Dropshipping Profit Margin Percentage Calculator
Ad spend applied to gross, not net.
Net profit margin
23.2%
$11,126 a month
Advertising is charged on gross orders including the 7% later refunded, so refunds cost you the spend as well as the sale. That is why a 7% refund rate takes more than 7% off the bottom line.
How the Dropshipping Profit Margin Percentage Calculator works
Advertising is spent on gross orders including the ones later refunded, so refunds cost you the spend as well as the sale. Applying the ad ratio to net revenue instead of gross understates the damage and makes a refund problem look smaller than it is.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
What net margin is realistic for a dropshipping store?
10% to 20% for a well-run operation. Stores reporting 40% are usually excluding advertising, subscriptions, or the cost of the products they tested and abandoned.
Why apply advertising to gross revenue?
Because you paid for every order, including the ones refunded. Applying it to net pretends the refunded orders were free to acquire, which they were not.
What are the biggest line items?
Cost of goods and advertising, usually close to each other and together often 65% to 75% of revenue. Everything else — apps, processing, support — is small by comparison and easy to over-manage.
How do I improve net margin?
Raise average order value, cut refund rate through faster shipping, and reduce acquisition cost through better conversion. Cutting app subscriptions feels productive and moves almost nothing.