Dropshipping Profit Margin Guide: Calculate & Boost Profits 2025

Want to build a profitable dropshipping store in 2025? It all starts with understanding your dropshipping profit margin.

In this guide, you’ll learn how to calculate your margins step-by-step, set smarter product prices, and boost your overall profits — with real examples, free calculators, and expert strategies tailored for today’s market.

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Dropshipping Profit Margin Calculator

If you want to calculate profit for your dropshipping store accurately, our simple dropshipping profit margin calculator helps you break down every sale.

🧮 Profit Margin Calculator

Sales Price ($):

Total Costs ($):

Calculate Profit Margin

✨ How To Use This Profit Margin Calculator:

1. Enter your Sales Price: Type in the total amount you sold your product for. For example, if you sold an item for $100, type 100 in the first box.

2. Enter your Total Costs: Type the total costs you paid to sell that product. This includes the product cost, shipping, marketing, fees, and anything else. For example, if all your costs add up to $70, type 70 in the second box.

3. Click on “Calculate Profit Margin”: Press the button, and the calculator will instantly show you your profit margin percentage!

4. Read your result: You’ll see something like “📊 Your Profit Margin is 30.00%,” showing exactly how much profit you make for every dollar of sales.

How To Calculate Your Profit Margins For Dropshipping?

The good news is that there is a simple profit margin formula that you can put into practice. And here is the formula to calculate your dropshipping profit margin:

{(Sales Price – Costs) / Sales Price} x 100 = Profit Margin

Let’s assume that you have a dropshipping business for electronics and made $1 million in sales last year.

Then, you need to subtract all of your expenses and costs, including the cost of your products, shipping, marketing, fees, etc., from your sales price. Let’s say that all of your expenses and costs stand at $700,000. In that case, you are left with net profits of $300,000.

To calculate your dropshipping profit margin, just divide your net profits by your sales price and multiply that number by 100.

 Now, I will show you the steps to help you learn how to simplify the formula on your own.

{($1,000,000 – $700,000) / $1,000,000} x 100 = 30%

• Sales price = $1,000,000
• Costs = $700,000
• Net profits = $300,000
• Profit margin = 30%

Just follow these steps:

1. Subtract costs from sales price: $1,000,000 – $700,000 = $300,000
2. Divide net profits by sales price: $300,000 / $1,000,000 = 0.3
3. Express it in percentages, i.e., multiply it by 100: 0.3 x 100 = 30%

According to this formula, your profit margin is 30%.

But keep in mind that it is essential to calculate margins for every single item you list for sale. Of course, the calculation process is the same.

Now that you know how to calculate your dropshipping profit margin, let’s move on to the next topic: Dropshipping product pricing.

What Is A Good Dropshipping Profit Margin?

With the dropshipping business model, you buy a product from a dropshipping supplier at a certain price. To earn a profit, you sell that product for more than what you paid.

Simply put, a profit margin represents what percentage of sales has turned into profits. It is actually a ratio calculation that suggests how much out of your overall sales your business keeps.

In general, a good profit margin for dropshipping in 2025 is anything between 10% and 30%, with ~20% considered healthy. However, it can vary based on what types of goods you are selling, your platform, and your selling region.

Fun fact: The global dropshipping market size will reach $464.4 billion in 2025. and is projected to exceed $500 billion by 2026. So, you’re entering a booming market!

So, before I add products to my dropshipping store, what I always do is check on the supplier price for the specific product vs the market price. This way, I get a sense of the profit I may earn.  For example, let’s say I want to sell this women’s bag.👇

And, I want to earn a profit margin of 30%. You can use the following formula:

Selling Price = Cost Price + (Cost Price * Profit Margin)

First, calculate the profit margin amount:

Profit Margin Amount = $61 * 0.30 = $18.30

Next, add the profit margin amount to the cost price to get the selling price:

Selling Price = $61 + $18.30 = $79.30

So, if you sell the women’s bag at $79.30, your profit will be $18.30. Here’s how the scenario looks:

You purchase a women’s bag for $61. By adding a 30% profit margin, you set the selling price at $79.30. When the bag sells, you earn a profit of $18.30. This approach ensures you cover your costs while making a reasonable profit.

However, let’s learn how you can calculate your dropshipping profit margins in detail!

👉 Check out the Best 8 Profitable Niches With Low Competition For Dropshippers.

