AliExpress Dropshipping Profit Calculator

How the figure is built

Profit per dropshipped order is the selling price less the supplier cost, less the supplier's shipping, less payment processing, less advertising, less the refunds and chargebacks the model generates.

Profit = price − supplier cost − supplier shipping − payment fees − ad cost per order − refund provision.

Advertising is the dominant term, because there is no organic traffic in a model with no brand and no marketplace rank.

Running the numbers

An item costing $6.20 with $2.80 of supplier shipping, sold at $29.99. Payment processing at 2.9% + $0.30 is $1.17.

Advertising at a $12 cost per acquisition, realistic for a cold-traffic product, leaves $7.82.

Refunds and chargebacks at 6% of orders, costing the full order value plus the fee, take roughly $2.10: $5.72 a unit, a 19% margin.

That is a viable number and it depends entirely on holding the acquisition cost at $12. At $18 the product loses money, and acquisition costs on paid social move constantly.

Where the figure deceives

Long shipping times from overseas suppliers drive refund and chargeback rates far above normal ecommerce, and the model above is sensitive to that assumption.

Supplier prices and shipping on marketplace platforms also change without notice, and a product costed three months ago may no longer be viable.

Acting on it

Model at a realistic acquisition cost including the testing spend on products that failed, not just the winning product's cost per acquisition.

Then set expectations on delivery time explicitly at checkout. Most of the refund and chargeback cost in this model comes from customers who did not know the item would take three weeks.

Why the model is harder than it looks

The margin structure requires a low acquisition cost, and the products that achieve one are the products everyone else has also found. Competition drives the cost per acquisition up until the margin disappears, which is why individual dropshipping products have short lives.

The businesses that persist do so by moving faster than the competition: testing continuously, accepting that most products fail, and treating the winners as temporary.

The alternative that works better over time is to use the model to find demand and then move to holding inventory: better margins, faster shipping, lower refunds and a product nobody else can list identically. Dropshipping as a discovery mechanism is sound; dropshipping as a permanent operating model fights an economic gradient that gets steeper the more successful the product becomes.

The testing budget spent on products that never worked. A seller who tests ten products to find one winner has to recover ten testing budgets from that one product.

Modelling only the winner's economics makes the model look far better than the business, and it is the single most common reason dropshipping ventures appear profitable on a spreadsheet and are not in practice.

Supplier reliability is the other unmodelled variable. A supplier who ships late, substitutes a variant or sends a lower-quality unit generates refunds and chargebacks that fall entirely on the seller, and there is no practical recourse. Ordering samples before scaling is the only protection available.