How are my margins calculated with Dropshipping?

How is the margin calculated?

The calculation of the margin follows the following formula:

Margin =  MSRP  -  Unit Price  -  Shipping cost  -  *VAT paid by the retailer 

*VAT is based on the destination country of an order , meaning that VAT is charged to the customer, based on their location 

When calculating margins in the context of Dropshipping , retailers must take into account the wholesale price, shipping costs and handling fees in order to determine if a product is profitable for them or not.

Your prices are the final point that lets a customer know whether or not your business is worth investing their time and money in. Getting it right is therefore a delicate balancing act, one that needs to be struck between pricing for profit and maintaining healthy sales.

While retailers have the option  to pass the shipping costs to their customer on their webshop, it is important to note that, in today's competitive market, most businesses offer free shipping. Therefore, our objective is to transparently communicate net margins by factoring in all relevant components.