👉 Check out the Top 11 Richest Dropshipping Store Owners In The World.

Key Dropshipping Profit Margin Metrics You Must Track for Success

You can run a successful dropshipping business, but you should be aware of the importance of profit margins. Thus, it’s a good idea to start by informing yourself better about dropshipping profit margin stats.

💡Tip: Learn How To Make 5k a Month With A Real Business.

This article will discuss the most important dropship profit margins for you. Let’s get started!

1. Cost of Goods Sold (COGS)

The cost of goods sold (COGS) is an important factor in determining your gross dropshipping profit margin.

As a result, it is a critical dropshipping metric!
The direct expenses of manufacturing the products sold by a business are referred to as the Cost Of Goods Sold (COGS).

These dropshipping stats cover the cost of the materials and labor necessary to make the product.

Thus, when dropshipping, the price you pay to your dropshipping supplier is the same as the COGS.

Let’s assume that you sold 100 items in the previous month and paid your dropshipping supplier $7 for each unit. Therefore, your COGS would be $700 in that situation. Clear enough?

The Cost Of Goods Sold ( COGS) is calculated using the following formula:

Furthermore, COGS does not include secondary expenses like distribution and sales force costs.

Also, keep in mind that fast shipping options (like US warehouses or fulfillment centers like ShipBob) can raise your COGS but boost your conversion rate since customers love faster delivery.

Accurately tracking your dropshipping cost breakdown — including COGS, shipping, marketing, and supplier fees — is critical to maintaining healthy margins.

2. Average Order Value (AOV)

The average order value (AOV) measures the average dollar amount spent on your dropshipping store every time a consumer places an order.

So, how to calculate AOV? Simply divide total revenue by the number of orders to determine your company’s average order value.

For example, let’s suppose that your dropshipping business made $10,000 in sales in September and received 1,000 orders. $10,000 divided by 1,000 is $10, therefore, the monthly AOV for September was $10.

Furthermore, AOV is a crucial performance dropshipping stat that dropshippers use to understand their consumers’ purchasing behavior better.

The AOV, like other critical indicators, may be measured over any time period. Moreover, increasing your AOV will boost your dropshipping profit margin.

3. Customer lifetime value (CLV)

Customer lifetime value (CLV) is a measure of how much money a company can expect to make from a customer for as much as this person stays a customer.

Studies show that retaining customers converts 60–70% of the time, compared to 5–20% for new prospects. Focusing on customer loyalty and lifetime value is more profitable than constantly chasing new buyers.

Thus, the CLV is calculated as follows:

CLV = AOV * Number of transactions per month * Retention period

So, let’s say that over a 5-year customer engagement, a specific consumer pays $40 every visit to your dropshipping store, and he/she visit once every two weeks (this means 26 times a year). By multiplying all three values together — 40 x 26 x 5 — you get 5200 CLV. But, why do you need this statistic?

• Improve Consumer Retention. Tracking these characteristics with precise segmentation can assist you in identifying your top clients and determining what works successfully.
• Encourage Repeat Purchases. CLV may be used to measure the average number of visits per year or during the lifetime of a customer and apply that data to design strategies to boost repeat business.
• Promote Higher-Value Sales. Cost increases that are too rapid may turn off long-term clients. The appropriate balance is essential for success here.
• Increase Your Profit. Overall, a larger CLV should result in greater profits. You should notice a boost if you retain consumers longer and establish a business that encourages them to spend more.

👉 Read more: The importance of Data in Dropshipping.

Furthermore, when calculating CLV, consider the total average total profits made by a consumer, but also consider the total average profit.

Also, aim for a CLV:CAC ratio of 3:1 to grow sustainably!

Each of them gives valuable information about how consumers engage with your company and if your entire marketing strategy is operating as planned.

4. Conversion Rate

The conversion rate is the percentage of visitors to your dropshipping shop that make a purchase.

Calculating the conversion rate is quite easy, all you need to do is divide the number of orders by the number of unique visitors.

Conversion rate = Number of orders / Number of unique visitors

So, let’s assume that you had 60 orders and 2,000 unique visits in September. Following the formula, divide 60 by 2,000 and you will get 0.03. In other words, 3% of your dropshipping store visitors purchased something.

💡 Tip: keep in mind that conversion rates vary by niche and product type.

