campaign reporting 1.5x ROAS is therefore losing money on every order it wins, while the ads dashboard shows revenue climbing. Break-even ROAS is the number to scale against. Amazon Ads defines ROAS as ad revenue divided by ad spend, and ACoS as its inverse expressed as a percentage - which is why the two break-even figures on this page are reciprocals of each other.
How this calculator works
| Output | Formula |
|---|---|
| Payment fee | price x payment rate + fixed fee |
| Ad spend | price x advertising rate |
| Returns reserve | price x returns rate |
| Profit per order | price - product cost - shipping - payment fee - ads - returns - overhead |
| Profit margin | profit / price x 100 |
| ROI | profit / (product cost + shipping) x 100 |
| Profit before ads | profit + ad spend |
| Break-even ROAS | price / profit before ads |
| Break-even ACoS | profit before ads / price x 100 |
| Monthly profit | profit per order x orders per month |
ROI divides by product cost plus shipping, because on a dropshipped order you lay out both per sale. Every per-order fee is rounded to cents before it is summed, and the monthly figure is the rounded per-order profit multiplied by volume - that is how the money actually moves.
When a product loses money before any ad spend at all, this calculator reports no break-even ROAS rather than a number. No amount of advertising efficiency rescues a unit that is already underwater, and printing a figure there would imply otherwise.
Dropshipping profit calculator FAQ
The return on ad spend at which profit is exactly zero: selling price divided by profit before advertising. If your break-even ROAS is 1.90x, a campaign reporting 1.5x is losing money on every order it brings in, even while the dashboard shows revenue growing.
Because ROAS compares ad spend to revenue, not to profit. On a thin-margin product, most of that revenue is already spoken for by product cost, shipping and payment fees. Break-even ROAS is the number that accounts for them, which is why it is the one to scale against.
The share of revenue you expect to lose to refunds, chargebacks and damaged goods, as a percentage. It is a reserve rather than a cost you have paid, but leaving it at zero models a store where nothing is ever returned, and prices accordingly.
Profit divided by product cost plus shipping - the money you actually lay out per order. Shipping is included because on a dropshipped order you pay it on the way out whether or not the sale sticks.
Yes - divide your monthly software and subscription spend by your monthly order count. It is the only way a per-order model can see fixed costs, and on low volumes it is often the line that turns an apparently profitable product into a loss.
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