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How Much Do Dropshippers Make On Average? | 6 Factors That Directly Impact Your Earnings

April 5, 2024

Dropshippers make around $1,000 to $3,000 per month on average. A few successful dropshippers earn up to $100,000 each year. However, a Fundera report tells us that only 10% of dropshippers are profitable in their first year. 

In general, the dropshipping business is all about having the best product and understanding the needs of your target audience. The key with dropshipping is to stay one step ahead of the curve. Then sell as many items as you can before the market becomes saturated. As a dropshipper, you need to stay updated about viral products and industry trends. You also need to be an expert in interruption-based marketing and in coming up with effective, high-converting ad strategies. For example, Mostaga Nouman of Full Dropshipping Course encourages newbie dropshippers to focus their marketing efforts running TikTok ads.  

That said, dropshipping is not a get-rich-quick scheme as some gurus may have you believe. Competition can be tough since the business model can be easily duplicated. Earnings can also be unpredictable and the market can quickly get saturated.

In this feature, we discuss about how much do dropshippers make on average. We also look into how to improve and calculate your earnings. Moreover, we introduce you to local lead generation and why, as a former dropshipper myself, I recommend it as the best online business model.  

How Much Do Dropshippers Make? 

Dropshippers make between $1,000 to $3,000 per month. On average, they earn 10% to 30% in profit from each sale. Successful dropshippers manage to make over $100,000 a year. 

Meanwhile, Harry Coleman shows in a YouTube video that he made $120,000 in 30 days via Shopify dropshipping. In his Beast of Ecom channel, Harry shares that the key elements to his success is finding a winning product, creating a high-converting dropshipping store, and running effective advertisements. As a result, his store made €109,000 in sales in July ($120,000) with a profit of €27,000 ($30,000).

That being said, earnings often vary depending on the dropshipper's product cost, the number of quantities sold each month, plus additional expenses such as advertising, shipping, and other fees.   

6 Factors That Can Affect How Much You Make On Dropshipping

1. Niche & Product Costs

Market research plays a vital role in the dropshipping business model. As a dropshipping store owner, your goal is to concentrate on products that offer value and can help people solve problems or save them time with daily tasks. As you look for products to sell online, you have to consider the niche and product's cost and profitability. For example, evergreen and high-end products cost more and sell less but offer longevity. On the other hand, trendy low-cost items can generate a ton of sales but do not have long shelf lives. 

2. Sourcing & Shipping

With dropshipping, you do not hold inventory or handle the order fulfillment process. Instead, your chosen dropshipping supplier manages everything for you. 

Costs to source and ship goods will depend on the location of your wholesaler (the further to ship, the more expensive the price gets). Smaller items are less expensive to ship than oversized products. You also need to factor in shipping by sea or air. Sea is the more cost-effective option but you are often faced with lengthy shipping times. In addition, you likewise want to make product quality a priority. 

As such, you need to work with dependable drop shipping partners to make the business work and generate continuous earnings. 

3. Returns & Refunds

While your suppliers directly deal with customer returns, you want to make sure that your buyers are getting the best shopping experience possible. Among the most common reasons for customer returns are defective products, incorrect product size, wrong product shipped, and failure to meet buyer expectations.
According to Shopify, ecommerce businesses usually have an average return rate of 20% to 30%. Data also shows that around 80% of online shoppers in the US are "less likely to shop from the same retailer again due to a poor returns experience."

Delivering excellent customer service involves handling returns in a professional manner. While returns can reduce your profits, they can be an opportunity to create customer loyalty. So check if it's cheaper to let the customer keep the product and send them a replacement at no extra cost. Otherwise, they can send the product back to your supplier and you cover shipping costs. 

4. Marketing & Advertising

You need to market and advertise to attract traffic to your online store. Experts suggest spending 12% to 20% of your revenue as a beginning dropshipper. Go test different ad strategies on social media platforms, depending on your budget range. Use a variety of channels and learn strategies from successful dropshippers. Also, set specific targets for a predetermined period to track the progress of your campaigns.  

5. Payment Gateways & Processing Fees

Sites like Shopify have their own payment gateway and they typically charge a transaction fee. Aside from Shopify Payments, other popular payment methods include PayPal, Amazon Pay, Google Pay, Stripe, and WePay. In some cases, you will also need to spend on currency conversion. For example, Shopify charges a currency conversion fee of 1.5% for US stores and 2% for international stores.

That said, different rates and fees apply on these services, so learn which ones are best to use for your dropshipping business. Keep in mind that the more payment options you offer your customers, the better your chances are of making a sale.  

6. Online Store Maintenance & Apps

A Basic Shopify store will cost you $25 per month. Meanwhile, Shopify for small business is worth $65 a month and Advanced costs $399 a month. All these 3 options are available as free trials for a limited time period. It's always best to go with the premium version, especially if you're planning to take the business seriously. 

You may also have to spend on various dropshipping-related apps and software tools, such as Inventory Source, SaleHoo, Modalyst, Wholesale Central, and Worldwide Brands. You need to factor in these costs before calculating your profit margins. 

How To Calculate Your Profit Margins

You can calculate your profit margins by considering the product's wholesale price, the customer purchase price, advertising expenses, shipping costs, and other fees (such as Shopify fees, software subscriptions, etc.).

Free online tools such as Drop Ship Lifestyle's Profit Margin Calculator allows you to automatically compute your potential profit and profit margin. This easy-to-use tool can be helpful for dropshipping industry beginners who need guidance in coming up with their own pricing strategy.