💡 Average ecommerce conversion rates vary, but a 3–5% rate is considered solid for 2025.

Boosting mobile optimization is a must, as over 45% of all ecommerce purchases happen on mobile devices now!

Conversion rates are a good approach to comparing and evaluating the performance of different advertising channels.

As in the previous example, conversion rates are very important when running mobile user acquisition campaigns since they allow you to track the effectiveness of each campaign.

👉 Learn some effective ways how to double the conversion rate to your dropshipping store.

5. Customer Acquisition Cost (CAC)

Client acquisition cost (CAC) is the amount of money spent by a business to attract a new customer.

These dropshipping stats are determined by summing the costs of converting prospects into customers (marketing, advertising, sales employees, and other expenses) and dividing the amount by the number of customers obtained.

CAC = Total marketing costs/number of new customers

Let’s assume that you spent $2,000 on marketing in September and obtained 40 new clients. Therefore, your CAC will be $2,000/40, which equals $50.

Moreover, CAC assists you in calculating the return on investment of attempts to expand your customer base.

👉 Check out How Much Does It Cost To Start Dropshipping In 2025?

6. Shipping Costs

For a dropshipping business, shipping costs are a very important one! These costs affect your profits and can seriously lower them. They include the costs of shipping labels, packing, and postage.

You may calculate your dropshipping store’s shipping expenses by looking at how much you paid to your supplier for shipping for all orders dispatched in a certain time period.

Shipping affects your margin massively. In 2025, customers expect cheap or free shipping. Consider building part of the shipping cost into your product price to offer “Free Shipping” and improve conversions.

There are lots of dropshipping suppliers that offer fair prices for shipping, and a good service as well.

Here’s a Quick Example Shipping Cost Comparison for a Product ($15 Fitness Tracker):

💡 Tip: If you sell low-ticket products (under $30), target suppliers like CJ Dropshipping, Zendrop, or Spocket with free or cheap shipping.

If you sell high-ticket products (over $150), use ShipBob or DHL Express for premium fast delivery — customers expect it and are willing to pay extra!

🔥 Smart Shipping Strategy for 2025:

Always list “Estimated Delivery Time” clearly on your product pages. If possible, offer Free Shipping by baking small shipping costs into your product price — it boosts conversions by 30–50% according to Shopify studies!

💡 Tip: Read about Dropshipping Taxes and Payments – Must-Know Facts.

7. Refund Rate

The refund rate refers to the percentage of returned orders.

If you want to calculate these dropshipping stats, just divide the number of refunds by the total number of orders.

A refund rate above 5% should trigger concern. Therefore, improve product descriptions, offer better size charts, and show customer reviews to keep this number low.

Why Is Analyzing Your Dropshipping Profit Margin Important?

If you don’t know your dropshipping profit margin, you won’t be able to determine which products are truly profitable.

Moreover, new tools like Adserea, Dropispy, and AliInsider allow you to track winning product margins, competition, and supplier prices faster than ever.

https://www.youtube.com/shorts/uKpkZWRgJIA

If you want to be successful in the long run in this dropshipping world, analyzing your dropshipping profit margins is very important!

If you don’t know your dropshipping profit margin, you won’t be able to determine which goods are profitable and which are not.

For instance, I always find helpful apps like Adserea, where I search for my winning products, and their insights, like cost price, sales price, profit margins, number of suppliers, competition analysis, and more.

👉 Check out my FULL Adserea Review: Best Dropshipping Product Spy Software?

As a result, if you don’t analyze the dropshipping profit margins, you may find yourself dropshipping a lot of things that make you no money!

Moreover, analyzing your dropshipping profit margins will help you to better understand your dropshipping business and make good decisions on where and how to invest your money and allocate resources.

Furthermore, this valuable statistic will help you find more profitable items to dropship instead of less profitable ones, and it will also assist you in pricing your products effectively.

What’s more, it also allows you to track your performance and see whether you are progressing over time.

So, once we learned why analyzing dropshipping profit margins is important, let’s learn more about all the how-tos: increasing profit margins and calculating them!

What Is The Average Dropshipping Profit Margin?

The average dropshipping profit margin in 2025 is between 10% and 30%, depending on your niche, your platform, and your operational efficiency.

Niches like fitness equipment, sustainable products, tech gadgets, and home organization still allow 50%+ margins if you choose products wisely!

