How Much Do Dropshippers Make On Average? (How much profit?)
If you are thinking of starting a dropshipping business, you would want to know how much one can earn on average through this business. You would want to make sure whether this business is worth to invest your time and money.
Know the earning varies from dropshippers to dropshippers. How much a dropshipper can earn depends on the experience, knowledge, marketing strategies used, niche selected, and profit margin per sale. But one can make 10-40% profit per sale. In general, a dropshipper can earn between $1000- $50,000 per month or $100-$20,000 profit.
But it is an estimated result generated from the success stories of dropshippers who have openly shared their result on the Internet. There are slim chances of these results to be false as dropshippers don’t have any obligation to share their income with people. Mostly, they are private limited companies.
Learn how much a dropshipper can make and facts to know before starting the business.
The average earnings of a dropshipper
One of the mistakes new dropshippers make is to confuse the money mentioned in the Shopify dashboard or screenshots as profit. It is actually the revenue of your business. Revenue includes the money you receive in the end without deducting the cost value. The cost covers the product price, shipping charges, paid marketing, and general expense like platform subscription, and for apps and premium themes.
Considering you have priced the products suitably, expect a profit between 10-40% of the final sale of each product. However, the percentage of profit will depend on the type of products you sell, the demography of targeted customers, competition level, product availability, and many more factors.
There are mainly four types of dropshippers. Each of them obtains a different amount of revenue. This information has been gathered from multiple YouTube videos, blogs, Reddit, and other sources.
- Dropshippers with minimum experience in this model usually earn between $0-$1000 per month
- Dropshippers who sell products trending or hugely liked by customers but haven’t mastered the marketing field generally earn between $500-$2500 per month.
- Dropshippers who use several platforms and strategies for marketing their products, spend time testing products, starting to expand their brand earns $1000-$5000. However, they still don’t generate money from ads.
- Dropshippers who have enough experience and understanding of the model knows to market effectively earns a minimum of $10,000 per month. They also know the perfect time to scale and kill ads. Some dropshippers have also made between $50,000- $100,000 per month.
For dropshipping, having proper knowledge and experience is the key. Initially, it was possible to build a store and start earning profits on the same day. However, competition has increased nowadays. Hence, the chances of obtaining such quick results are slim. Though it is inevitable not to make any mistakes, investing in a good dropshipping course to lower them. Also, seek advice from a person you know who is already in this field.
But you can make high revenues and earn a lot of profits through dropshipping given you have done the needed research. A lot of people are starting to use this business due to the rapid popularity of online shopping.
However, if you are failing in this business, these facts can help you to understand why
The chance of success increase with more knowledge and experience
Dropshipping is no different than any other business. Knowing all the ins and outs of dropshipping increases the opportunity to succeed. Most amateur dropshippers fail to understand this concept. However, failure is bound to happen before success arrives. You have to figure out the areas you have lacked that led to failure. It is how you gain experience. As a beginner, you will make many mistakes. But making mistakes in every area, including store design, product choice, advertising strategy, usually is the reason beginners fail. As you start using dropshipping, you would know what to do and when to do to have effective results.
Dropshipping can be scaled
The first thing amateur dropshippers should do is to start smart. Avoid setting a high markup on products and try using multiple marketing techniques and find out which one works the best for you. After finding winning products and the process that increases your sales, start to scale your business only then. Before investing your money in any paid ads, research about the needs of your customer. It is because promoting the wrong product to wrong audiences will never let you make a positive ROI(return on investment). Dropshippers earning higher revenues have been able to find the winning product and the right process.
The reward is in the risk
Though dropshipping provides a high revenue, you have to go through a lot of risks in the beginning stages. It is one of the reasons why some people stay away from this model or don’t invest when the right time comes. But remember, the higher the risks, the higher the chances of a successful store. This is the reason why dropshipping has gained popularity in such a short period of time.
A lot of external factors at play
The reason behind the success of top dropshippers is their knowledge of general factors. From outside, they may seem trivial, but they play a huge role in determining the profit margin of a dropshipper. For example, keeping track of special offers like Black Friday in other marketplaces and seasonal demand products. The market value of a product at that time also determines the rate of sales. Use product sales; promoting what your customer needs at the right time will help to boost your profit margins and, ultimately, your store. Using these factors at the right time gives you a more in-depth knowledge of how the market works.
What factors affect your profit?
Though how much a dropshipper can earn depends on the knowledge and experience obtained, several other factors can affect your profit as well. Your main goal is to spend as low cost as possible while finding ways to maximize your revenue. These factors are the areas you invest your money on to run your store.
The main costs to select products and setting prices are-
- Product sourcing and shipping costs
- Subscription cost on platforms like Shopify.
- Payment processing costs like PayPal
- Outsourcing or employee costs
- Advertisement costs like Facebook, Instagram
- Theme or App costs
Although these are costs every dropshippers spend, there will be some specific ones relating to the context of your store. You can cut down these costs with useful and accurate strategies and planning. Otherwise, your cost price will surpass the profits leading to losing money per sale.
How much money do you need to start dropshipping?
One of the important facts about dropshipping is you have to spend a lot less money relative to other businesses to getting started. In fact, you can build and run your store for free for the first 14 days using Shopify’s free trial. In dropshipping, you don’t have to but a physical store, nor do you need any warehouses or inventory.
Initially, you only need to pay for software subscriptions like Shopify, required apps, and advertising expenses. However, you only have to pay a minimum amount of ads in the beginning and then scale when your store has grown. Cut down on spending for fancy apps and premium themes in the beginning. In this way, you lower the risk of losing money.
An average income of a dropshipper fluctuates between high and low. It is only a part of running a business. However, there are people with high income, and people failed miserably in this model and declared it as scam. It is because they expect unrealistic results in a short span of time and give up easily. If tried properly, anyone can have a profitable long-term ecommerce business. A successful dropshipper is proactive, patient, and dropship effectively. However, try to invest in a course before starting the business.