There is a common misconception keeping some people away from an online business that you cannot make a living with it – not to speak of making a fortune! But success stories of numerous online entrepreneurs prove otherwise: you can get as large dropshipping profit as you dare to have.
Of course, not all eCommerce options are equally profitable. For example, it’s hard to imagine that someone could earn millions with affiliate marketing only. Good old online retail looks more money-making option. But many eCommerce beginners are afraid that the cost of inventory, storage, delivery, refunds and what not can reduce their income to nothing.
This is why dropshipping seems to be a perfect option. No inventory, no stocks. Delivery costs are included in your price. And occasional refunds should not disturb you as your profit margin covers such cases easily.
Dropshipping profit formula
Dropshipping profit much depends on what kind of products you are selling. It’s often a good idea to stick to low prices with a high margin potential. Such products usually cost within a $1-$20 price range and these products generally can be priced at $20-$50 or more. The most successful dropshipping websites have proved that such a profit margin range is optimal.
We recommend having a profit margin of 40%-70%. You can also try this formula that works well for our own dropshipping projects:
$0 < Supplier Price < $1 = Your Price: $9.95. Your minimum profit: $8.95
$1 < Supplier Price < $2 = Your Price: $11.99. Your minimum profit: $9.99
$2 < Supplier Price < $5 = Your Price: $13.95. Your minimum profit: $8.95
$5 < Supplier Price < $30 = Your Price: Supplier Price (SP) x 2. Profit margin: 50%
$30 < Supplier Price < $50 = Your Price: SP x 1.75. Profit starts from: $22.5
$50 < Supplier Price < $100 = Your Price: SP x 1.5. Profit starts from: $25
$100 < Supplier Price = Your Price: SP x 1.35. Profit starts from: $35