Dropshipping - earnings, costs. Is this model profitable?
E-commerce
20 June 2025
Dropshipping is a business model of selling products without having them in your own warehouse. Although it has become extremely popular over the past few years, many budding entrepreneurs question whether it is cost-effective. That's because the method has both benefits and costs, something newcomers seem to be unaware of.
Dropshipping – co to?
The dropshipping entrepreneur acts as an intermediary between the end customer and the supplier. This works as follows:
- the consumer places an order with the dropshipper;
- The dropshipper forwards the order to the supplier;
- the supplier sends the product directly to the address indicated by the consumer.
The seller takes a margin for brokering the transaction, without having to have its own warehouse or even invest in product stock. For this reason, dropshipping is a logistics model that is used especially by small companies or people just starting out in business.
The dropshipper does not directly control the shipping process, packaging, order quality and delivery, which creates the risk of delays and customer dissatisfaction. This, in turn, is capable of affecting, in case of failure, the reputation of the start-up businessman. It is therefore his or her responsibility to choose only trusted suppliers and to manage the whole process accordingly, including contacting consumers regularly to make sure they are satisfied. It is worth choosing a good logistics company, such as InPost, which knows how to manage the warehouse and shipments. 
Dropshipping - earnings. What influences them?
Is dropshipping is it profitable? To answer this question, it is important to look at exactly how it allows you to generate profits and at all the factors that affect the amount of potential revenue.
The margin plays a key role. The higher it is, the greater the potential profits. It is the difference between the price the entrepreneur will pay the supplier for the product and the price he will offer the customer. However, it cannot be intensified indefinitely, because it is strongly dependent on:
- market competitiveness;
- Product type;
- the supplier itself (the way it operates).
In the case of the most popular goods, such as clothing or items that are gadgets, competition is usually significant, making it impossible to increase margins (customers will then use the more financially viable dropshipper). Other factors affecting earnings in this business model include the choice of e-commerce platform. Some of them require the payment of a fee or charge a commission on sales, which effectively reduces the final profit of the entrepreneur.
Speed of order delivery is important. If a consumer finds two websites of two different shops offering, for example, the same accessories, at exactly the same prices, he will choose the one that delivers his order faster. Long shipping times have a detrimental effect on the dropshipper's reputation.
Margin in dropshipping - how to calculate it?
To see if dropshipping pays off, it is important to carefully analyse the costs:
- acquisitions;
- dispatches;
- ancillary fees (taxes, e-commerce platforms).
The amount of margin will mainly depend on whether the price of the product is higher than them. If the demand for the item is high, even a minimal difference will become worth it to consider working with the chosen supplier. The standard dropshipping margin is between 25% and 30%.
How much you can earn from dropshipping - examples
How much money can be made from dropshipping depends on the category of product offered and the supply and general interest in the product among consumers. It is also worth mentioning that it is possible to make money in different ways in this way. Some entrepreneurs focus on selling large volumes of low-margin goods, while others focus on selling high-quality and low-competition products with higher margins. 
Promotions and offers, or how to encourage the customer to buy?
The next step after deciding to set up a dropshipping business should be to use free online marketing. There are free tutorials available online to help you increase the visibility of your shop. It also pays to hire a specialist for this purpose, but this generates additional costs.
Other ways to encourage customers to buy include creating discounts and promotions. It is often more advantageous to sell more at a lower price than to sell more but more expensively.
Competition - how does it affect earnings in a dropshipping model?
As for the advantages and disadvantages of dropshipping, undoubtedly the biggest disadvantage of this business model is the high competitiveness. The low entry threshold means that even someone offering the same products, but with greater reach and a better marketing background, can become an effective rival.
For example, even after initial success, it is possible that a celebrity, e.g. a nationally known influencer, will take over the sale of an identical product the following week. He or she will then win the battle, especially in a situation where his or her competitor has not managed to make a strong name for himself or herself in the industry. At the same time, the downside is also an upside: almost anyone can do dropshipping.
Costs to be covered in dropshipping
How do you make money from dropshipping? By making sure that the costs of the venture are kept to a minimum. The most basic of these, apart from the price of the product itself, are:
- shipping;
- taxes;
- commission;
- bank charges;
- Marketing.
Is dropshipping profitable and when?
Yes, it can be profitable, but on the condition that the interested party knows how to start dropshipping and at the same time has chosen a product that is in demand and is able to get the necessary publicity and does not want to waste money on, for example, renting a wholesaler. Then it is worth trying your hand at this business.
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