Your dropshipping ROAS is excellent. Every $1 spent on ads brings $4+ revenue with healthy profit margins.
Cost Breakdown
Understanding Your Dropshipping ROAS Results
Excellent (ROAS ≥ 4.0)
Your dropshipping ad campaigns are highly profitable. Every $1 spent on ads generates $4+ in revenue with healthy profit margins. This is the ideal zone for scaling your dropshipping business.
Good (3.0 ≤ ROAS < 4.0)
Performance is stable but has room for optimization. Your dropshipping ROAS is positive, but consider lowering product costs through better supplier negotiations or improving conversion rates to boost profitability.
Needs Improvement (2.0 ≤ ROAS < 3.0)
Your dropshipping business is close to the break-even point with thin profit margins. You need to optimize ad targeting, reduce operating costs, or increase average order value to improve ROAS.
Loss Risk (ROAS < 2.0)
Current dropshipping ad strategy is unsustainable. Your ROAS is below break-even, meaning you're losing money on every sale. Pause campaigns and re-evaluate your entire cost structure immediately.
What is Dropshipping ROAS?
Real Dropshipping ROAS Examples
Successful Dropshipping Store
Low product costs with optimized operations
Calculation Steps
- Revenue from Ads: $15,000
- Ad Spend: $3,000
- Product Cost: 35% ($5,250)
- Platform Fees: 3% ($450)
- Payment Fees: 3% ($450)
- Shipping Cost: 8% ($1,200)
Break-Even Dropshipping Store
High costs eating into profits
Calculation Steps
- Revenue from Ads: $8,000
- Ad Spend: $3,200
- Product Cost: 45% ($3,600)
- Platform Fees: 3% ($240)
- Payment Fees: 3% ($240)
- Shipping Cost: 12% ($960)
Optimized Dropshipping Store
After cost reduction and supplier negotiation
Calculation Steps
- Revenue from Ads: $20,000
- Ad Spend: $4,000
- Product Cost: 30% ($6,000)
- Platform Fees: 2.5% ($500)
- Payment Fees: 2.9% ($580)
- Shipping Cost: 5% ($1,000)
How to Use This Dropshipping ROAS Calculator
Enter Revenue from Ads
Input the total sales revenue generated from your advertising campaigns. Get this from Facebook Ads Manager, Google Ads, or TikTok Ads. Only include revenue directly attributed to paid ads for accurate dropshipping ROAS calculation.
Enter Ad Spend
Input your total advertising expenditure across all platforms (Facebook, Google, TikTok, etc.). Make sure to include all ad costs for the same period as your revenue for accurate dropshipping ROAS.
Calculate Product Cost
Enter the percentage of revenue spent on purchasing products from your dropshipping suppliers. Check your supplier invoices and calculate: (Total Product Cost / Total Revenue) × 100%. Typical dropshipping product costs range from 30-50%.
Enter Platform Fees
Input the percentage charged by your ecommerce platform. For Shopify dropshipping, this is typically 2-3% (monthly fee + transaction fees). For WooCommerce, fees are usually lower. Check your platform's billing statements.
Enter Payment Processing Fees
Input the percentage charged by payment gateways. PayPal and Stripe typically charge 2.9% + $0.30 per transaction for dropshipping businesses. Calculate the average percentage from your payment processor statements.
Calculate Shipping Costs
If you offer free shipping to customers, enter the percentage of revenue spent on actual shipping costs. If customers pay for shipping, enter 0. For dropshipping with free shipping, this typically ranges from 5-15% of revenue.
Why Use a Dropshipping-Specific ROAS Calculator?
Accurate Cost Accounting
This dropshipping ROAS calculator considers the unique multi-layer cost structure of dropshipping businesses: product costs, platform fees, payment processing fees, and shipping costs that standard calculators ignore.
Avoid False Profitability
Reveals the truth behind 'high ROAS but low profit' scenarios common in dropshipping. Many dropshipping stores have a ROAS of 3-4× but are still losing money after all costs are deducted.
Fast Decision Making
Instantly determine if your dropshipping ad campaigns are worth continuing. Calculate break-even ROAS in real-time to make data-driven decisions about scaling or pausing campaigns.
Optimization Guidance
Identify which cost categories need optimization in your dropshipping business. See exactly how reducing product costs, platform fees, or shipping costs impacts your bottom line.
Scenario Comparison
Test different dropshipping scenarios: compare suppliers, evaluate platform options (Shopify vs WooCommerce), or analyze free shipping strategies. See the impact on profitability before making changes.
Dropshipping ROAS Calculator Parameters
Revenue from Ads
Total sales revenue generated from paid advertising campaigns in your dropshipping business. Only include ad-attributed sales.
Ad Spend
Total advertising expenditure across all platforms for your dropshipping campaigns. Include Facebook, Google, TikTok, and other paid channels.
Product Cost
Percentage of revenue spent purchasing products from dropshipping suppliers. Calculate from supplier invoices.
Platform Fees
Ecommerce platform fees including monthly subscription and transaction fees for your dropshipping store.
Payment Processing Fees
Payment gateway fees charged by PayPal, Stripe, or other processors for dropshipping transactions.
Shipping Cost
Actual shipping costs if you offer free shipping to customers in your dropshipping business. Enter 0 if customers pay shipping.
Dropshipping ROAS Calculation Formulas
Mathematical formulas behind the dropshipping calculator
Basic ROAS Formula
The fundamental ROAS calculation for dropshipping. Shows how much revenue is generated per dollar spent on advertising. However, this doesn't account for profitability.
