How to calculate dropshipping profit per order
Dropshipping profit is what is left of the retail price after everything an order costs you. Start with the supplier price, add shipping if the listing doesn't include it, then subtract payment fees, platform or app fees and an allowance for returns. What remains is the contribution before advertising. Subtract what you paid in ads to win that customer and you have the profit per order.
Profit per order = retail − (supplier price + shipping) − payment fees − platform fees − returns allowance − ad cost per customer
A worked example
The calculator opens with a product that costs $8.00 on AliExpress and sells for $20.00, our default 2.5x markup. Card payments cost 2.9% plus $0.30 per order, and we set aside 3% of the price for refunds. That leaves $10.52 of contribution. With an ad cost of $9.50 per customer, our US planning benchmark for TikTok, the order makes $1.02: only just profitable, so a small rise in ad costs would turn it into a loss.
What the result tells you
A positive profit per order means the product can work at that price and that ad cost. A negative one means each sale from ads loses money, however many you make. The contribution before ads is also your break-even CAC: the most a customer can cost before you lose money. If it sits close to the benchmark CAC for your channel, you have no room for a bad week of ads.
Three levers move the result. A higher retail price raises contribution directly, but only if the product still converts at that price. A cheaper supplier or shipping line lowers your landed cost. Bundles and upsells raise the order value, which spreads one customer's ad cost over more revenue. Cutting the ad cost itself usually takes better creative or organic traffic rather than a new setting in the ad account.
Common mistakes
The most common one is using the bare AliExpress price as the product cost. Many listings show the product price and charge shipping on top, and imports into the UK and EU carry VAT. Leaving these out makes almost any product look profitable. The second is ignoring refunds: fragile, sized or gadget-type products come back more often, so raise the returns allowance for them. The third is judging a product before you know your real ad cost; until you do, compare against the benchmarks for your market and leave a margin of safety.
Product Score runs this calculation for every product it scores, using the same formula and fee assumptions as this calculator, and ranks products by a 0–100 Opportunity Score alongside their economics. See the scored niches for examples.