Dropshipping Profit Calculator: Margin & Ad Budget

Test whether a US dropshipping order can fund its ads after supplier cost, delivery, payment fees, refunds and chargebacks. There is no dropshipping fee, so every cost line is yours to edit.

By Berend Vrakking, Founder · Updated 15 October 2026 · ~9 min read

Your results

At $39.99 you keep $3.62 per sale (10.0% margin). You can spend at most $15.62 on ads per order before losing money (break-even ROAS 2.56).

Profit per order: $3.62
Break-even ROAS: 2.56
Target ROAS: 394%

Profit margin: 10.0%
Net markup on COGS: 25.0%
Max break-even ad spend: $15.62
Total fees: $1.46
Payment processing: $1.46

Explore the break-even ROAS calculator

US dollars, one item per order. Selling price and shipping charged exclude sales tax. Tax only increases the basis of fee lines marked payment; it never becomes seller revenue. Fee lines are rounded half up to whole cents before summing. All fee presets are editable estimates, not a settlement quote.

Illustrative starting values. No sign-up required. Results update as you edit.

Platform and payment fees

Edit any preset to match your account.

Payment processing

Fee preset

Percentage

%

Fixed amount

$

US domestic online card example. Applied to item price, shipping charged and sales tax.

Supplier recovery and chargebacks

Item cost the supplier takes back on a return

%

Orders lost to chargebacks

%

Dispute fee per chargeback

$

A returned order loses its revenue and, unless the supplier takes the item back, its item cost. A chargeback claws back the sale and adds the dispute fee. Fees paid on the original payment are not refunded.

Key takeaways

Dropshipping profit per order = retained revenue − item cost − shipping cost − payment processing fee − overhead − return handling net of supplier recovery − chargeback fees − ad spend. Retained revenue is item price plus shipping charged, reduced by the expected refund and chargeback rate; sales tax is not revenue but raises the base of the payment processing fee. Starting values: payment processing fee: 2.9% + $0.30 on item price, shipping charged and sales tax, presets 2.9% + $0.30, 2.7% + $0.30, 2.5% + $0.30, 3.49% + $0.49; ad spend $12.00 per order; overhead $0.00 per order; 8% of orders returned with $2.00 handling each; supplier recovers 0% of the item cost on returns; 1% of orders lost to chargebacks at $15.00 each.

There is no universal dropshipping fee. The payment preset is the Shopify Basic card example, 2.9% + $0.30, and every fee is editable.
A returned order loses the sale and the payment fee. Enter the share of the item cost your supplier takes back, or leave it at 0% for the conservative case.
A chargeback takes the sale back after the item has shipped, with no supplier recovery, and adds a dispute fee. Stripe and WooPayments each list $15.
Your maximum ad spend per order is the contribution before ads. Keeping a margin lowers it and raises the ROAS you need.

Which costs does dropshipping have?

Use the supplier’s landed item cost and the actual delivery charge. Keep customer-paid shipping separate from the supplier’s bill, and allocate subscriptions or order-processing apps through overhead. A supplier discount does not automatically offset a higher customer-acquisition cost.

Fee line, Starting preset, Basis and scope, Source
Fee line	Starting preset	Basis and scope	Source
Payment processing	2.9% + $0.30	US domestic online card example. Applied to item price, shipping charged and sales tax.	Shopify pricing

A returned order loses its revenue, and the payment fee is not refunded. Whether you also lose the supplier cost depends on the supplier: enter the share of the item cost it takes back, or leave it at 0% for the conservative case. Add the handling cost per return, such as a return label or a restocking charge.

A chargeback is different from a refund: the bank takes the sale back, the item has already shipped and no supplier recovery applies, and the processor adds a dispute fee. Stripe and WooPayments each list $15 per dispute. Enter the rate of lost disputes you actually see, not the share of customers who ask.

Fees last checked 15 October 2026. Next review due 15 January 2027. Fees change: presets are US examples, so edit them to match your account.

Dropshipping worked example

A $39.99 product costs $14.50 from the supplier plus $4.50 for delivery to the customer. The scenario spends $12 on ads, expects 8% of orders returned with $2 of handling each and a supplier that takes nothing back, and loses 1% of orders to chargebacks with a $15 dispute fee. The payment preset is the Shopify Basic card example, not a fee charged by dropshipping itself.

