Profit margin calculator
When starting a new dropshipping and Print on Demand business, having a clear understanding of its profit margin is important. It helps you create strategies that can increase your profit in the long run and assist in business expansion.
What is a good profit margin for online dropshipping and print on demand business?
A good profit margin for online dropshipping and Print on Demand business can range between 15%-35%. However, it depends on your niche, product quality, costs of goods, demand, and market structure.
If you are selling a low-cost product or working in a competitive industry, your profit margin will remain lower in comparison to the one working in a niche industry. Here, the demand is more as competitors are less, so you can make high profits.
How to calculate the dropshipping profit margin?
You can calculate the dropshipping profit margin using the following inputs and an authentic Profit Margin Calculator.
- Quantity of items: Input the number of items for dropshipping, which will be the base factor in calculating your profit margin.
- Selling price of the item: You must calculate the cost of manufacturing the item and its associated costs with taxes to fix a selling price. Enter that price for each item on the calculator to generate a dropshipping profit margin.
- Printing cost: The printing costs may vary according to the type of print you want on your items. You must look into all the available choices and their prices and select the right one for your niche.
- Shipping charges: To ship the products to your customers, you need to pay a shipping charge. For prepaid orders, your shipping charges are usually lower than for COD orders. You can select either of the options and calculate the costs along with the costs of goods sold.
- GST: Finally, calculate the GST on product and printing costs, which is currently 18% in India. This needs to be added to the costs of goods sold while setting your selling prices.
Once you have all these inputs in hand, you can easily determine the profit margin for dropshipping and print on demand business.
Dropshipping and print on demand profit margin formula
Profit margin = ((Selling Price) – (Product Price + Product’s GST + Min Printing Cost + Printing GST + Shipping))
Let us take an example to understand the profit margin formula for dropshipping and print on demand business.
You want to sell unisex Round Neck Cotton T-shirts for ₹700 each. What will be your profit margin?
The cost of unisex Round Neck Cotton T-shirts is ₹180, and you pay 5% GST on the product, which is ₹9
Now, you can select a product type, which can be either plain t-shirts or printed t-shirts. For printed t-shirts, your minimum cost is ₹50, and you pay 5% GST on it, which is ₹2.5
You must also consider the shipping charge, which is ₹50 for prepaid orders.
Now, let us put all this data in our profit margin calculator to determine how much profit you can make from selling the Unisex Round Neck Cotton T-shirts.
Profit margin= ((Selling Price) – (Product cost + GST on product + Min printing costs + Printing GST + Shipping charges))
So, profit margin = ((700) – (180+ 9 + 50 + 2.5 + 50)) = ₹408.5
You can have a profit margin of ₹408.5for one unisex Round Neck Cotton T-shirts.