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What Gross Margin Do You Need to Run a Profitable Dropshipping Business?

The short answer: at least 60% gross margin.

Let’s break it down:
If you’re selling a product for $100, your total cost (including product, shipping, fulfillment, etc.) should be no more than $40. That leaves you with $60 in gross profit — a solid 60% margin.

Why is this important in dropshipping?

Because in dropshipping, you don’t control production or inventory, so your main levers are marketing and operations. And both require cash:

  • You need budget to run ads and acquire customers
  • You need margin to handle refunds, hire support, or scale
  • You need breathing room when CPMs spike or suppliers raise costs

If your margin is too thin — say, you sell for $100 but it costs $90 to deliver — you’re running on fumes. There’s no buffer to grow.

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