But regardless of that, you must keep your pricing competitive while ensuring your product markups are adequate in order to make a good profit.

Make sure you follow an ultimate dropshipping checklist before starting a dropshipping store in front of you. To avoid any challenges during the journey, also have this business starting checklist on your side.

And, if you are asking yourself, “What profit margin should I aim for?”, the average dropshipping profit margin might be your smartest shot!

How To Price Your Dropshipping Products in 2025?

Have you ever been in the retail industry, found a popular item, and promoted it, only to end up with no sales?

Unquestionably, it is an extremely unpleasant feeling, which can make you second-guess yourself. “Did I choose the wrong product?” “Why is my marketing strategy ineffective?”

The truth is, many factors can hurt your dropshipping business’s financial success.

Luckily, one of those factors is easy to fix.

And here is how to do so. 👇

1. Know Your Business Expenses

To get started, you need to calculate a base retail price for every single item you are about to sell. However, that price needs to cover all of your expenses.

The most common expenses you will need to cover include:

💡 Tip: Learn about Shopify Pricing Plans: What’s The Cost Of Dropshipping With Shopify?

Needless to say, you also need to take into account any unexpected costs. Therefore, it is advisable to increase your total expense number by an extra 10%.

Moreover, when defining the minimum retail price for any item, make sure you do not lose money on your items. This can give you a good start, enabling you to avoid risking profitability and understand how low you can possibly go.

Try to include and calculate all that information while creating your dropshipping business plan.

2. Understand Your Target Market

As you can see, not everything revolves around covering the costs and expenses. To set the right prices for your products, you must have an understanding of your target market.

But what does this mean? This means that you must be familiar with product availability and seasonality.

➡ Product Availability

Product availability is, without a doubt, a major factor in deciding how much to charge for an item.

On the one hand, certain dropshipping products with high-profit margins aren’t widely available. So, if you choose to sell these products, there may be a higher demand for them, and you may increase your price.

On the other hand, certain products, such as phone cases, are quite common. As a result, they usually require a lower price point to be competitive. Having an idea of how much you can charge for a product while still encouraging sales is crucial.

For instance, you can go to Amazon, Etsy, or other marketplaces and check on their Best-Sellers; this way, you can check on products of interest and availability.

Moreover, I suggest you use product research tools like Minea and check on products that are trending and valuable insights bout each, like profits, revenue, sales, and more.

➡ Product demand and seasonality

Another important factor you need to consider when pricing your dropshipping products is product demand and seasonality.

In 2025, social commerce is booming — 17%+ of ecommerce sales now happen through social platforms like TikTok and Instagram.

So, use Google Trends or TikTok Trends to check seasonality for products you plan to sell.

Being aware of the impact of demand and seasonality on sales allows you to adjust pricing to maximize profits all year round.

So, what I do here is use Google Trends’ specialty. Hence, I type in a certain product keyword and get my information. For example, let’s say I want to sell a swimsuit. 👇

As you can see, this product demand is much higher in summer than in autumn. With Google Trends, I get information even about interest by region, and in a certain period of time.

Plus, it gives me related queries.

💡 Tip: Check out the Top 15 Hot Summer Products for Dropshipping Stores in 2025.

3. Scan The Competition

Analyzing your competitors and identifying how much they charge for similar or identical products is a must for you. As a new online merchant, do not look at the largest online retailers such as AliExpress or Amazon.

Instead, focus on competitors within your specific dropshipping niche and analyze their websites and online stores. This can help you see how much they charge for similar or identical products.

If they offer the same product as you do, you should not charge more unless you provide something different and extra. For instance, you can charge more if you offer impeccable customer service and free delivery.

Also, do not try to compete on price alone. Do not continuously lower your prices to gain that one step ahead of your competition. This can be too risky and contribute to financial instability.

For this purpose, I personally love using Ali Hunter. So, I installed this AliExpress extension. And now, once I enter my competitor’s website, I immediately get any kind of valuable information about their performance, and items they sell the most, etc.

✅ Important: Don’t undercut prices blindly; instead, focus on differentiating with better descriptions, bundles, faster shipping, or stronger brand visuals.

4. Learn More About Your Target Audience

This is where things may get a bit complicated. Your dropshipping product pricing should depend on how much your customers are willing to pay for the item you sell.

In other words, if you do not know your target audience, you may end up with bad pricing and no actual customers.

