AliExpress dropshipping margin math is where most stores fail before they start. Operators see a $10 source cost and a $30 retail price and assume 67% margin — ignoring that ad spend, payment processing, and refunds typically eat 50-60% of revenue. The actual unit economics on a 3× markup dropship product are usually negative.
This calculator builds the full per-order P&L: source cost + shipping + payment processing + ad spend + refund buffer = total cost. Subtract from retail to get net profit per order. The model exposes where dropshipping math actually breaks — usually at ad spend percentage, since dropship stores have no organic traffic to subsidize paid CAC.
The strategic takeaway: aim for 5× markup minimum, not 3×. A $10 AliExpress product should retail at $50, not $30. The extra margin headroom is what lets you survive the 30-50% ad spend percentage and 8-15% refund rate inherent to dropshipping. Below 5×, only categories with very low ad CPM (truly novel products with cheap audience reach) work — and those are getting harder to find.
Pair with the Dropshipping Margin calculator (broader margin view), Customer Acquisition Cost calculator (your actual CAC vs target), and Returns Cost calculator (refund processing economics). Most successful dropshipping operators end up reinvesting in faster shipping (4PX, 3PL warehousing of bestsellers) and basic branding (custom packaging, content) — which gradually transforms them from dropshipping into a hybrid model with better unit economics.
Frequently asked questions
What's a typical dropshipping markup?
3-5× source cost is the floor. So $10 AliExpress cost should retail at $30-50. Below 3× and the margin doesn't survive ad costs and refunds. Premium dropship brands push 5-8× by adding brand value (custom packaging, faster shipping via 3PL).
What's the realistic ad spend %?
For dropshipping, expect 30-50% of revenue on ads (vs 10-25% for branded ecommerce). Reason: dropshipping has no organic traffic, no email list, no repeat purchase momentum — paid carries the entire load. This eats most of the margin if markup is too low.
What about returns and refunds?
Dropshipping return rates are 8-15% (vs 3-7% for branded). Customer expects fast shipping, gets 2-4 week shipping from China, returns at higher rate. Refund rate (full chargebacks): 2-5%. Build 10-15% buffer into margin model to cover.
Should I use ePacket / standard shipping?
ePacket is the cheaper option but slow (15-25 days). Standard 4PX or AliExpress Premium Shipping costs $2-4 more but ships in 7-15 days. The faster shipping reduces cancellation rate and refund rate enough that the $2-4 increase typically pays for itself.
Why do most dropshipping stores fail?
Three reasons: insufficient markup (selling 3× and getting eaten by ads), poor product selection (saturated categories where Meta CPM is bid up), and operations breakdown (slow shipping creates refund spiral). The math works at 5×+ markup with disciplined product research and 7-15 day shipping.