How do you calculate dropshipping profit?
Profit after tracked costs = net revenue − product costs − fulfillment − fees − ad spend − tracked overhead.
For this example, net revenue is Shopify net product sales plus separately tracked net shipping income. Net product sales already account for discounts and returns of merchandise.
Use amounts from the same reporting period and one currency. If net product sales already subtract a refunded item, add the shipping income net of shipping refunds separately. Match any chargebacks or other adjustments to the underlying transaction to avoid subtracting the same expense twice.
Worked example for one Shopify store
The fictional store sold A$2,150 in merchandise, offered A$100 of discounts, and had A$90 in returned merchandise. It collected no shipping revenue, so net revenue is A$1,960.
| Reporting line | Amount |
|---|---|
| Net revenue | A$1,960.00 |
| Product cost | −A$570.00 |
| Fulfillment | −A$170.00 |
| Payment fees | −A$60.00 |
| Meta Ads spend | −A$730.00 |
| Tracked overhead | −A$60.00 |
| Profit after tracked costs | A$370.00 |
How do you calculate profit margin?
Divide profit after tracked costs by net revenue, then multiply by 100. The example gives A$370 ÷ A$1,960 × 100 = 18.9%. If a period has zero net revenue, leave the margin blank and report its absolute gain or loss.
Record missing costs and refunds
Keep a record of supplier costs, shipping labels, marketplace fees, app bills, and ad channels your sources do not cover. Check which payment fees and refunds appear in Shopify. Use adjustments for recorded events and clearly label estimates and untracked costs before comparing results.
When your cost per order changes, recalculate the contribution and check what ad spend the order can support. Calculate your break-even ROAS.