Knowing who your customers are—their geographic location, age, interests, income, etc.—allows you to make the best decisions when it comes to pricing and marketing.

There are a few points that enable you to find a viable price range. In addition, this viable price range should generate sales and maintain a solid profit margin at the same time. These points are as follows:

• Consumer buying behavior
• Purchase rate (e.g., one-time, weekly, monthly, etc.)
• How much they are willing to pay

For example, younger buyers (Gen Z, Millennials) are now the dominant online shoppers. They value:

• Sustainable products
• Authentic branding
• Mobile-friendly checkout
• Personalized promotions

So, using personalized pricing strategies (such as VIP offers, SMS-exclusive deals) can drive better conversions.

I personally use Meta Ads Library. So, I choose a location, select an ad category, and type in a keyword.

Next, I search for the competitor ad copy. Once I find it, I can get insights about my target audience, like the estimated audience size, the amount spent, the number of impressions, and more.

5. Determine Your Markup

Understanding the difference between dropshipping markup vs margin is essential to pricing your products properly

Markup is the difference between the sales (retail) price of a product and the total cost of the product.

Furthermore, the markup is typically expressed as an extra percentage that you charge your customers (on top of your cost).

Some people confuse the dropshipping profit margin with the markup. However, there is a difference between them.

Namely, the dropshipping profit margin refers to the profit as it relates to an item’s sales price or revenue generated, whereas the markup refers to the profit as it relates to the product cost.

Let’s take a look at the same example using the electronics dropshipping business and the same numbers as above to calculate the markup.

{(Sales Price – Costs) / Costs} x 100 = Markup 

{($1,000,000 – $700,000) / $700,000} x 100 = 42.9%

As you can see, your dropshipping profit margin and markup are two different things. But they both are used to help determine profitability.

Once you have done all this work, it is time to decide on your dropshipping product pricing strategy.

Dropshipping Product Pricing Strategies

Prior to discussing the dropshipping product pricing strategies, it is important to know that there are three main pricing methodologies:

1. Cost-Plus Pricing

This is a simple pricing methodology. And the only thing you need to do is to calculate your total costs and add a particular profit margin to set your sales/retail price.

For instance, if the cost of materials, labor, and overhead for a particular piece of furniture is $500, and you want to achieve a profit margin of 30%, you would add 30% of $500 ($150) to the cost, resulting in a selling price of $650.

This cost-plus pricing strategy ensures that you cover all of your costs and generate the desired profit on each unit sold. It also provides transparency to customers, as they can clearly see how the price is derived and understand the value they are receiving.

2. Market-Oriented Pricing

This methodology is based on market conditions and competition. Here, you set your prices based on the prices of similar or identical items set by your competitors.

For example, an airline may use dynamic pricing to increase ticket prices during peak travel seasons when demand is high, and lower prices during off-peak periods to attract more customers.

So, by continuously monitoring market conditions and adjusting prices accordingly, businesses can maximize their revenue and profitability while remaining competitive in the market.

3. Consumer-Oriented or Value-Based Pricing

The consumer-oriented pricing methodology is based on the perceived or estimated value of the item you are providing to your customers.

The high-end clothing retail industry is a good example of this pricing methodology, to be more specific. Luxury fashion products are priced higher to represent their social value, rather than their functional value.

One great example of a dropshipping store that sells luxury fashion products correctly is BrandsGateway. 👇

Plus, this is more than just a dropshipping and wholesale supplier. This, it’s a dynamic B2B luxury fashion marketplace that’s transforming the way retailers and manufacturers connect.

To price your products correctly and increase your profit margins, use one or more of the following methodological approaches.

3. Penetration Pricing

As its name suggests, this dropshipping product pricing strategy is ideal for dropshipping beginners who want to penetrate the market.

You are a dropshipping beginner, aren’t you? So, in the beginning, drop your prices below the competition to gain a foothold in the market and boost sales. After you have attracted a substantial customer base, you can GRADUALLY raise your prices.

One example of a dropshipping store that has used penetration pricing and succeeded is “DropshipDeals.” This store focuses on offering a wide range of trendy and affordable products, targeting price-sensitive customers who are looking for great deals.

By strategically pricing its products at a lower cost compared to its competitors, DropshipDeals was able to quickly attract a large customer base. They focused on building a strong online presence through social media platforms and search engine optimization, ensuring that their products were easily discoverable by potential customers.

