See what you really make on each order once product, shipping, fees, ads, refunds and VAT are taken off.
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How it’s worked out
- Start with what the customer pays, including any shipping you charge.
- Take off VAT if your prices include it.
- Take off refunds, assuming you lose the product and shipping cost.
- Take off product cost, supplier shipping, and payment and platform fees.
- Take off your ad cost per order.
| Measure | Meaning |
|---|---|
| Most you can pay in ads per order | Your break-even cost per acquisition (CPA) |
| Break-even ROAS | Revenue per £1 of ads you need just to break even |
| Orders to cover fixed costs | How many orders a month pay for your store plan and apps |
Costs people forget
- Import VAT and customs duty on goods shipped from abroad
- Currency conversion fees from your supplier or payment provider
- Chargebacks and items lost in the post
- VAT registration: in the UK you must register once taxable turnover goes over £90,000 in 12 months
Frequently asked questions
What's a good dropshipping margin?
It depends on your ad costs. Check the profit after ads, not just the gap between your price and the supplier’s.
What is break-even ROAS?
The return on ad spend at which you make no profit and no loss. Below it, ads lose money.
Do I charge VAT on dropshipped goods?
If you’re VAT-registered in the UK, your prices to UK customers usually include VAT. Get advice for your situation.
Is anything stored?
No, it runs in your browser.
Sources
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