How To Improve Your Dropshipping Earnings

Very few dropshippers become an overnight success. Store owner earnings vary widely, with many experiencing failure even after trying several dropshipping ideas. For the most part, the key is to find a winning product and develop a concrete marketing strategy. Moreover, there are a few ways to improve your success rate and increase your average income with dropshipping.

Focus On Your Customer

Offer products that add value or solve a problem. Ensure that customers have a positive experience when they purchase from your store. Besides, a Forbes article tells us that 97% of consumers say "customer service interactions impact whether consumers stay loyal to a brand." You'll earn more and gain more favorable reviews.

Build A Brand

Hire professional designers to create logos and website design for your brand. This will help you stand out from competitors. Try freelancing platforms such as Fiverr and Upwork to find experts who can help you with these projects.  

Leverage The Internet

Connect with your target market through a solid online presence. Use Google and social media platforms to reach your potential customers. Remember that 74% of shoppers rely on their social networks for purchasing decisions, so learn to use them to boost your earnings.

Secure The Right Supplier

Working with a reliable supplier will be an advantage for your dropshipping business Of course, you should likewise look into their price points, shipping costs, and order fulfillment process to maximize your profit margin.    

Upsell and Cross-sell

The SalesForce website defines upselling as "the practice of selling a more expensive product to a customer." Meanwhile, cross-selling is the strategy of "offering supplementary products." You can do both in your dropshipping business to attract buyers and increase sales. 

2 Types Of Dropshipping

There are two main types of dropshipping businesses, namely low ticket and high ticket dropshipping.

Low-Ticket Dropshipping

 A dropshipping store can sell a ton of low-cost products, typically priced lower than $200. This approach requires savvy marketing abilities. Using paid ads can help you get impulsive purchases from your target market niche. This technique is less about customer retention since you're selling cheap inventory at a mark-up. Also, stocks are usually imported from China. There are often long delays and you may face breakdowns in the supply chain. 

High-Ticket Dropshipping

With high ticket dropshipping, products usually cost over $200. The focus is on evergreen products that people are actively looking for.Compared with low-ticket dropshipping, this model is slower to grow. It likewise requires superior customer service and optimal product selection. You are usually partnering with suppliers based in your country of origin for faster shipping times.

Case Study: Sara Rosalia Tries Shopify Dropshipping Without Spending Money for 10 Days

In an experiment posted on her YouTube channel, Sara Rosalia tried doing Shopify dropshipping without investing any money for 10 days. So she built a free trial Shopify store from scratch with the goal of earning $10,000 in sales within that time period. She started with product research and eventually decided to sell a LED portable makeup box along with several other related products for upselling.  

For her marketing strategy, she took advantage of platforms such as TikTok, Instagram Reels, Pinterest, and YouTube Shorts. By repurposing existing content, she later managed to generate online interest with one of her TikTok videos reaching over 100,000 views.

From January 31 to February 9, Sara's dropshipping store made a total of $815.81 in sales, thanks to the viral TikTok video and her product's high price point. Shopify and PayPal fees were around $28.65 with product costs at $318.99. Overall, her total profit of $468.92 was over 50% in profit margin.  

"I was way off from my ten thousand dollar goal," Sara points out. "But I am positive that if I actually kept the store running and even started running ads, I could easily scale this to make six figures since this product is in high demand." 

In addition to her YouTube channel, Sara also creates content on TikTok and has her own Sara Finance online program where she teaches students about dropshipping, affiliate marketing, and stock market. 

Why People Fail With Dropshipping

There are a few explanations why so many people fail at this business model. Understanding these obstacles will put you in a better position in achieving success and generating a profitable income stream.

Some of the common reasons for dropshipping failure include:

  • Poor niche selection
  • Insufficient product research & testing
  • Unprofessional online store website
  • Unreliable suppliers
  • Shipping delays
  • Lack of competitive pricing
  • Ineffective marketing strategy

As mentioned, dropshipping isn't a get-rich-quick scheme. Research and product testing are paramount to your long-term success. You also need to work with the best suppliers to ensure that you sell quality products and deliver positive customer experience. Our article on 10 common dropshipping mistakes also digs deep on this subject, so go give it a read to learn more.

Why Local Lead Generation Is A Better Business Model Than Dropshipping

Dropshipping is undoubtedly profitable, with the industry market size headed for a growth of $372.47 billion in 2025, according to Oberlo. However, individual revenue streams can be inconsistent in dropshipping.

This business model heavily relies on market trends and in selling viral products. Your income will often vary from month to month, depending on your total sales. It's also a highly competitive industry because of its low barrier to entry. Dropshippers likewise do not have control over their supply chain and since they're technically middlemen, earning a percentage from each sale.

It's a different story when you're doing local lead generation. Profit margins potentially range from 85% to 90% so you have higher opportunities to earn big bucks. With this business model, you will build and rank business websites targeting specific keywords and locations. The next step is to rank the said sites and then offer them for rent to interested local business owners.

To illustrate, I own a Grand Rapids tree care website and my client pays me $2,000 per month without much work on my part. Since ranking the site, I've done little to no maintenance work over the years. This website brings organic traffic and leads to my customer. Compared with dropshipping, competition is not as fierce because there are thousands of business keywords you can target. Plus with 41,683 ZIP codes in the US, the opportunities are virtually endless, even for new lead generation experts. 


If this sounds interesting to you, feel free to get in touch. We have a lead generation program for learners of different levels. We can teach you our proven 3-step process to help you build a successful lead gen business that brings you passive income online.

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Ippei Kanehara

$52K per month providing lead generation services to small businesses is for digital hustlers, industry leaders and online business owners.

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    1. Hey-thanks for taking the time to read and leave a comment. Are you a dropshipper? Best of luck with your business and thanks again for reading.

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