Pricing Dropshipping Products: The Profit Formula With Examples
Many dropshipping stores lose money without knowing it because they simply double the cost. The right price covers every cost and leaves a defined net profit.
The formula
Price = (product cost + shipping + ad cost per sale + target profit) ÷ (1 − payment fee % − returns reserve %)
The parts
- Product cost and shipping: from the supplier; shipping depends on product, warehouse and country.
- Ad cost per sale: what you spend on ads to get one order. Start with an estimate and adjust from your campaigns.
- Payment fees: the gateway’s percentage per sale.
- Returns reserve: a percentage covering damaged items and refunds.
- Target profit: the net amount you want per order.
Example 1
SAR 30 product, SAR 11 shipping, SAR 25 ads, SAR 30 profit, 5% fees and 5% reserve: (30+11+25+30) ÷ 0.90 = 106.7 — about SAR 107, or 109 as a marketing price.
Example 2: why doubling fails
Doubling to SAR 60 leaves SAR 18 after shipping (11), ads (25) and fees/returns (6), before any other expense — and any rise in ad cost turns it into a loss.
Tips
- Review prices when shipping costs or exchange rates change.
- Very cheap products rarely survive ad costs; a comfortable range is often SAR 79–299.
- Show free shipping and include it in the price — it lifts conversion.
The DropStore template applies this formula automatically with real CJ shipping costs and reprices when anything changes.
Ready to start? See the DropStore plans and own your store with one payment.