Illustrative data. Starting calculator values, one item per order.

Order revenue before returns: $39.99 + $0.00 = $39.99
Payment processing: $1.46
Total fees: $1.46
Retained revenue: $39.99 × (1 − 8% returns − 1% chargebacks) = $36.39
Contribution before ads: $36.39 − $14.50 COGS − $4.50 delivery − $1.46 fees − $0.00 overhead − $0.16 return handling − $0.15 chargeback fees + $0.00 supplier recovery = $15.62
Profit after ads: $15.62 − $12.00 = $3.62
Profit margin: $3.62 ÷ $36.39 = 10.0%
Net markup on COGS: $3.62 ÷ $14.50 = 25.0%
Max break-even ad spend: $15.62
Break-even ROAS: $39.99 ÷ $15.62 = 2.56
Target ROAS for 15% retained margin: 394%

At $39.99 you keep $3.62 per sale (10.0% margin). You can spend at most $15.62 on ads per order before losing money (break-even ROAS 2.56).

How do returns and chargebacks change dropshipping profit?

The starting order has 8% of orders returned and 1% lost to chargebacks. A return loses the sale and, unless the supplier takes the item back, the supplier cost: $3.62 profit with no recovery, $4.20 when the supplier recovers half the item cost and $4.78 when it recovers all of it. A chargeback loses the sale and adds the dispute fee, and no supplier recovery applies.

Scenario, Retained revenue, Profit after ads, Break-even ROAS
Scenario	Retained revenue	Profit after ads	Break-even ROAS
Returns, supplier recovers nothing	$36.39	$3.62	2.56
Returns, supplier recovers half the item cost	$36.39	$4.20	2.47
Returns, supplier recovers the full item cost	$36.39	$4.78	2.38
No returns or chargebacks	$39.99	$7.53	2.05
Chargebacks at 2% of orders	$35.99	$3.07	2.65
Returns at 15%, no recovery	$33.59	$0.68	3.15

Illustrative data. Computed from the starting calculator values with the same model.

What is the maximum ad spend per order?

Your ceiling is the contribution before ads: $15.62 per order at the starting values, which is a break-even ROAS of 2.56. Spend that much and the order earns nothing. To keep a margin, subtract it from the budget and the ROAS you need rises, as the table shows.

Retained margin you want, Maximum ad spend per order, Target ROAS
Retained margin you want	Maximum ad spend per order	Target ROAS
0%	$15.62	256%
10%	$11.98	334%
15%	$10.16	394%
20%	$8.34	479%
30%	$4.70	850%

Illustrative data. Computed from the starting calculator values with the same model.

Mistakes to avoid when calculating Dropshipping profit

Mistake, What it does to profit, Fix
Mistake	What it does to profit	Fix
Entering the supplier’s item price without delivery	The order looks profitable until the shipping bill arrives.	Enter the supplier’s delivery charge in shipping cost.
Assuming the supplier refunds every return	You lose the sale, the delivery and the payment fee even when the item comes back.	Enter the share of the item cost the supplier actually takes back.
Ignoring chargebacks until they arrive	Each lost dispute costs the full sale plus a dispute fee, with the item already gone.	Enter the rate of lost disputes your payment provider reports.
Reading supplier-to-retail markup as profit margin	A high markup can still leave little profit after delivery and ads.	Look at the profit margin on retained revenue.

ROAS, POAS and Dropshipping fees

A dropshipping margin looks wide until delivery, payment fees, refunds and chargebacks come out. Revenue ROAS counts none of them, so a campaign can hit its target and still lose money. POAS divides contribution before ads by ad spend: a POAS of 1 covers the ads and leaves nothing over.

How this calculator works

US dollars, one item per order. Selling price and shipping charged exclude sales tax. Tax only increases the basis of fee lines marked payment; it never becomes seller revenue. Fee lines are rounded half up to whole cents before summing. All fee presets are editable estimates, not a settlement quote.

Retained revenue = (selling price + shipping charged) × (1 − returns % − chargebacks %). The returns scenario retains all original COGS, fees and outbound shipping, and adds handling cost × returns %. It assumes no recovered stock value and no refunded fees, unless a page lets you enter a supplier recovery share. Use zero returns for the ordinary completed-order calculation.

