Margin in dropshipping is not a matter of feeling. It's a 4-variable calculation that determines whether your business holds up or not. Here's how to do it right.
The 4 variables to factor in
1. The supplier purchase cost
The price excl. VAT negotiated with your wholesaler. That's your base.
2. The shipping cost
Often ignored by beginners: if the supplier charges €4 shipping and you offer free delivery, that's a negative margin of €4. Must be included.
3. The marketplace commission
Varies by platform: 8% on Cdiscount, 12-15% on Amazon, 10-12% on Fnac. Not counting payment fees (~1.5%).
4. The hidden costs
Returns (3-8% of revenue), disputes (1-3%), marketplace subscription, subscription to your management platform. Must be provisioned.
The formula
Target selling price = Purchase cost + Shipping cost + Marketplace commission + Desired net margin + Returns and disputes provision (8%)
Worked example
You sell a product bought at €25 excl. VAT, supplier shipping €3, on Cdiscount (8% commission + 1.5% payment). Target net margin: 15%. Returns provision: 8%.
Selling price calculation, excl. VAT:
- Cost base: 25 + 3 = €28
- Returns provision (8%): +€2.24
- Subtotal: €30.24
- Net margin (15%): +€4.54
- Total before commission: €34.78
- Marketplace commission (9.5%) → selling price = 34.78 / (1 − 0.095) = €38.43 excl. VAT
- Price incl. 20% VAT: €46.12 incl. VAT
The classic trap: forgetting VAT
The #1 beginner trap: reasoning excl. VAT while the marketplace displays prices incl. VAT. You think you have a 15% margin — in reality you're working at a loss. Always run the calculation down to the final price incl. VAT, and always respect your minimum profitability threshold (never below 8% net after all costs).
Automation tools
Doing this calculation by hand for 200 products on 5 marketplaces is impossible. A management platform like Sellavi integrates these variables directly and automatically propagates prices while respecting your minimum margin, at every supplier cost change.
Want to try this in practice?
Sellavi automates everything we just described — no manual intervention.
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