4. MSRP Pricing (Manufacturer’s Suggested Retail Price)

For some new dropshippers, including you, it may be difficult to set the right prices. But this is where MSRP comes into play.

It is a dropshipping product pricing strategy where you set prices recommended by your suppliers. In reality, this strategy is a good choice for you if you want to find a safe middle ground.

5. Bundle Pricing

You have probably seen sales promotions like, “Buy two, and get 15% off” or “Buy three, get one free”. And this is the bundle pricing strategy. You can use it to drop your item’s retail price and turn a higher profit in the end.

Actually, your favorite McDonalds, or Burger King menu meals are based on bundle pricing. So, how do you feel when they give you 3-in-1 products at an affordable price? I stand in the buy line ✌️!

6. Premium Pricing

Interested in dropshipping luxury clothing brands? Then, opt for this dropshipping product pricing strategy and set high prices to highlight your products’ quality and exclusivity.

For example, if I create luxury watches with a production cost of $100, I might set the retail price at $500 to highlight their premium craftsmanship and exceptional materials.

Brands like Nordgreen successfully apply this approach to position their high-end watches.

This pricing method works especially well for premium products where customers are willing to invest more for exclusivity and superior quality, such as luxury accessories, upscale electronics, and designer fashion.

It’s an excellent strategy for boosting profit margins while establishing a prestigious and desirable brand image.

7. Psychological Pricing

This is an old method of setting pricing, as you probably know. Additionally, the idea behind this pricing strategy is that people will see the slightly lowered price and “think” it is lower than the actual price.

Even in the dropshipping industry, this strategy works well. Unsurprisingly, $99.99 does way better than $100. So, why not utilize psychology to encourage your visitors to buy something from your website?

For example,  Zara uses psychological pricing to attract budget-conscious shoppers.

8. AI-Driven / Dynamic Repricing (New for 2025)

In today’s competitive dropshipping landscape, AI-driven dynamic repricing is becoming a real game-changer.

Instead of setting your product prices manually or adjusting them occasionally, you can now automate the entire process using smart algorithms.

So, modern repricing tools like Prisync, PriceMole, and other retailer repricing engines allow you to:

• Monitor your competitors’ prices automatically
• Adjust your own prices in real-time based on supply, demand, and competition
• Protect your profit margins without constant manual work
• Maximize your conversions when competitors raise or lower prices

These AI repricers analyze live data feeds: such as market demand, your inventory status, and competitor moves.
Then, based on your rules (for example: “keep my price always $1 cheaper than competitor X” or “never go below 25% margin”), they adjust prices automatically across your Shopify store, Amazon listings, or other channels.

💡 Tip: Dynamic repricing especially shines during high-traffic events like Black Friday, Cyber Monday, Christmas, or back-to-school sales, when markets move fast.

Here’s an example:

Let’s say you’re selling a smartwatch for $79.99.
If your top competitor drops their price to $74.99, your AI tool can automatically lower your price to $73.99 to stay competitive, without you lifting a finger.
When your competitor raises their price back up, your AI tool can automatically bring your price up too, maximizing your profits!

✅ Good dynamic pricing apps for dropshipping stores in 2025:

• Prisync – Detailed competitor tracking and auto-pricing rules for Shopify, WooCommerce, Amazon, and more.
• PriceMole – Great Shopify app for automatic price updates based on competitors and stock levels.
• Repricer.com – Ideal if you also sell on Amazon alongside Shopify.

Thus, using AI-driven dynamic repricing not only protects your dropshipping profit margins but also saves you a ton of time, and gives you a competitive advantage 24/7 without manual pricing wars.

Top 5 High Margin Dropshipping Products To Sell In 2025

🎨 High-Margin Dropshipping Products for 2025

1. Smart Home Gadgets

Why dropship?
Consumers are willing to pay a premium for smart devices that make life easier. This category keeps growing with new tech innovations, and customers perceive these products as “high-value,” even if supplier costs are low.

Supplier price range: $15 – $50
Market price range: $50 – $150
Potential profit margins: 60% – 75%

Example: A smart thermostat costs $28 from suppliers but easily sells for $90-$110.

2. Eco-Friendly Products (Reusable Items, Sustainable Goods)

Why dropship?
Green consumerism is surging. People are willing to pay more for sustainable products like reusable kitchen wraps, eco-toiletry sets, and biodegradable items.