Profit = retained revenue − COGS − shipping cost − total fees − overhead − return handling − ads. Profit margin = profit ÷ retained revenue. Net markup = profit ÷ item COGS. This is profit after entered costs, before unallocated business costs and income taxes.

Maximum break-even ad spend = contribution before ads. Break-even ROAS = original item and shipping revenue ÷ contribution before ads, shown as a plain number. Target ROAS = original revenue ÷ (contribution before ads − retained revenue × desired margin), shown as a percentage. A zero or negative budget has no feasible ROAS. Pre-return advertising revenue sets the ROAS basis and retained revenue sets the margin basis: match the revenue basis to your advertising reports.

Pages with extra inputs add them to the same sum. Monthly costs are divided by orders per month and added to overhead. Supplier recovery adds back that share of the item cost on returned orders. A chargeback removes the sale, adds the dispute fee and recovers nothing.

Profit = retained revenue − COGS − shipping cost − fees − overhead − return handling − ads.
Break-even ROAS = order revenue ÷ contribution before ads, as a plain number.
Target ROAS = order revenue ÷ (contribution before ads − retained revenue × desired margin), as a percentage.

Starting values on this page: selling price $39.99, shipping charged $0.00, sales tax $0.00; item cost $14.50, shipping cost $4.50, overhead $0.00 per order, ad spend $12.00 per order; 8% of orders returned with $2.00 handling each; supplier recovers 0% of the item cost on returns; 1% of orders lost to chargebacks with a $15.00 dispute fee each; payment processing fee: 2.9% + $0.30 on item price, shipping charged and sales tax, presets 2.9% + $0.30, 2.7% + $0.30, 2.5% + $0.30, 3.49% + $0.49; desired profit margin 15%.

Not modelled: supplier minimum orders, import duties, app subscription tiers and fraud losses beyond the chargeback rate you enter.

Dropshipping fee and profit questions

How do I calculate dropshipping profit?

Start with collected item and shipping revenue, take off the share lost to refunds and chargebacks, then subtract supplier cost, delivery, payment fees, overhead and ad spend. The result is an order estimate. Business taxes and unallocated salaries are not included, so check your own accounts for those.

What fees does dropshipping charge?

There is no universal dropshipping fee. Your storefront, payment provider, supplier and apps set their own charges. The starting payment rate is the Shopify Basic card example, and you can switch to the Shopify Grow or Advanced plan, Stripe or PayPal Checkout. Every fee stays editable.

How much can I spend on dropshipping ads?

The most you can spend per order is the contribution before ads: spend all of it and the order earns nothing. To keep a margin, subtract the profit you want from that budget. The table above shows the maximum ad spend and the target ROAS for margins from 0% to 30%.

What happens to profit when a supplier does not take returns back?

You lose the sale and keep the supplier cost, delivery and the payment fee. At the starting values that is the difference between the 0% and 100% supplier recovery rows in the returns table. Enter the share your supplier actually refunds, and ask for it in writing.

Is product markup the same as dropshipping margin?

No. Here net markup divides order profit after entered costs by the supplier item cost, while profit margin divides it by retained revenue. A high supplier-to-retail markup can still leave little profit once delivery, refunds, chargebacks and advertising are paid, so judge the page by its profit margin.

Are these Dropshipping fees current for 2026?

The linked official sources were checked on 15 October 2026; the next review is due 15 January 2027. Fees can change during the year. Confirm your category, account and order-specific charges before relying on any preset.

Next step: check your advertising headroom

Check your refund scenario in this calculator, then use the free break-even ROAS and POAS calculators to compare the required return with your advertising results. If you advertise these products on Google Shopping, Product Segmentation helps you compare their economics.

Break-even ROAS calculator
Free: check the return your contribution requires.
POAS calculator
Free: compare contribution with advertising spend.
See product-level POAS in Product Segmentation
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About this calculator

Written by Berend Vrakking, founder of Product Metrics. Fee presets come from the official pages linked above, checked on 15 October 2026, with the next review due 15 January 2027. The calculator is free and needs no sign-up.