ROAS = Revenue from Ads ÷ Ad Spend
Example: Revenue $10,000 ÷ Ad Spend $2,500 = ROAS 4.0× (or 400%)
Break-Even ROAS Formula
Critical formula for dropshipping profitability. Calculates the minimum ROAS needed to break even after all dropshipping costs. Your actual ROAS must exceed this to be profitable.
Break-Even ROAS = 1 ÷ Profit Margin | Profit Margin = 1 - (Product Cost % + Platform Fees % + Payment Fees % + Shipping Cost %)
Example: Costs: 40% + 3% + 3% + 10% = 56% | Profit Margin: 44% | Break-Even ROAS: 1 ÷ 0.44 = 2.27×
Net Profit Formula
Complete dropshipping profit calculation. Shows actual dollars earned after deducting all costs including product, platform fees, payment fees, shipping, and advertising.
Net Profit = Revenue × (1 - Total Cost %) - Ad Spend | Total Cost % = Product Cost % + Platform Fees % + Payment Fees % + Shipping Cost %
Example: Revenue $10,000 × (1 - 0.56) - Ad Spend $2,500 = Net Profit $1,900
Dropshipping ROAS Calculator FAQ
For dropshipping businesses, aim for a ROAS of 3.0× or higher. However, what matters more is your break-even ROAS, which depends on your cost structure. Typically, dropshipping stores need a ROAS of 2.0-2.5× to break even (depending on product costs, platform fees, and shipping). Anything above your break-even ROAS is profitable. Use this dropshipping ROAS calculator to find your specific break-even point.
This is a common trap in dropshipping. ROAS only measures revenue vs ad spend, not profitability. If your product costs, platform fees, payment processing fees, and shipping costs total more than 66%, a 3:1 ROAS means you're losing money. For example: $10,000 revenue with $3,333 ad spend (3:1 ROAS), but if costs are 70% ($7,000), you only have $3,000 left, resulting in a $333 loss. This dropshipping ROAS calculator reveals your true profit by including all costs.
Three main strategies to lower break-even ROAS in dropshipping: 1) Reduce product costs by negotiating with suppliers or switching to suppliers with better pricing (aim for 25-35% instead of 40-50%). 2) Choose lower-fee platforms (WooCommerce vs Shopify) or negotiate better rates. 3) Optimize shipping strategy by increasing average order value to spread shipping costs, or pass shipping costs to customers. Each 5% reduction in total costs significantly lowers your break-even ROAS.
Dropshipping product cost benchmarks: Excellent: 25-35% of revenue (high profitability), Normal: 35-45% (acceptable margins), High: 45-55% (thin margins, hard to profit), Too High: >55% (very difficult to achieve profitability). If your dropshipping product costs exceed 45%, focus on finding better suppliers or increasing your selling prices to improve margins.
Shopify dropshipping fees include: Monthly subscription: $29-$299/month depending on plan, Transaction fees: 0.5-2% (varies by plan, waived if using Shopify Payments), Payment gateway fees: 2.9% + $0.30 per transaction (when using Shopify Payments). Total effective fee is typically 2-3% of revenue. For accurate dropshipping ROAS calculation, include all these fees in the Platform Fees field of this calculator.
Free shipping can increase conversion rates and ROAS by 10-30%, but it also increases your costs. You must include actual shipping costs in this dropshipping ROAS calculator to see if you're still profitable. Strategy: If free shipping increases your conversion rate enough to offset the cost, it's worth it. Test by calculating: (Higher Revenue with Free Shipping × Lower Profit Margin) vs (Lower Revenue without Free Shipping × Higher Profit Margin). Use this calculator to model both scenarios.
This calculator is not fully suitable for Amazon FBA. Amazon FBA has additional costs not included here: FBA fulfillment fees, storage fees, long-term storage fees, and Amazon referral fees (typically 15%). For Amazon FBA, use a dedicated Amazon FBA profit calculator. However, if you're doing dropshipping on Amazon (not FBA), you can use this calculator by including Amazon's referral fees in the Platform Fees field.
To get accurate dropshipping revenue from Facebook Ads Manager: 1) Go to Ads Manager and select your campaign, 2) Click 'Columns' dropdown and select 'Customize Columns', 3) Add 'Website Purchase Conversion Value' or 'Purchase ROAS' metrics, 4) This shows revenue directly attributed to your Facebook ads. Use this number in the 'Revenue from Ads' field of this dropshipping ROAS calculator. Make sure your Facebook Pixel is properly tracking purchases for accurate data.
Important Disclaimer
This dropshipping ROAS calculator provides estimated results for educational and planning purposes only, and does not constitute financial or investment advice. Results are based on the data you input and assume accurate campaign attribution, synchronized reporting periods, and stable product margins. Actual dropshipping profitability may vary due to factors not included in this calculator such as: product returns and refunds, customer service costs, currency exchange rate fluctuations, seasonal demand variations, supplier price changes, marketing asset creation costs, software subscription fees, and other indirect operating expenses. The calculator simplifies cost calculations by using percentage-based inputs and assumes all products are sold without inventory holdover. Different product categories, target markets, and business models may have significantly different cost structures. Platform fees and industry benchmark data are based on publicly available information as of October 2024 and may change over time. This tool cannot replace professional financial advisors or accountants. Always confirm final business decisions with your finance team and conduct thorough due diligence before making significant changes to your dropshipping advertising budgets or business strategy. Privacy: This calculator runs entirely in your browser and does not collect, store, or transmit any of your input data. We do not use cookies to track your calculation history. Last updated: October 2024.