Supplier price range: $5 – $20
Market price range: $18 – $60
Potential profit margins: 65% – 80%

Example: Bamboo cutlery sets cost about $8 from suppliers and sell for $30–$40.

3. Luxury Pet Products

Why dropship?
Pet owners love spoiling their pets and often don’t mind paying luxury prices. Products like luxury dog beds, automatic feeders, and pet tech are booming.

Supplier price range: $20 – $60
Market price range: $80 – $200
Potential profit margins: 60% – 75%

Example: A plush orthopedic dog bed can cost $32 from a supplier and sell for $120+.

4. Specialty Health & Wellness Devices

Why dropship?
Products like massage guns, posture correctors, or portable saunas are trending again, especially with remote work. They are perceived as “health investments,” allowing for high markups.

Supplier price range: $25 – $80
Market price range: $100 – $250
Potential profit margins: 60% – 70%

Example: A neck massager costs around $38 but sells easily for $120-$140.

5. Personalized Jewelry

Why dropship?
Personalized gifts always carry emotional value, making customers willing to pay more. Since these items often cost little to make, margins are massive.

Supplier price range: $5 – $15
Market price range: $30 – $80
Potential profit margins: 70% – 85%

Example: A name necklace costs $7 to produce but typically retails for $40-$60.

How Much Does The Average Dropshipper Make?

As you start dropshipping, one of the first questions that will pop up to you is of course- How much does the average dropshipper make?

This question has no particular or obvious response. To estimate how much money you can make from the dropshipping business, you must first grasp how the dropshipping model works. 

If you are working with low-ticket dropshipping, you should know that many dropshippers make even less than $500/month. However, you can always switch your strategy if you want to make more.

To increase profits, you will need to engage in huge, profitable marketing efforts. Better still, you should try with ‘high ticket’ dropshipping.

Instead, with high-ticket dropshipping, you concentrate on finding the greatest dropshipping items to offer. This model grows slowly, but it has longevity, which can lead to higher profits year after year, maybe even more than $100,000 per month.

💡 Tip: Check out the High Ticket Dropshipping: Best Product Categories To Sell.

As the average is made up of the highest and the lowest, let’s give an answer to how much does the average dropshipper make?

Dropshippers typically earn between $1000-$50,000 per month in net revenue on average, or $100-$20,000 in net profit. This often translates to a 10-40% dropshipping profit margin for each sale, with around 10-10,000 orders issued and completed each month.

👉 Check out these dropshippers’ stories: Dropshipping Profit: Expectations vs. Reality.

Calculate Shopify Gross Margin

As we already know, gross margins are calculated by subtracting the cost of goods sold (COGS) from the gross sales, then dividing the result by the gross sales, and multiplying the result by 100.

However, Shopify has several amazing apps for calculating gross margins.

First, there is the Shopify Retail Profit margin calculator, which is 100% free to use.

The retail profit margin calculator on Shopify will assist you in determining a competitive selling price for your items. 

So, how does the Shopify gross margin work?

First, you write the gross cost of each item and the percentage of profit you want to generate on each transaction.

When you select “Calculate profit” the program will run those figures through its profit margin algorithm to determine the final amount you should charge your consumers.

Moreover, there are other Shopify gross margin apps, like:

• BeProfit– Free, up to $150/month
• SimplyCost – $4.99/month
• Webgility Pro – $49/month
• Lifetimely – $19-$99/month
• Accountify – Free
• Profitario – Free, up to $39.90/month
• Conversific ‑ Free, up to $199/month

Dropshipping Profit Margin FAQs

Final Thoughts: Mastering Your Dropshipping Profit Margin

Your dropshipping profit margin is not just a number — it’s your business lifeline.

Knowing how to calculate it, how to price products smartly, and how to optimize your costs is what separates profitable stores from those that struggle.

In 2025, aim for a 20%–30% margin at minimum, and always focus on niches that allow higher perceived value, like smart gadgets, sustainable products, or personalized gifts.

My advice:

Don’t chase sales blindly. Focus on profitable sales. Use free profit calculators, study your costs carefully, and explore AI tools like dynamic repricing apps to stay competitive without constant manual work.

If you understand your margins, you control your future profits.

Now, it’s your turn to take action and grow a sustainable, profitable dropshipping business!