Dropshipping Profit Margin Calculator
Put your selling price and all four per-order costs in one place and see the complete unit economics at once: profit per order, profit margin, break-even CPA, break-even ROAS and the total profit a given number of orders would leave you.
Your numbers
The number of orders is optional. Leave it empty if you only want the per-order picture.
Results
Your ad cost per order stays below your contribution margin, so every order leaves money behind. The gap between the two is your profit per order, and it is what volume multiplies. Monthly costs like apps and subscriptions still come out of it.
The profit margin formula
Contribution margin (Break-even CPA) = Selling price − Product cost − Shipping − Fees · Profit per order = Contribution margin − Ad cost per order · Profit margin = Profit per order ÷ Selling price × 100
The calculation runs in two stages, and keeping them apart is what makes the result readable. The first removes the three costs that exist because you fulfilled the order: the product, the shipping, and what payment and platform fees took out. What survives is your contribution margin, and it carries a second name that matters just as much, because it is also your break-even CPA — the most one order may cost you in advertising before it stops contributing anything. The second stage subtracts what you actually paid to win that order, and only then do you have profit.
The other outputs are that same relationship from different angles. Break-even ROAS is the selling price divided by the contribution margin: the revenue multiple your ads have to beat. Achieved ROAS per order is the selling price divided by what you really paid for that order, so the two ROAS figures sit side by side and can be read against each other. Total profit is profit per order times your order count, and it inherits the sign of the per-order result. At a price of 40 with 12 of product cost, 5 of shipping and 3 of fees the contribution margin is 20, and an ad cost of 14 leaves 6 in profit: a break-even ROAS of 2, an achieved ROAS of about 2.86 and a margin of 15 percent. That last word needs care. The margin on this page is measured after advertising, while the familiar rule break-even ROAS = 1 ÷ margin uses the margin before advertising — here 20 ÷ 40, or 50 percent, and 1 ÷ 0.5 is indeed 2. Put the 15 percent into that rule instead and this page and our BEROAS calculator will look like they contradict each other, when they are simply measuring at two different points of the same calculation.
How to use this calculator
- 1
Enter the selling price of one typical order — what the customer actually pays, before anything is subtracted. If your order sizes vary, use your real average, because an optimistic price flatters every number below it.
- 2
Enter the three costs the order causes: the product, the shipping, and what payment and platform fees add up to. The fee field wants an amount, not a percentage, so take it from your provider's statement or work out what your rate comes to on an average order.
- 3
Add your advertising cost for one order. The three cost blocks above it are set by your supplier, your carrier and your payment provider; this is the field you keep moving while you watch the profit per order react to it. Add the order count as well if you want the period view, then read the profit per order first, the margin second and the two break-even numbers last.
The contribution margin is the number everything else hangs on
Your contribution margin is what one order leaves once it has paid for itself: price minus product, minus shipping, minus fees. At a price of 40 with 12 of product cost, 5 of shipping and 3 of fees, that is 20. The same 20 is your break-even CPA, because it is the largest amount you could hand an ad platform for that order and still come out even. Two names, one number, and every other figure on this page derives from it.
Advertising does not reduce the contribution margin, it consumes it. Pay 14 to win the order and 6 remains. Pay 20 and nothing remains: the order is a complete round trip that leaves you exactly where you started. Pay 22 and it becomes a transfer of 2 from your account to your supplier, your carrier, your payment provider and your ad platform, all of whom are paid in full while you are not.
That is why the contribution margin is the first thing to fix and never the last. It sets the ceiling all ad optimisation works underneath: better creatives and better targeting push your cost per order down toward that ceiling, but nothing in an ads manager lifts the ceiling itself. Widening the margin does. Cutting 4 out of your costs takes the contribution margin to 24, lifts the break-even CPA to 24 and pushes break-even ROAS from 2 down to about 1.67 — the same ads suddenly have room they did not have before.
Profit per order and total profit answer two different questions
Profit per order is a question about quality: does this product, at this price, with these costs, work at all. Total profit is a question about volume, and it is pure multiplication, so it inherits the sign of the first. Six of profit across 300 orders is 1,800. A loss of 2 across those same 300 orders is 600 gone, and across 900 orders it is 1,800 gone. Scaling never changes the sign, it only makes the existing one louder.
That is the flaw in hoping volume will fix a weak product. It can work where costs are mostly fixed, because there the same overhead spreads across more sales. Here almost every cost is per order: each sale carries its own product, shipping, fees and advertising, and all four grow in step with the order count. Growth only helps if it changes one of the inputs — a better purchase price at volume, cheaper shipping, a plan that fits your turnover — and that is a new calculation, not a reason to skip this one.
The achieved ROAS per order is the bridge between this page and your ads manager: selling price divided by what that one order cost you in advertising. Held against the break-even ROAS directly above it, it answers the only question that matters here — is this order above the line or below it. At a price of 40 and an ad cost of 14 it lands at about 2.86 against a break-even of 2, and the headroom is obvious. At an ad cost of 22 it falls to about 1.82, below the break-even, and the order loses money while still reporting a return above one. This is deliberately narrower than our ROAS calculator, which measures a whole campaign against the revenue it produced. Here the unit is a single order, and a campaign average that looks acceptable can still be made up of orders sitting under the line.
Frequently asked questions
Should I judge a product by the profit per order or by the margin percentage?
Start with the amount, then use the percentage to compare. Profit per order is the money that actually reaches your account, and it is what pays your bills; the percentage says nothing at all about size. Twelve percent of a 40 order is 4.80, twelve percent of a 15 order is 1.80 — identical margins, and one of them absorbs a single refund far better than the other. The percentage earns its place when you compare products from different price brackets, because it shows what share of each sale you keep no matter how big that sale was.
Should I enter fees as a percentage or as an amount?
As an amount, because that is what the formula subtracts. Payment processing is usually charged as a percentage of the order plus a fixed sum per transaction, and platform or app costs that scale with orders sit on top. Work out what all of it comes to on one average order and put that figure in the field. Our Shopify fees calculator does the conversion if you only know your rate and your average order value.
My profit per order went down but my total profit went up. Which one should I believe?
Both, because they are not in conflict. Buying more volume usually costs more per order, so the unit figure falls while the order count climbs faster, and the product of the two still grows. That only holds while the profit per order stays above zero; the moment it crosses, every extra order subtracts instead of adding. Run this page twice with your two ad costs and compare the totals: 6 in profit across 200 orders is 1,200, and 4 across 400 orders is 1,600, so the push paid off. Push once more to 1 across 700 orders and the total drops to 700, with a great deal more work behind it.
Does this calculator include my monthly fixed costs?
No, and that is deliberate. Everything on this page happens inside a single order, so subscriptions, apps, tools and your own salary sit outside it and have to be covered by the profit per order you see here, repeated often enough. That is also where the break-even calculator picks up: the profit per order this page produces is exactly the figure that page divides your monthly costs by, which turns an amount per order into a monthly order target. Two calculations, one value handed from the first to the second.